Companies from the US are in good stead to set up a Singapore holding company for their investments in the Asia Pacific region and especially for their Indian investments. Singapore and the US have always shared a strong bilateral relationship that was further enhanced with the signing of the US – Singapore Free Trade Agreement on January 1, 2004. The FTA not only enhanced the trading volumes between the countries but also amped Singapore’s traction as an investment destination.
Singapore is now the third largest recipient, behind Canada and Australia, of US foreign direct investment (FDI) in the Asia Pacific region, with over $116 billion of cumulative FDI, and over 1,500 US companies operate in Singapore. With the increase in economic engagements of the US in the region the role of Singapore in the equation has been growing in importance.
Singapore has been the most preferred holding company jurisdiction for outbound investments targeting the emerging markets of Asia owing to its strategic geographic location, economic connectivity, world class infrastructure, presence of international financial institutions, robust legal framework, international reputation, open immigration policy, simple tax system, competent workforce and neutral political relationship with neighbors.
One of the key driver of preference for Singapore as a location for holding companies is the taxation system. The following report provides an overview of the dynamics that make Singapore the preferred holding company location among US companies for their Indian investments.
Singapore as a Preferred Holding Company Jurisdiction
Investing in an Indian company through an intermediate holding company in a tax-favorable jurisdiction may offer various advantages. It helps in pooling offshore investments and also helps in globalization or restructuring of a company at a later stage. US companies targeting India will benefit by establishing a holding company in Singapore with which India has strong bilateral ties and a DTA.
Singapore also has a comprehensive network of FTAs with the regional economies that are surging ahead in growth. As such, investors and enterprises from the US find Singapore an ideal location to hub and spoke their investments in the region by leveraging on the advantages of the FTA arrangements.
The Inland Revenue Authority (IRAS) the tax authority of Singapore is vigilant on fraudulent activities and insists strongly on commercial substance of holding companies. Therefore, Singapore is generally regarded as a legitimate holding company jurisdiction.
Read more about starting a Holding Company in Singapore at Rikvin.com.
