Part I: Building Your Overseas Investment Structure

Singapore continues to shine as a trading platform and many investors looking to expand into Southeast Asia are increasingly choosing Singapore as their ideal location to setup holding companies.

In this two part series, we will explore the fundamental aspects of investing in Singapore and the key elements that go into setting up your global supply chain.

Let’s begin with understanding Singapore as an investment hub.

So what exactly stands out about this island country?

  1. Low country risk

Singapore’s stability across financial, political, and social aspects provides a sense of security for many investors.

  1. Low foreign exchange risk

Singapore follows a policy of a gradually appreciating Singapore dollar, making it easier for investors to plan ahead. Having a stable currency allows CFOs to determine what kind of expansion plans they wish to make for the business and how collaboration partners can help manage foreign exchange risks.

  1. Lower tax cost

Singapore’s headline tax rate remains low at 17%.

  1. No hidden cost

Singapore has transparent regulators making the process of investing into the country less complex.

  1. Ease of financing

Singapore continues to stand out as a key financial hub as it has banks from all over the world which are equipped to assist with investments wherever you are. Singapore also offers lower financing costs compared to other countries. There are no capital controls in Singapore, as well as no thin capitalisation rules.

Coins symbolising overseas investment

Leveraging Singapore as a Holding Platform

As foreign businesses invest into Singapore, many would want to know how to leverage this thriving destination as a holding and trading platform.

One of the key factors that Singapore continues to build is its strong network of international agreements that investors can benefit from. Singapore has 15 bilateral and 12 Free Trade Agreements which allows businesses to enter new markets and trade in goods, services and explore other investment opportunities.

Singapore also has 43 bilateral investment treaties which is greatly beneficial for companies interested in expanding to different countries. Singapore investors are able to receive the same favourable treatment as domestic investors when they go into these other countries. They can be assured of fair treatment and equitable opportunities, without having to worry about external business threats. Another benefit of the treaties in place is the ability to limit expropriation of investments and be assured of adequate compensation in the event of unavoidable expropriations. Singapore investors are also free to transfer their capital in and out of the operating country.

Lastly, Singapore has a network of 93 Avoidance of Double Taxation Agreements (DTA) in place which may help to lower withholding taxes and help manage associated risks. However, to claim DTA benefits you need to be a Singapore tax resident.   

Conclusion:

For businesses looking to expand their presence across the Asia Pacific, Singapore offers companies an ideal platform to grow. Before selecting your business location, companies need to understand the restrictions as well as incentives that every destination has and how to optimise on the opportunities that Singapore has to offer in relation to it.

At RSM, out team of professionals are able to direct you with the expertise needed to understand target industries and capitalise on investment structures that would best benefit your business.

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Next up in our series, we will be exploring key elements that go into building an efficient supply chain and investment structures commonly adopted by businesses across the region.

The contents of this article are extracted from the RSM webinar on “Structuring your Overseas Investments” - with speakers RSM Partner & Head of Tax Advisory Thomas Chan and RSM Partner & Head of Transfer Pricing Joanna Lam.

If you would like to speak to our specialists, kindly contact:

Joanna Lam
Partner & Head of Transfer Pricing
[email protected]
T: +65 6594 7896