An investment holding company (IHC), also known as a ‘parent’ company is a fantastic business structure in Singapore.

Generally, there are many reasons why you should incorporate a holding company in Singapore. But for an IHC, the main reason lies in the favorable tax system and pro-business climate of the country.

If you’re planning to start an IHC, let’s go in-depth on what it is, the benefits it brings, the taxes it pays, and the process to register your own IHC in Singapore. So you can get the most out of this wonderful structure.

What is an Investment Holding Company in Singapore?

To effectively start and run your Investment Holding Company (IHC), you’ll need a basic understanding of this entity type.


An IHC is a special type of entity that allows you to generate revenue from owning assets and investing in other companies.

That means in addition to buying, selling, and renting properties, you get to own and run other companies after acquiring equity through their shares.

While a typical company earns profits from sales of goods and services, your IHC owns passive income like dividends, interest, rental, and royalties. It may also own property such as real estate, lands, and other assets.

It’s worth noting that an IHC in Singapore deals with non-trade activities only. You can’t directly use an IHC to conduct business ventures.

Instead, your IHC can purchase shares and gain control of other firms, and use those firms as subsidiaries to conduct trade.

If your IHC has 100% ownership of another firm, that firm will be referred to as your wholly-owned subsidiary.

Common usage

You can use an IHC to invest in a variety of different assets, including:

  • Stocks
  • Bonds
  • Intellectual property
  • Loans
  • Real Estate
  • Shares

If your strategy is to own and operate multiple properties at the same time, starting an IHC is a great idea.

In fact, many well-known conglomerates are IHCs. For instance, Johnson & Johnson, Citi Group, or Wells Fargo.

In the case of Johnson & Johnson, it holds ownership of more than 265 subsidiaries, all focusing on pharmaceuticals, health care, or medical technology.



You should not mistake an investment dealing company for an investment holding company. These two are different kinds of companies.

An investment dealing company trades shares and properties on a regular basis. Its income is from the gains on sales of those shares and properties – also known as trade income.

Why set up an Investment Holding Company in Singapore?

The restriction to carry out business activities may leave you to wonder “Why would anyone ever consider starting an investment holding company (IHC) instead of normal one?”.

The simple answer to this is protection from losses. Your IHC won’t be affected if there’s a crisis in your subsidiary company.

For instance, Jolly Golly Group is your IHC, and Holiday Pte Ltd is your subsidiary.

If Holiday Pte Ltd goes bankrupt, you will experience a capital loss and a decline in revenue.

However, your Jolly Golly Group will not be legally liable and creditors cannot pursue you for remuneration.

If, on the other hand, Holiday Pte Ltd performs well and brings more profits, your IHC will benefit as well.

Along with the protection from losses, setting up an IHC in Singapore means you’ll have access to the advantageous business climate and tax regime of the country.

Business climate of Singapore

Singapore’s business climate creates a hotspot for IHC incorporation.

The country’s government has put efforts to reduce entry barriers for foreign investors and global businesses.

Whether you’re local or a foreigner in Singapore, you can register for an IHC in no time. Also, the whole incorporation process can be done online with little trouble.

Tax regime

Tax saving is undoubtedly one of the biggest benefits of starting an IHC in Singapore

Singapore follows a territorial tax regime. This means you only pay tax on income arising from sources inside Singapore.

The foreign-sourced income can be tax exempted, as long as your company satisfies certain conditions.

In some cases, you also pay tax on income remitted and received in Singapore.

  • Corporate tax

The corporate income tax rate in the city-state is 17%. This is relatively low compared to other global financial hubs.

However, this rate does not reflect your exact payable tax. In fact, the actual amount of tax you have to pay is lower. This is due to certain tax reliefs and beneficial schemes in Singapore.

For example, you can apply for the Partial Tax Exemption for Companies (PTE) for a low tax rate of only 4,25%.

Also, foreign-sourced income can be exempted from Singapore income tax, as long as your company can satisfy certain conditions.

  • Double Tax Agreement

Singapore has a network of tax treaties with more than 80 countries.

These treaties offer favorable tax rates and benefits between Singapore and the signed countries.

Let’s say you have a subsidiary in Mauritius – a country that has signed a tax treaty agreement with Singapore. Then, the dividends, interests, and royalties paid from this subsidiary to your IHC in

Singapore is subject to a reduced tax rate or is even exempt from tax obligations.

 For a better idea of the reasons to incorporate in Singapore, simply read our article for practical advice.

Which type of income is taxable in Singapore?

By now you’ve known the background and benefits of Singapore Invest Holding Company (IHC), as well as the key aspects of Singapore taxation relevant to it. . To get you off a smooth operation, let us provide a full list of taxable income for your IHC.

According to the Inland Revenue Authority of Singapore (IRAS), your taxable income in Singapore includes:

  • Profits from trading activities or supplying services
  • Income from an investment such as dividends, interest, and royalties
  • Income from rented property and other types of properties

Since your IHC owns shares in other companies and receives dividends as income, it has to pay income tax in Singapore.

Understand the tax basic
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How to reduce taxes for your Investment Holding Company?

Your IHC in Singapore can apply the following methods to lower the payable income tax.

Expense deductions

Your company can deduct three types of expenses against its assessable income.

Those are direct expenses, statutory and regulatory expenses, and other allowable expenses.

Direct expenses are the expenses that result in investment income.

Let’s say you have rental properties, your deductible expenses include costs for collecting income, insurance, property tax, maintenance, and repair cost.

The interest paid on loans is also a deductible expense.

Statutory and regulatory expenses are the expenses spent to keep your company stay compliant with local laws (e.g. Singapore Companies Act and other related laws).

Some typical examples are:

  • Fees for accounting, auditing, and tax service
  • Secretarial fees
  • Bank charges

Additionally, there are other allowable expenses that your investment holding company in Singapore can deduct. These include:

  • Administrative and management fees
  • Directors fees
  • Office fees (rental, charges for telephone, water, and light for example)
  • Salaries, bonuses, and allowances for employees
  • Other general expenses


According to IRAS, the deducted amount of these other expenses cannot go higher than 5% of the gross income of your company.

Group relief system

Group Relief allows members of a group of companies to transfer certain Corporate Tax losses to other members of the group.

The two companies are considered in the same group when satisfying all of the following conditions:

  • They are both incorporated in Singapore
  • 75% of the ordinary share capital of one company is held by the other, or 75% of each company is held by a third Singapore-incorporated company
  • Both companies have the same financial year period

Your Singapore investment holding company can transfer unutilized funds to other companies in the same group, including

  • industrial building allowance
  • land intensification allowance
  • donations

For current-year unutilized losses caused by expenses exceeding investment income, your company cannot transfer these losses to another company within the same group.

Also, it cannot carry forward any losses to the following years to offset future accessible income.

And since your Singapore IHC does not carry out any trade, it’s not allowed to claim capital allowance.

Fixed assets are considered deductible expenses only when they are bought to replace other existing ones.

Tax exemption and rebate

If your IHC is a new start-up, you cannot apply for tax exemption.

However, your company is still eligible for the Partial Tax Exemption (PTE) Scheme.

With the PTE scheme, your company will be entitled to:

  • A 75% tax exemption on the first $10,000 of income, and
  • Another 50% tax exemption on the next $190,000 of income.

After the PTE scheme, your company will continue to benefit from an annual tax rebate (with a given cap).

Every year since 2013, the Singapore government has rebated taxes on all Singapore companies. The tax rebate rate in 2019 was 20%, with a given cap of $10,000. In 2020, the figures were 25% and $15,000.

To know more about how to reduce income tax in Singapore, take a look at our exclusive article, which summarizes everything you need to know.

Foreign-sourced dividend exemption

As mentioned above, if your IHC receives dividends from foreign subsidiaries, it can be subject to income tax.

Yet, you don’t have to pay these taxes if you meet the following conditions:

  • Your dividends have already been paid/payable in the foreign jurisdiction (where the dividends arise)
  • The headline tax rate in the foreign jurisdiction is no less than 15% when the dividends are remitted to Singapore
  • The exemption benefits the resident taxpayers in Singapore.

View a basic format of tax computation for a Singapore investment holding here

Discover the full list of conditions for foreign-sourced income tax exemption in Singapore and gain your entrepreneurial edge instantly!

How do you register an Investment Holding Company in Singapore?

You can register your Singapore investment holding company (IHC) as a private limited company or a limited liability company.

The setup process is quite simple and straightforward. Yet, you’ll need to satisfy certain requirements and follow procedures to avoid costly mistakes.

Requirements to register your IHC

In most cases, you’ll need the following requirements in place:

  • Minimum of one shareholder – who can be an individual or a company
  • At least one director – must be a Singapore resident and be over 18 years of age
  • At least one resident company secretary
  • Minimum initial paid-up capital of S$1
  • A registered company address (not a P.O box address)
  • A corporate bank account

Procedure to register your IHC

Follow these simple steps to register your IHC:

  • Choose a company name and submit it for name approval
  • File your application with the ACRA to formally register your IHC

You can wrap up everything online using the ACRA Business Filing portal. The whole process can take up to 3 working days.

Make sure you fill out your application form and documents properly. If there’s any issue or mistake with your application, it’ll take much longer to form your IHC.

If you feel overwhelmed with all these requirements and procedures, remember it’s not just you.

Paperwork and back-office tasks are not everyone’s strong suit. And you certainly won’t save more money handling them all by yourself.

Why not leave all the stressful, boring paperwork to us? So you’ll have more time to crush your goals and build a business that you’re proud of.

You can always rely on our skillful team for an automated, hassle-free Singapore company formation.

Our packages are purposely designed to fit your style, and budget and to expand your confidence as you go.


Let us list down some notable points for you to consider:

Key takeaways

  • An IHC in Singapore mainly receives passive income from dividends, interest, rentals, or royalties. Investment income from passive sources is subject to Singapore taxes.
  • You can use an IHC for various assets investment.
  • Despite trading restrictions, an IHC can protect you from losses. Besides, you’ll gain benefits from the business climate and tax regime of Singapore.  
  • Foreign income can be exempted from Singapore tax under certain conditions.
  • There‘s no withholding tax on dividends and no tax imposed on dividends received by individual shareholders.
  • There are many ways to reduce the income tax of an IHC in Singapore – deduct expenses against accessible income, PTE scheme, and annual tax rebate.
  • Registering your IHC may involve paperwork and back-office hassle. Make sure you engage professional service providers for stress-free incorporation.

Feel free to get in touch with one of our friendly consultants for more advice on your Investment Holding Company in Singapore. Or, drop us a message via

Disclaimer: While BBCIncorp strives to make the information on this website as timely and accurate as possible, the information itself is for reference purposes only. You should not substitute the information provided in this article for competent legal advice. Feel free to contact BBCIncorp’s customer services for advice on your specific cases.

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