ArtsAutosBooksBusinessEducationEntertainmentFamilyFashionFoodGamesGenderHealthHolidaysHomeHubPagesPersonal FinancePetsPoliticsReligionSportsTechnologyTravel

Singapore as an Alternative to Offshore Companies

Updated on January 8, 2014

Singapore for Investment Holding purposes

Finding suitable corporate vehicles for investment holding is an on-going challenge for professionals who service private clients. So far, commonly used offshore jurisdictions have served the purpose well. However, recent world events have caused many global financial institutions to take action to prevent the inadvertent acceptance of funds from undesirable sources. Most, if not all, significant financial institutions have implemented internal policies of not accepting the opening of new bank accounts by offshore companies.

As a result, it is now extremely difficult for an offshore company to open a new bank account in Hong Kong, Singapore or any other city. This has caused practical problems in the use of offshore companies for investment holding purposes. What then is the solution?

The time has come to consider the use of a Singapore company for investment holding purposes. A Singapore company can bring about the same results as an offshore company. More importantly, a Singapore company is able to open bank accounts and Singapore is considered as a jurisdiction of a "premium stature" when compared to offshore jurisdictions.

It is widely known that Singapore is a highly regulated jurisdiction. A user may rightfully question whether it is really possible to use a Singapore company to achieve the same results as an offshore company. The answer is a resounding "YES" and the following are the bases for this assertion.

Recent developments in tax and corporate law in Singapore have made it easy to use a Singapore incorporated company to achieve the same results as that of an offshore company. Changes in tax and corporate law in Singapore and relevant existing legislations are summarised below:

  1. Singapore has abolished the two-tier tax system. Income of a corporation is only taxed once, i.e., at the corporate level. Dividend payments by a Singapore company are not taxable to the recipients.
  2. Offshore incomes that are not received in Singapore are not taxable in Singapore.
  3. Capital gains are not taxable in Singapore.
  4. The current corporate tax rate on taxable profit is 22%. It is Singapore's objective to reduce corporate tax rate to 20% over the medium term.
  5. Effective 15 May 2003, a company (of not more than 20 individual shareholders) with annual turnover of S$2.5 million or less (revised to S$5 million after one year) is exempt from annual statutory audits. This is a positive development, especially in a situation where a private client uses a Singapore company solely for investment holding purposes.
  6. Movable properties held by individuals who are not domiciled in Singapore are not subject to estate taxes in Singapore. Shareholding in a Singapore company is considered movable property.
  7. Singapore has a wide network of tax treaties. In certain cases, tax treaties can be used for the reduction of taxes in treaty countries where investments are held.

In summary, a private client that uses a Singapore company for investment holding will enjoy the following benefits:

  1. Ability to open a bank account in any country/city, subject to the usual due diligence policy of the financial institution.
  2. Is viewed by an investor's home country jurisdiction, as having a "premium stature" when compared to offshore companies.
  3. Enjoys the protection of the legal framework of Singapore.
  4. It may avail itself of tax treaty benefits for the reduction of taxes in certain treaty countries where investments are held.
  5. Is able to derive offshore profits and capital gains without incurring tax in Singapore.
  6. Is able to retain offshore profits and capital gains or pay a dividend out of such profits, without incurring tax in Singapore.
  7. Its shareholders are not subject to tax in Singapore on dividend income.
  8. The exemption from annual statutory audits would contribute to cost savings in maintaining the structure.
  9. Where a company has individuals as shareholders, there is no requirement to file financial statements with the Registry of Companies. Third parties are unable to access a company's financial statements.
  10. Shareholders and directors who do not wish to have their names disclosed can arrange for their shareholdings and directorship to be held in trust by nominees arranged by professional service providers.
  11. A non-domicile individual who uses a Singapore company for investment holding purposes would not be subject to Singapore estate taxes.
  12. A non-domicile individual can use a Singapore company to invest in real estate in Singapore to avoid Singapore estate taxes on investment in real estate.

A Singapore company has all the benefits of an offshore company and more.

  • It is able to open bank accounts, which are essential to the carrying on of financial transactions.

  • It is viewed by an investor's home country jurisdiction, as having a "premium stature" when compared to offshore companies. The "premium stature" status would contribute to placing the investor in a favorable position with relevant authorities in the investor's home country.
  • The availability of a network of tax treaties to benefit the investor in certain situations.

These are the key factors when choosing a jurisdiction for investment holding. These are also the key added benefits that offshore companies are unable to offer.

Singapore is definitely a location of choice for private client servicing professionals in their continuing quest to search for and advise private clients on investment holding structures.

Comments

    0 of 8192 characters used
    Post Comment

    • malabikajay profile image

      malabikajay 

      7 years ago from Pune

      Hey Thanks very Informative Hub...Just wantd to understand that we are trying to explore the Singapore Market into Services as we are an Offshore development company, Could please let me know the best possible way to do the same alos we are planning to start up a Small office in Singapore. For details on our offshore services pls visit: www.srmtech.net or drop email at ajaysharma@srmtech.net

    • profile image

      Tom Jordans 

      9 years ago

      Hi guys just wanted to share with you that I have used Companies Express to incorporate companies. Very fast, very polite and great service. You can visit their site for more info www(dot)companiesexpress(dot)com

      Thanks

      Tom

    working

    This website uses cookies

    As a user in the EEA, your approval is needed on a few things. To provide a better website experience, hubpages.com uses cookies (and other similar technologies) and may collect, process, and share personal data. Please choose which areas of our service you consent to our doing so.

    For more information on managing or withdrawing consents and how we handle data, visit our Privacy Policy at: https://hubpages.com/privacy-policy#gdpr

    Show Details
    Necessary
    HubPages Device IDThis is used to identify particular browsers or devices when the access the service, and is used for security reasons.
    LoginThis is necessary to sign in to the HubPages Service.
    Google RecaptchaThis is used to prevent bots and spam. (Privacy Policy)
    AkismetThis is used to detect comment spam. (Privacy Policy)
    HubPages Google AnalyticsThis is used to provide data on traffic to our website, all personally identifyable data is anonymized. (Privacy Policy)
    HubPages Traffic PixelThis is used to collect data on traffic to articles and other pages on our site. Unless you are signed in to a HubPages account, all personally identifiable information is anonymized.
    Amazon Web ServicesThis is a cloud services platform that we used to host our service. (Privacy Policy)
    CloudflareThis is a cloud CDN service that we use to efficiently deliver files required for our service to operate such as javascript, cascading style sheets, images, and videos. (Privacy Policy)
    Google Hosted LibrariesJavascript software libraries such as jQuery are loaded at endpoints on the googleapis.com or gstatic.com domains, for performance and efficiency reasons. (Privacy Policy)
    Features
    Google Custom SearchThis is feature allows you to search the site. (Privacy Policy)
    Google MapsSome articles have Google Maps embedded in them. (Privacy Policy)
    Google ChartsThis is used to display charts and graphs on articles and the author center. (Privacy Policy)
    Google AdSense Host APIThis service allows you to sign up for or associate a Google AdSense account with HubPages, so that you can earn money from ads on your articles. No data is shared unless you engage with this feature. (Privacy Policy)
    Google YouTubeSome articles have YouTube videos embedded in them. (Privacy Policy)
    VimeoSome articles have Vimeo videos embedded in them. (Privacy Policy)
    PaypalThis is used for a registered author who enrolls in the HubPages Earnings program and requests to be paid via PayPal. No data is shared with Paypal unless you engage with this feature. (Privacy Policy)
    Facebook LoginYou can use this to streamline signing up for, or signing in to your Hubpages account. No data is shared with Facebook unless you engage with this feature. (Privacy Policy)
    MavenThis supports the Maven widget and search functionality. (Privacy Policy)
    Marketing
    Google AdSenseThis is an ad network. (Privacy Policy)
    Google DoubleClickGoogle provides ad serving technology and runs an ad network. (Privacy Policy)
    Index ExchangeThis is an ad network. (Privacy Policy)
    SovrnThis is an ad network. (Privacy Policy)
    Facebook AdsThis is an ad network. (Privacy Policy)
    Amazon Unified Ad MarketplaceThis is an ad network. (Privacy Policy)
    AppNexusThis is an ad network. (Privacy Policy)
    OpenxThis is an ad network. (Privacy Policy)
    Rubicon ProjectThis is an ad network. (Privacy Policy)
    TripleLiftThis is an ad network. (Privacy Policy)
    Say MediaWe partner with Say Media to deliver ad campaigns on our sites. (Privacy Policy)
    Remarketing PixelsWe may use remarketing pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to advertise the HubPages Service to people that have visited our sites.
    Conversion Tracking PixelsWe may use conversion tracking pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to identify when an advertisement has successfully resulted in the desired action, such as signing up for the HubPages Service or publishing an article on the HubPages Service.
    Statistics
    Author Google AnalyticsThis is used to provide traffic data and reports to the authors of articles on the HubPages Service. (Privacy Policy)
    ComscoreComScore is a media measurement and analytics company providing marketing data and analytics to enterprises, media and advertising agencies, and publishers. Non-consent will result in ComScore only processing obfuscated personal data. (Privacy Policy)
    Amazon Tracking PixelSome articles display amazon products as part of the Amazon Affiliate program, this pixel provides traffic statistics for those products (Privacy Policy)