This page contains information on the following Singapore company structures. Please click below to skip ahead.
International Holding Companies
Family Owned Investment Holding Companies
Non-Resident Companies
Tax & Economic Incentive Companies
Corporate Law Requirements
International Holding Companies
Apart from specific tax and economic incentives, general tax exemptions offer significant benefits to international holding companies that are resident in Singapore.
Singapore has a network of approximately 60 double tax agreements which in most instances provide concessional rates of withholding tax on dividends, interest and royalties paid to Singapore resident companies.
Further, many of the double tax treaties entered into by Singapore concede taxing rights to any capital gains to Singapore. As Singapore does not have capital gains tax this provides a significant tax advantage.
Foreign source income, including dividend income, is only taxed if it is remitted into Singapore. However, dividends received in Singapore by a resident Singapore company are usually exempt from Singapore tax. Foreign dividends received by a resident Singapore company are tax exempt in Singapore if the income from which the dividend has been received has been subject to a headline rate of tax of at least 15%. Note that the headline rate includes both the relevant company tax rate and the dividend withholding tax rate.
There is no dividend withholding tax levied on dividends paid to non residents from Singapore companies (whether resident or non resident companies).
Family Owned Investment Holding Companies
A Singapore company that qualifies as a Family Owned Investment Holding Company (FIHC) will be exempted from income tax on all foreign sourced income remitted into Singapore as well as most types of Singapore sourced income.
An FIHC must be administered by an institution licensed or approved by the Monetary Authority of Singapore. Asiaciti Trust Singapore Pte Ltd is such a licensed institution.
To qualify as a FIHC a company must:
Carry on the principal activity of holding or making investments;
Be beneficially owned by an individual or individuals. If the shares are owned by more than one individual, these individuals must be "connected persons" (essentially includes all relationships established by blood, marriage or adoption). The shares in the FIHC do not have to be owned by individuals directly - they can be owned by a trust or nominee company. Asiaciti Trust Singapore Pte Ltd as a licensed trust company can provide these nominee company services.
The company must be incorporated before 1 April 2013 and has to file an annual declaration with both the Monetary Authority of Singapore and the Inland Revenue Authority of Singapore.
There is an extensive list of income that is exempt from taxation but the most important ones include and foreign sourced income that is remitted into Singapore, any interest derived from deposits held with an approved bank or finance company licensed in Singapore and any dividend paid by a resident company in Singapore
Non-Resident Companies
Singapore non-resident companies, ie. companies which have their central management and control located outside Singapore, are not liable to Singapore tax on foreign source income not remitted into Singapore. Consequently they can be used as tax effective international business entities.
International Holding Companies
Non-resident Singapore companies are not entitled to the benefits of double tax treaties. Their use as international holding companies is therefore appropriate where treaty benefits are inapplicable or where the underlying investments will not qualify for the "participation exemption" or dividend exemption described above, e.g. investments in low tax countries. Foreign source dividends received outside Singapore are not subject to Singapore tax. Foreign source dividends can therefore pass through Singapore non-resident companies without liability to Singapore tax.
International Trading Companies
On a similar basis, trading activities conducted outside Singapore by non-resident Singapore companies are not subject to Singapore income tax. Profits can be distributed to non-resident shareholders without liability to Singapore tax.
Tax & Economic Incentive Companies
Corporate Law Requirements
Directors
A Singapore incorporated company must have a minimum of one director, who must reside in Singapore. Such resident director must be either a Singapore citizen, a permanent resident, or a holder of a valid employment pass. Corporations are not permitted to be directors of Singapore companies.
Subject to the terms of our policy statement, Asiaciti Trust can provide resident directors, and when required, non-resident directors.
Company Secretary
Each Singapore company must appoint a resident company secretary.
Registered Office
A registered office must be maintained in Singapore. All government and official correspondence will be directed to the registered office.
Share Capital
Singapore companies do not have the concept of share capital . Only one share needs to be issued. Shares in Singapore companies do not have par value.
Generally the Ministry of Manpower, when processing employment passes for foreigners, will require the employer to have a minimum paid up capital of S$100,000 or such higher amount as is considered sufficient for the business conducted by the employer. Companies planning to participate in Government tenders are also required to have a certain minimum paid-up capital, the amount of which depends on the category of the application.
Accounting & Audit
Subject to the exemptions noted below all companies must keep proper accounting records and have the records and financial statements audited annually by an external auditor. The auditor must be resident in Singapore and appropriately qualified under local law. Auditors must be appointed within 3 months from the date of incorporation.
Exemptions from Audit
The below categories of companies will be exempted from the legal requirement to have their accounts audited by external auditors. All companies regardless of whether they are audited or not, are required to maintain proper accounting records, and prepare "true and fair" financial statements which comply with the Financial Reporting Standards prescribed by the Council on Corporate Disclosure and Governance.
Dormant companies (that is, a company with no significant accounting transactions during a financial year).
Exempt private companies (that is, a private company with not more than 20 shareholders and no corporate shareholders) with annual revenues of less than S$5 million [approx. US$3 million]. Exempt private companies may continue to have their accounts audited to meet their business requirements, e.g., if required by their shareholders or bankers, but do not have any statutory obligation to prepare audited accounts.
Annual General Meeting (AGM)
A private company does not need to hold an AGM if all its shareholders agree that an AGM is not required. The matters that would otherwise be dealt with at an AGM must still be resolved by way of written resolutions of shareholders.
Otherwise the first AGM must be held within 18 months from the date of incorporation and thereafter, the AGM must be held once in every calendar year and not more than 15 months after the last AGM.
Annual Returns and Accounts for Exempt Private Companies
Exempt private companies that are exempted from statutory audit, do not have to file accounts with their Annual Return. They must however include a declaration of solvency signed by a director and the company secretary.
The auditors do not need to sign the declaration. In the event that such a company is unable to file a declaration of solvency, it may instead file its unaudited accounts with the Accounting and Corporate Regulatory Authority (ACRA).
Click below to read more about:
Singapore Tax System
Limited Liability Partnerships
Singapore Foreign Trusts
Anti-Money Laundering Legislation
