Where to place the holding when the factories are already in Vietnam
Tuan owns an electronics components manufacturer with two plants in Bac Giang and a trading company in Ho Chi Minh City. After a Singapore fund expressed interest in investing, he faces the question most Vietnamese business owners meet at this stage: should the holding company sit in Vietnam, directly above the existing assets, or in Singapore to welcome international capital? There is no universally right answer, only the answer fitting each investor’s strategy.
1. What Singapore offers a holding company
The starting point is 17% corporate income tax with reliefs for new companies. More important for a holding role, Singapore levies no capital gains tax, so future disposals of subsidiary shares trigger no Singapore tax. Dividends flow under the one-tier system with no further tax. A fully free foreign exchange regime allows unrestricted movement of capital and profits. A double tax treaty network of 100+ countries optimises withholding on inbound dividends and royalties from many states. Finally, Singapore’s fundraising ecosystem, investment banks and M&A advisory bench make it the ideal environment if Tuan’s strategy is international fundraising or a partial exit within three to five years.
2. When a Vietnamese holding is the wiser choice
First, when the assets and cash flows are principally in Vietnam. A Vietnamese holding sits next to the plants, management controls directly, and administration and compliance costs run far below maintaining a Singapore entity with a resident director, audits and two-country reporting.
Second, the favourable domestic dividend mechanics. Dividends distributed by a subsidiary out of taxed after-tax profits are excluded from the parent’s taxable income under the Corporate Income Tax Law. For a pure holding that owns and collects dividends, the Vietnamese tax burden is therefore much lighter than the 20% headline rate many people fear.
Third, when the strategy is long-term development in Vietnam. If Tuan has no plan to sell the business or raise international capital in the medium term and instead focuses on expanding Vietnamese manufacturing, a local holding keeps the ownership structure lean, easy to govern and aligned with domestic investment procedures.
Fourth, Vietnam’s treaty network is wide enough. Vietnam has double tax agreements with more than 80 countries and territories, sufficient for cash flows from the main markets Vietnamese businesses typically deal with.
3. The downsides of a Vietnamese holding to weigh
The biggest minus is foreign exchange control. Every offshore investment flow, profit repatriation to foreign investors and capital transaction must follow Vietnam’s strict foreign exchange administration procedures. Capital transfer gains suffer 20% corporate income tax, while Singapore imposes no capital gains tax at all. The domestic capital market is shallower, so if the goal is an international IPO or a sale to a foreign strategic investor, a Vietnamese holding will need later restructuring at significant cost.
4. A five-minute decision framework
Choose a Vietnamese holding when: assets and cash flows are mainly in Vietnam; long-term strategy is tied to domestic manufacturing; no international fundraising or exit is planned for the medium term; minimising administration cost matters. Choose a Singapore holding when: preparing for international fundraising or cross-border M&A; capital gains tax optimisation on disposals is needed; cash flows come from many countries and the widest treaty network is required; the cost of maintaining a Singapore entity is acceptable.
Whichever route is chosen, investment projects in Vietnam must complete investment registration and obtain an investment registration certificate under Investment Law No. 143/2025/QH15 (effective 1 March 2026, replacing Investment Law 61/2020).
Conclusion
Tuan ultimately placed his holding in Vietnam because all his assets sit in Bac Giang and his five-year plan is manufacturing expansion, not exit. The Singapore fund still invested directly into the Vietnamese holding through a share subscription. The decision saves him hundreds of thousands of dollars a year in Singapore structure maintenance while keeping flexibility. The lesson: let business strategy drive legal structure, never the reverse.
Frequently asked questions
Are dividends from a subsidiary to a Vietnamese holding taxed twice?
No. Dividends distributed out of taxed after-tax profits are excluded from the parent company’s corporate income taxable income under the CIT Law. That is a key advantage of a pure holding model in Vietnam.
Can foreign investors contribute capital to a Vietnamese holding?
Yes. Foreign investors may acquire shares in a Vietnamese holding under foreign investment rules, with capital contribution and share purchase registration under Investment Law 143/2025. Inward and outward capital flows must comply with foreign exchange administration.
How hard is it to move the holding from Vietnam to Singapore later?
Doable but expensive. The shift involves share transfers subject to 20% CIT in Vietnam, foreign exchange procedures and comprehensive legal restructuring. It is better to think carefully upfront than to place temporarily and move later.
Can a Vietnamese holding enjoy tax incentives?
Pure holding activity (shareholding, dividend collection) is generally not within investment incentive scope. Tax incentives attach to specific investment projects at the operating subsidiaries, for example high-tech manufacturing projects in industrial parks, under current tax legislation.
FLAT Law Firm supports business owners
Choosing a holding location is a structural decision with decade-long effects. FLAT Law Firm helps owners analyse cash flows, model the tax burden of each option and design an ownership structure fitting long-term strategy, from investment registration to group governance.
This article has been quality-reviewed by the FLAW AI Legal Council