ledgengroup, Author at LEDGEN Group

Hong Kong and Singapore are undoubtedly one of the best countries to set up a business in. The fact that they have good tax benefits, strategic locations and good governing strategies make them leading countries for businesses that are looking to expand. This article will share what you need to know about starting a holding company in Singapore or Hong Kong.

What is a holding company?

A holding company usually takes the form of a private company limited by shares. In most cases, it does not manufacture anything, offer any products or services, or engage in any other business activities. Holding companies usually own the majority if not all of the stock in other corporations.

Despite the fact that a holding company controls the assets of other companies, it usually just holds monitoring responsibilities. As a result, while it may monitor the management decisions, holding companies are usually not involved in the day-to-day operations.

Why set up a holding company?

Liability protection

Creating separate corporations for operational enterprises and the assets they employ gives a liability shield. Each subsidiary is responsible for its own debts. The assets of the controlling company or another subsidiary are inaccessible to a subsidiary’s creditor.

Lower debt financing costs

When a holding company has financial strength, it may typically be able to obtain loans at a lower interest rate than its operational companies, especially if the company in need of cash is a startup or undertakes risky business ventures. The holding company may secure a loan and extend the loan to its subsidiary.

Centralise internal functions

Certain internal functions such as internal finance, human resource, technology, marketing and more can be centralised at a holding company to provide seamless services across the subsidiaries more efficiently and effectively.

3 Benefits of Setting Up a Holding Company in Hong Kong

Easy process for setting up a company

The process of forming a holding company and registering the firm in Hong Kong is similar to that of forming a regular company. Because there is no minimum capital requirement for forming a holding company in Hong Kong, businesses of any size can use the territory as a foundation.

The general norm for companies incorporated in Hong Kong is to have at least one shareholder with one ordinary share issued on their formation. Forming an investment holding company in Hong Kong takes between 3 to 5 days. However, one has to make sure to have all of the necessary company documentation to make the incorporation process go smoothly.

Location advantage

Entrepreneurs will get the best of both worlds when establishing an investment holding company in Hong Kong. Investors can do business with Mainland China easily after forming a holding company in Hong Kong. It is easier to establish a subsidiary or trade with China, and Hong Kong-based enterprises are given priority over others. Particularly if you are a foreign corporation. If you want to get into the Chinese market in the long run, building a Hong Kong investment holding company is a common approach.

Tax Benefits

Hong Kong imposes no VAT, Capital Gains, Sales Tax and no withholding tax on dividends and interest.

Hong Kong has also reached agreements on double taxation with a number of the world’s strongest trading nations. Hong Kong has double tax treaties with the United Kingdom, Vietnam, Austria, Belgium, Brunei, Czech Republic, France, Hungary, Indonesia, Ireland, Japan, Liechtenstein, Luxembourg, Malaysia, Malta, Netherlands, New Zealand, Portugal, Switzerland, Spain, Thailand, and Mainland China, etc. The primary goal is to alleviate concerns of double taxation caused by overlapping tax jurisdictions. As a result, when it comes to double taxation, Hong Kong holding companies would have little concerns.

3 Benefits of Setting Up a Holding Company in Singapore

Attractive Tax System

Singapore has a favourable tax framework for businesses, so establishing your holding company here may enable you to leverage on the various tax advantages. For instance, Singapore has a single-tier corporate tax structure, where the corporate tax paid by a company on its profits is final.

Dividends paid by Singapore resident companies are tax exempted in the hands of the shareholders. Additionally, Singapore does not impose withholding tax on dividends paid to non-resident shareholders.

The country offers a low corporate and individual income tax rate. It also does not impose a capital gains tax. Therefore, the sale proceeds from the disposal of assets or shares (deemed as capital gain in nature) will not be taxable. Although Singapore does not have capital gains tax, the Inland Revenue Authority of Singapore (IRAS) will apply the “badges of trade” to determine if the gain on disposal of investments is revenue or capital in nature.

Ease of Compliance

The rules for establishing a holding company in Singapore are not too complicated. Two basic obligations must be met with regards to the continued compliance requirements of establishing a holding company in Singapore. These two requirements are the customary tax filing obligations and the financial reporting obligations.

Supportive Economic & Legislative Environment

The Singapore government often offers schemes and incentives that aim to boost specific sectors of the economy and to attract foreign investment in the country. The Economic Development Board (EDB) has several grants and schemes to support growing businesses, innovation and R&D, as well as productivity.

Lastly, Singapore has a comprehensive tax treaty network regulated by the Inland Revenue Authority (IRAS). These tax treaties help to mitigate double taxation of both passive and active income.

Conclusion

Businesses should carefully consider where they want to establish a holding company and some or all of their subsidiaries. They might also consider a corporate services partner who is well-versed in the regulations of the jurisdiction and can assist them throughout the procedure.

Ledgen Group has helped countless clients to start businesses over the years, whether it is a venture into Malaysia, Singapore or Hong Kong. We continue to serve our clients by offering a comprehensive solution at every step of their business, from incorporation to regional expansion, in several countries around the world. We have professionals in countries to advise you on each step you have to take and make your time valuable for incorporation.

Contact us today to get started with a holding company incorporation.

From time to time, businesses find themselves needing to relocate to adapt to current changes in geopolitics and to ensure the best environment for their growth. With many pull factors, Singapore is seen as a viable location for businesses in Asia to move and relocate their operations.

There has been a sharp influx of foreign money flowing into Singapore since 2019. Furthermore, bankers and wealth managers have reported that they have received more queries from clients to move funds from Hong Kong to Singapore.

Why should businesses relocate to Singapore?

There are many factors to why most Hong Kong businesses are relocating to Singapore instead of any other country. Singapore has made a name for itself as a reliable financial and trading hub in the region, as well as being the best place to invest in Asia Pacific. Recently in the ranking for the world’s freest economy, Singapore took the top spot overtaking not only Hong Kong but Taiwan and even Switzerland.

Singapore has one of the busiest ports in the world, connecting West and East Asia. It has other factors including a strategic position, a competitive workforce, a pro-business environment, and forward-thinking economic policies.

Apart from all geographical factors, companies choose to relocate to Singapore because the process of starting a business is relatively simple and fast. Other than that, Singapore has an attractive tax rate for both personal and corporate sectors. There is also access to various incentives which may help in funding. The low trade barriers and welcoming attitude to foreign investment is also added factor to why more businesses are choosing to relocate to Singapore.

A private company limited by shares is the most common type of entity to be established in Singapore.

Examples of Hong Kong business relocation to Singapore

Establishing a Singapore parent company for the Hong Kong business

This type of business relocation strategy allows you to set up a company in Singapore that acts as a parent company for your Hong Kong operations.

The advantage of this is that the Singapore operation can continue to run concurrently with the Hong Kong business. If any events occur that will affect the Hong Kong company, the headquarters in Singapore can take over the operating responsibilities while still offering strong legal protection throughout any transition.

And when all operations have been transferred to Singapore, you can have the option to close and deregister the Hong Kong operation. This means that you can either continue to run the Singapore company under the original parent company or have a standalone company.

Establishing a Hong Kong parent company with a subsidiary in Singapore

In this scenario, the parent company is established in Hong Kong while a new subsidiary is created in Singapore. This option is said to be relatively easier to secure Singapore working permits and visas since it is a subsidiary of a foreign parent company.

Gradually, you can shift the business from the original Hong Kong company to the new Singapore company. Once the transition is complete, you have the option to close both the parent company and the original company in Hong Kong, keeping all your business in Singapore.

Converting current Hong Kong company into a parent company

With this type, the present Hong Kong business will still serve as the parent company for the new Singapore branch. This approach is preferred because it is much simpler. On the downside, you would not be able to provide as much legal protection if the Hong Kong company becomes unstable over time.

Concerns when relocating a company from Hong Kong to Singapore

Deciding to relocate to a new country is not an easy task. Here are several factors to consider when relocating to Singapore from Hong Kong:

Employees & Staffing

Human resources are the engine of your company. You would want to keep and relocate your best employees and make the transition as easy and smooth for them as possible.

For the employees you want to move to Singapore, you need to obtain employment passes for them and their dependents. Working with a reliable corporate service provider to aid the process in obtaining the relevant passes will be the best solution.

You can also consider hiring new staff in Singapore and work with recruiters to find the best match for the new job. Bear in mind that Singapore employers are required to follow the guidelines established in the Fair Consideration Framework (FCF).

Compliance & Regulations

A Singapore-based company must have a Singapore resident director and a Singapore company secretary. As long as the individual is not the sole director of the company, one person may serve as both the resident director and secretary.

The Singapore company would also need to get all necessary permits and licences after it is established and before its business operations start. If a company utilises trademarks in its business, it should be registered in Singapore to provide the company with trademark protection.

Assets & Banking

The transfer of assets is often the most complex part of any business relocation. You can start by evaluating your tangible and intangible assets to determine what should be brought to Singapore. Would it be economical to bring equipment and machinery to the new location? What about your Intellectual Property (IP) and how would that intangible asset be transferred?

For banking, plan out a robust way to transfer all your banking assets to Singapore. Think about creating a corporate bank account in Singapore to do business there. The transfer should be smooth and orderly so your new business will have uninterrupted banking transactions during and after the move. When interacting with Singapore banks, be prepared for background checks, credit assessments, and various local bank policies.

Other Business Operations

When relocating, how will customers, vendors, partners, and other stakeholders be onboarded? Customers and clients must be assured that the change will have little effect on them and that service level quality would not be affected. As for vendors and partners, they too can be informed early on so the relationship can be maintained. You could also consider working with new vendors in Singapore and re-evaluate the costs and logistics of supplies.

Other than that, issues such as office premises and manufacturing facilities must be addressed before making the big move. Would you need both office and manufacturing spaces in Singapore or could your manufacturing stay in Hong Kong/China? How would your supply chain be affected? For service sectors, would a new office base affect service delivery?

All these concerns and issues can be daunting to think about. This is why a lot of our clients come to Ledgen to get professional advice on company registration and consultation on the best way to make the relocation process hassle-free.

Conclusion

Since 2019, many Hong Kong-based businesses have changed their regional strategy and moved their headquarters to Singapore, thanks to both push and pull factors. The whole relocation process does not have to be complex and hard. Engage with a corporate service provider to craft a good relocation strategy in-line with your business goals. If you are deciding to relocate to Singapore, contact Ledgen Group.

Ledgen Group (previously Ecovis Bizcorp) has helped a variety of clients to launch and incorporate their businesses successfully over the past 15 years. At every level, from incorporation to regional expansion, Ledgen continues to serve clients by offering them a complete solution across key Asian markets in Hong Kong, Singapore, and Malaysia.

Contact us today to get started

With growing complexities in regulation and compliance, today’s tax teams would find themselves requiring more technical skills, knowledge and expertise in their field. This complexity also highlights the need for qualified personnel to handle a company’s taxation concerns. By outsourcing tax, you can gain several advantages including saving time, reducing risk, and having a knowledgeable practitioner to work with you.

Read more: 6 Ways How Professional Tax Compliance Benefits You

Finding the right tax firm to outsource can be challenging. What you should look out for and what are the factors to help you decide? Here, we will break down some key considerations on how to identify and select the right tax outsourcing partner for your business.

1. Communication & Responsiveness

Communication is essential for successful outsourcing, especially tax outsourcing. When interacting with prospective firms and partners, look at how well their teams can understand your needs and how prompt are their interactions with you. It is necessary to have an outsourcing partner who can understand the requirements your team needs.

The tax outsourcing service provider must be well-versed in the final date for submissions and other similar tasks. They should be able to specify the duration it will take to complete filling the tax. All this is to ensure that your company’s tax queries and submissions are done in time to avoid unnecessary penalties. Thus, communication is the lifeline of a successful collaboration between you and your tax compliance partner.

Here are some ways you can manage your communication with the tax firm better:

Share necessary files and information early on and make them easily accessible to the team
Specify a communication channel (email, phone)
Set an agreeable time to correspond or meet especially when working with a partner from a different time zone
Check-in once a while or have a meeting to touch base and get updates

Finally, the firm or partner you are looking for should be transparent from the start of the conversation. You can ask about fees, pricing plans and situations where extra charges might apply. A lack of transparency can result in misunderstandings that can jeopardize the quality of the collaboration.

2. Track Record & Past Clients

Does the prospective tax outsourcing service provider have a good track record? With whom had they worked before? By looking at their past clientele, you can get a picture of the tax firm’s performance and professionalism. Referrals and testimonials are typically shown on the outsourcing company’s website but you could also request to see portfolio and case studies during the discovery meeting.

Additionally, if the partner demonstrates auditor independence, which is when they offer tax accounting services without also doing the auditing, it can be a good sign of trustworthiness.

Read more : What is auditor independence and & Why is it important ?

3. Expertise in Tax Compliance

When looking and choosing the perfect tax partner to work with, it is helpful to learn about their credentials, background, and experience. While having more years of experience is intuitively good, you can also consider what accreditation and certification they possess.

Tax accountants and compliance professionals can help more than submitting your tax returns and answering to local tax authorities. They can provide insightful advice and consultation through tax advisory services Singapore that align with your business objectives.

4. Privacy Terms

Before outsourcing your tax agenda, have a procedure and precaution to ensure your data can be shared safely with the right party. For example, you could use encryption when storing and sending sensitive data, or record all transactions and movement of documents.

Next, learn about how your tax firm will be handling your data. What would their procedures be so only a select team will work on your tax data? What is included in the firm’s privacy terms? Are there any countermeasures during a possible data breach? These and a lot more questions on privacy and security can be asked to help you decide on the right tax outsourcing solution.

5. Other Scope of Work

Last but certainly not least, you should opt for a tax partner who can also offer extensive services that relate to tax accounting.

Find a partner who can help you scale your company by providing a wider range of services, such as accounting, payroll, and corporate tax planning. It is easier to collaborate and work with a firm as a one-stop center rather than managing multiple service providers.

Conclusion

The goal of outsourcing is usually to achieve better work efficiency. So, your tax compliance partner should help you achieve your objectives and work better and smarter. Consider the factors we have talked about when finding and evaluating the right outsourcing provider. In the end, you would want to reap the benefits of outsourcing your tax compliance.

Ledgen Group’s team of capable tax specialists are able to help your business with a comprehensive range of tax advisory services in Singapore. We have helped clients solve tax-related issues with success and work with them to find the best solutions.

Connect with us to get started.

Outsourcing has grown in importance as HR professionals look for ways to optimise and streamline their tasks. Payroll, benefits administration, and other operations are frequently delegated to outsourced partners while internal HR teams focus on talent management, recruiting, succession planning and other key roles.

Additionally, other than allowing in-house HR employees to concentrate more on strategy, outsourcing can:

Give businesses access to specialised HR knowledge
Provide support for regulatory compliance
Save valuable time for HR transactional tasks like payroll and benefits enrollment.

There are also advantages in terms of technology when outsourcing your HR tasks. Employers can benefit from cutting-edge software systems to gather insights about their workforce and reduce errors through automation.

There are a lot of benefits to outsourcing human resources. Despite this, there are some reservations about getting started with outsourcing. Therefore, let us look into some of the misconceptions about HR outsourcing.

Myths and Misconceptions about HR Outsourcing

Here, we will try to debunk some of the misconceptions about outsourcing your human resource activities:

HR outsourcing will cause a loss of control of your business

Some would have thought that outsourcing will make them lose their authority and control over their department and business. This can happen because of the assumption that outsourced staff are not obliged by the rules and regulations of the client’s company.

In actuality, outsourcing clients will still retain their core responsibilities as the head of the company or department. They are in charge of their employees’ growth and overall performance. Outsourcing certain redundant tasks such as payroll or claims do not necessarily result in loss of control, especially when working with the right firm.

Outsourced firms are meant to help your department and are thus obliged to follow the guidelines and standards of the client’s company. To reduce the concern of losing control, both parties must maintain good communication so that your objectives are consistently met.

Outsourcing is an unnecessary expenditure

Is it true that hiring an outsourced HR partner will cost a lot more than managing everything in-house? The answer might depend on how you choose your outsourcing partner, what your outsourcing objectives are, and how it will be handled. Getting the right firm to work with ensures HR services can be done efficiently and cost-effectively. It is perhaps better to employ a partner offering customisable packages that will match your HR needs while further reducing extra costs later on.

In the long run, outsourcing your HR may even save costs and provide you with better use of resources and insights for your department.

The outsourced firm will not understand the business

Many HR leaders and department heads would assume that providers are merely sleeping partners, meant to do a few basic tasks. These partners do not understand their business nor contribute to the client’s overall growth.

As with many things, there are a lot of options out there for you to find the right outsourcing firm. As capable professionals in their field, HR outsourcing firms can be beneficial to your business when they work collaboratively. They often provide advice, guidance and insights to help you manage your team. Partners at Ledgen work hand-in-hand with clients to help them solve their problems and give them peace of mind in running their businesses.

HR outsourcing only works for large enterprises

Another fallacy regarding HR outsourcing services is the idea that only large-sized organisations can benefit from outsourcing. Smaller businesses would face budget constraints and are unable to meet the requirements of some of the firms.

The right provider can ease your strain and give top-notch services regardless of company size. They will be able to meet your capacity and workload to scale. The need for HR outsourcing services is not determined by the size of the firm, but rather by the organisation’s readiness to delegate to professionals and prioritise productivity.

The scope of outsourced work is too small

Depending on the outsourcing service provider, some of the scopes of work offered may truly be limited. However, there are also many firms, including Ledgen, that have been offering a lot more than just payroll maintenance and local provident fund calculation.

Some of the scope of work Ledgen provides:

Preparation and filing of related forms to the local authority on behalf of the employer including year-end returns
Being the preparer of our client’s payroll bank account to assist in making payments to employees and government authorities
Advisory on compliance requirements on employment, payroll and provident fund or pension matters
Prepare related forms and provide guidance for expatriates leaving the country
Registration with the local provident fund or pension provider or authority
Application of work passes/visas for expatriates
Employee personal tax service (including expatriate tax computation and submission)
E-leave – Employees can apply for leave on multiple non-consecutive days in one application as well as have a calendar view of colleague’s leave schedule
E-claim – Configure different claim forms for different types of claims
E-appraisal – Configurable appraisal forms based on your company’s requirements

As one can see, outsourcing service providers such as Ledgen offers more comprehensive payroll and HR administrative services. It is up to the client whether to choose a partner offering limited services, or another provider who is able to do more.

Is outsourcing the right decision for your organisation?

It is crucial to understand how outsourcing can either improve or hamper your overall performance. Take the steps and evaluate whether outsourcing is the right path by looking at key areas such as compliance, service levels, the scope of work, and processes.

Reach us out at Ledgen to get started on outsourcing your HR roles and responsibilities. From small to relatively large businesses, Ledgen’s committed HR & Payroll department works with clients who demand professional services of the highest calibre.

Contact us to get started.

In October 2001, the world was shocked by the single biggest audit failure in the modern era. Known as the Enron Scandal, the repercussions following its lawsuit and bankruptcy are still talked about today, 20 plus years ahead. The Enron scandal generated much debate as well as legislation designed to improve accounting standards and practices today.

The accounting firm responsible was Arthur Andersen, then one of the “Big Five” accounting firms in the world (now Big Four). They were accused of unfair accounting in the wake of Enron’s bankruptcy, and it was asserted that they had confirmed Enron’s accounting practises to maintain their clients.

In response to the scandal, countries around the world started to propose and enact laws to ensure better bookkeeping and auditing, including the Sarbanes-Oxley Act that increases penalties for fabricating records or attempting to defraud shareholders.

Why are we discussing a case from over two decades ago? Because it is as relevant and important to learn about the need for independent auditing today. Here, we will talk about auditor independence and its importance to uphold the integrity of businesses.

What is Auditors Independence?

An independent auditor is a certified public accountant (CPA) or chartered accountant (CA) who is not affiliated with the business they are auditing. The independent auditor must be free from external influence or bias to be able to maintain integrity, make objective judgements and exercise appropriate professional scepticism when they examine the company’s financial documents and business operations. The inability for auditors to remain objective and independent will hamper an accountant’s ability to provide an honest opinion about a company’s financial information. Therefore, objectivity and independence are important ethical values for auditors.

Independent auditors are commonly used—or even required—to protect shareholders and potential investors from the occasionally misleading or misrepresentative financial assertions made by public corporations.

There is a code of ethics adopted by the Malaysian Institute of Accountants (MIA) and Institute of Singapore Chartered Accountants (ISCA) via their respective by-laws in Section 600 respectively (ISCA code-of-ethics, page 131).

To summarise, para 600.2 states that “Providing non-assurance services to audit clients might create threats to compliance with the fundamental principles and threats to independence”.

In addition, para 600.3 prohibits a firm or network firm from providing certain services to an audit client in certain circumstances because the independence threats created cannot be addressed by applying safeguards.

Under subsection 601 – Accounting and Bookkeeping Services, providing accounting and bookkeeping services to an audit client might create a self-review threat. Unless it is demonstrated that the audit firm provides accounting services that:-

a) cover transactions or entries which are routine or mechanical in nature which require little or no professional judgement; AND

b) the firm addresses any threats that are created by providing such services that are not at an acceptable level; then a self-review threat may not exist.

Why does Auditor Independence Matters?

The idea and concept of auditor independence have long been promoted and upheld by professional auditing bodies around the world. An organisation’s compliance and transparency as well as many of its stakeholders depends on honest auditing.

Auditing, in this case financial auditing, is an impartial analysis and evaluation of a company’s financial statements to make sure they fairly and accurately reflect the transactions they claim to represent. They, therefore, rely on the auditor’s impartial evaluation.

The trustworthiness of the judgments and reports provided by auditors regarding financial audits is a factor for shareholders and other stakeholders to make confident assessments and decisions, such as divesting, investing, contracting or lending with the company.

What can your company gain from an Independent Auditor?

The audit’s findings can be used by company managers to keep internal processes up to pace. The audit can eventually lead to financial savings because it identifies waste and areas where the company is losing money. Audits may also highlight areas that need better internal controls and inspections.

In addition, written assurance from an unrelated source gives the financial records of a corporation more credibility in the eyes of an independent audit. The accuracy and validity of the financial information and records can help business owners secure external financing from lenders and investors. Inaccurate accounting information can increase a company’s tax liability that may arise from overstating income, inventory value or other items which can significantly increase the amount of taxes owed by the company.

Independence Compromised

Auditor independence can be compromised when said auditor also performs services other than audit towards the same clientele. Non-audit services include bookkeeping, financial system design and implementation, actuarial services, internal audits, outsourced services, and more.

Independence can be compromised when the auditor misuses his or her rights and responsibilities towards being an auditor. It can also be compromised due to the familiarity threat, where conflict of interest can happen when there is a close or long relationship with a clientele. Familiarity threat can happen when an audit member becomes too accepting of the client’s work. For example, individuals who handle general accounting functions and then perform audits on the same information may compromise the objectivity and independent views of that individual.

Therefore, the best way to prevent these conflicts that will compromise auditor independence is to refrain from having the auditors’ firm and partners doing any services other than auditing for or on behalf of their audit clients.

Conclusion

There are now laws and regulations intended to improve the accuracy of financial reporting for publicly traded corporations and to prevent another Enron scandal. It is the duty of business leaders and accounting departments to ensure trustworthiness and transparency for the benefit of all stakeholders.

The best way is to work with a firm that offers accounting services as a distinct service that will ensure independence from conflicts of interest. Firms such as Ledgen has been handling accounting procedures for a variety of clients, focusing only on core professional outsource services.