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A Singapore holding company is a normal private company that owns shares in other companies. It pays corporate tax at 17% on taxable income. Dividends it pays to shareholders are not taxed under the one-tier system, and IRAS does not tax capital gains. Checked against IRAS and ACRA pages.
This page comes from SingaporeCompanySetupGuide.com, which has no link to IRAS or ACRA and does not sell company services itself. Requests from the form here go to providers that fit, and those providers can pay us for the referral.
How is a Singapore holding company taxed?
The company is taxed like any other. These are the IRAS rules that matter most for a holding structure.
| Item | IRAS rule |
|---|---|
| Corporate income tax | Flat 17% of chargeable income |
| Dividends the holding company pays | Not taxable in shareholders' hands under the one-tier system (co-operatives excepted) |
| Capital gains | Not taxable |
| Foreign income received in Singapore | Taxable when received, unless an exemption applies |
| Specified foreign dividends, branch profits and service income | Exempt for a tax resident company if three tests are met |
| Gains on selling shares | Certainty of non-taxation if 20% held for 24 months |
New companies get a start-up exemption in their first three years of assessment, with partial exemption after that. A holding company with only dividend income may have little taxable income anyway, so check what applies before you budget for tax. The exemption bands are on corporate tax.
How are share sale gains treated?
IRAS says capital gains are not taxable. The hard part is proving a share gain is capital. IRAS offers a scheme that gives upfront certainty. The company is not taxed on gains from selling shares if it held at least 20% of the investee company for a continuous 24 months before the sale.
Two points changed. From , qualifying preference shares count as well as ordinary shares, and the 20% test can be met across a group. IRAS has also removed the old end date for the scheme. Some situations are excluded, such as certain property-related investees, and where the scheme does not apply the normal rules decide whether a gain is income or capital. Losses follow the same logic, so do not assume a loss is deductible.
Read the IRAS e-Tax guide before a disposal, and get written advice on a sale that is large or close to the 24 month line.
Which foreign income is exempt?
A resident holding company can claim exemption on three kinds of foreign income: dividends, branch profits and service income. IRAS grants it only if foreign tax was paid on the income, the paying country's headline rate is 15% or more, and the Comptroller agrees the exemption is beneficial.
For dividends, tax paid by the dividend-paying company on its profits counts as well as any tax on the dividend itself. IRAS expects audited accounts of the paying company, or other accepted documents such as a bank certification or a confirmation letter, kept for at least 5 years. Where the exemption does not apply, a foreign tax credit may relieve double tax.
Foreign income is generally taxable in Singapore only when it is received here. Money reinvested abroad stays outside the Singapore net until the sale proceeds are brought back.
Will the holding company be a Singapore tax resident?
A company registered in Singapore is not automatically resident. IRAS asks where the business is controlled and managed, and weighs board meeting venues, the strategic decisions taken there, directors' locations and key staff.
For foreign-owned holding companies the starting view is cautious. IRAS says those with purely passive income, or only foreign-sourced income, are generally not tax residents, because they usually act on their foreign owners' instructions. They can still be treated as resident if certain conditions are met. The reliefs above and the Certificate of Residence used under tax treaties depend on this status. Keep board minutes that show where decisions are made.
How do you set up the holding company?
The company is a private company limited by shares, registered with ACRA through Bizfile.
- Reserve the name. S$15 and the name is held for up to 120 days.
- Appoint a local resident director. At least one, holding citizen, permanent resident or a qualifying pass status.
- Provide a Singapore registered office. Open and accessible to the public in business hours.
- List shareholders and the share capital. ACRA says the minimum is one issued share.
- Register for S$300. Most registrations are approved soon after payment. Complex ones can take up to 15 working days.
- Appoint a company secretary within six months.
ACRA makes foreigners go through a corporate service provider for both the name and the registration. Compare the structure with a plain private limited company first, then see the document list for foreign founders.
What does it cost to keep a holding company running?
ACRA fees are S$60 a year for the annual return. Filing is due within seven months after the financial year end for a non-listed company. You also need a registered address, a secretary, an accountant and, if the owners live abroad, a resident director. Providers set these prices and ACRA does not publish them, so this guide quotes none. Ask for each item on its own line.
A holding company still has to keep accounts and file them. Whether it is exempt from audit depends on its size and group, which is covered on audit exemption. Filing steps are on annual return and AGM.
When does a holding company make sense?
It suits an owner with two or more businesses who wants one entity above them, a founder who wants to receive dividends in one place, or an investor holding shares in several companies. It adds cost and filings, so it rarely pays for a single small business. Ask an adviser to test the structure against your tax position in your home country, because Singapore rules cover only the Singapore side.
For overseas-facing setups and what Singapore does and does not offer, see offshore company.
Prefer to hand the build to a firm? Fill in the form here with the owners, where they live and what the company will hold. Providers used to holding structures will reply with quotes.
Sources
- IRAS, tax rate page: https://www.iras.gov.sg/taxes/corporate-income-tax/basics-of-corporate-income-tax/corporate-income-tax-rate-rebates-and-tax-exemption-schemes (17%, start-up and partial exemption).
- IRAS, dividends: https://www.iras.gov.sg/taxes/individual-income-tax/basics-of-individual-income-tax/what-is-taxable-what-is-not/dividends (one-tier system).
- IRAS, what is taxable: https://www.iras.gov.sg/taxes/corporate-income-tax/income-deductions-for-companies/taxable-non-taxable-income (capital gains, income received in Singapore).
- IRAS, foreign income page: https://www.iras.gov.sg/taxes/corporate-income-tax/income-deductions-for-companies/companies-receiving-foreign-income (three tests, records, foreign tax credit).
- IRAS, company residency page: https://www.iras.gov.sg/taxes/corporate-income-tax/basics-of-corporate-income-tax/tax-residency-of-a-company-certificate-of-residence (control and management, foreign-owned investment holding companies).
- IRAS e-Tax guide, certainty of non-taxation of gains on disposal of equity investments: https://www.iras.gov.sg/media/docs/default-source/e-tax/etaxguide_certainty-of-non-taxation-of-companies-gain-on-disposal-of-equity-investments.pdf (20%, 24 months, the changes from ).
- ACRA, registration page and fee table: https://www.acra.gov.sg/how-to-guides/setting-up-a-local-company/submitting-your-application-to-acra and https://www.acra.gov.sg/manage/companies/service-transaction-fees/ (S$15, S$300, S$60).
- ACRA, foreigner rules: https://www.acra.gov.sg/register/business/requirements-eligibility/ (CSP rule, local resident).
