Advantages of Setup of a Singapore Holding Companies for USA and Other Ventures

When it comes to outbound investments, there is no other place in the world like Singapore. It is by far the most preferred jurisdiction for investors who are keen to set up a holding company in Singapore or companies in Singapore.

What Makes Singapore Holding Companies the Best Option

Businesses from all over the world are keen to set up a Singapore holding company for their Asia Pacific business investments. Especially, American companies want to do so because of the strong bilateral ties between Singapore and the US. The relationship first strengthened during the Singapore Free Trade Agreement in 2004.

The agreement not only helped to enhance the trading volumes between these countries, but it also helped Singapore boost its traction as a major investment destination. The free trade agreement helped to put Singapore on the map.

As per the agreement, Singapore is now the third largest recipient of US foreign direct investments in the world. The city-state is only behind Australia and Canada. With over 1,500 US-based companies currently operating in Singapore, the increased economic engagements will only serve to further boost Singapore’s growth and importance in the years to come. Thanks to its strategic location, Singapore holding companies have become the most preferred option in all of Asia. This is because of various reasons like economic connectivity and sound legal framework. Adding on to that, the reputation and the world-class infrastructure have also been tremendously favorable in this case.

Benefits for Holding Companies in Singapore

Singapore’s taxation system is another primary reason why Singapore holding companies are the preferred choice. In the USA, dividends received by holding companies are subject to a 35% federal corporate tax rate. However, in Singapore, all foreign-sourced dividend incomes are exempted from tax. This is because of the conditions stipulated in the Foreign Sourced Income Exemption Scheme. A huge incentive for investors, the program has attracted more people to set up a holding company in the country.

Yet another significant advantage for Singapore holding companies is the redeployment of earnings to other regional economies. Why this is an advantage is because it can be done without directing the earnings into the United States where it could potentially attract tax liabilities. Singapore also has a comprehensive network of Double Taxation Agreements (DTAs) with many other countries. This is yet another benefit investors will be able to leverage on.

Approximately 300 US-based companies or more have already made Singapore their regional headquarters. The related support services which allow companies to enjoy concessionary tax rates on either a global or regional basis have helped them. If the companies meet the required conditions, they will be able to enjoy a concessionary tax rate of 15% for about 3 years. They might get an additional 2 years. All of this will depend on any incremental qualifying income from abroad.

A Singapore Holding Company Is the Ideal Choice

Especially for the US-based company, Singapore is the perfect destination to set up a holding company. With its business-friendly environment, world-class infrastructure and one of the best tax frameworks in the world, Singapore is the best place for any investor to enhance their business and their presence in Asia.