Singapore vs. Indonesia Holding Company Structures

Roger Pay
17 hours ago
6 min read

Singapore vs. Indonesia Holding Company Structures

Choosing between a Singapore (SG) holding company and an Indonesian (ID) one depends heavily on your plans for capital exit, profit repatriation, and legal protection.

In 2026, the updated Indonesia-Singapore Double Taxation Agreement (DTA) makes the "Singapore Route" particularly attractive for regional businesses. Here is a comparison of the three structures.

1. Singapore HoldCo + Indonesia Subsidiary (PT PMA)

This is the most common "professional" structure for startups and international investors.

Structure: Individual shareholders → SG HoldCo → ID Subsidiary (PT PMA).
Tax Efficiency:
- Capital Gains: If you sell the Indonesian subsidiary, the gain is generally taxed only in Singapore under the new DTA. Since Singapore has no capital gains tax, you retain 100% of the exit value.
- Dividends: Indonesia's standard 20% withholding tax (WHT) on dividends is reduced to 10% (if SG HoldCo owns ≥25%) or 15% under the treaty.
Legal & Funding: Singapore’s common law system and the Singapore International Arbitration Centre (SIAC) provide a "legal safety net." Most VCs and global investors prefer funding a Singapore entity over an Indonesian one due to ease of due diligence.

2. Indonesia HoldCo + Singapore Subsidiary

This is less common and usually used by Indonesian conglomerates expanding outward.

Structure: Individual shareholders → ID HoldCo → SG Subsidiary.
Tax Efficiency:
- Dividends: Dividends flow from the SG Subsidiary to the ID HoldCo. Singapore has no dividend withholding tax, so the ID HoldCo receives the full amount. However, the ID HoldCo may then be taxed on this income in Indonesia (though exemptions exist for certain reinvested dividends).
- Exit: If the ID HoldCo sells the SG Subsidiary, Indonesia may tax the capital gains.
Use Case: Best if the primary business, management, and majority of assets are in Indonesia, and the Singapore arm is purely for sales or specific regional operations.

3. Direct Individual Ownership (Side-by-Side)

Here, the shareholders own shares in both companies directly as individuals.

Structure: Individuals → [SG Company] AND [ID Company].
Tax Efficiency:
- Double Taxation: Without a holding company to "pool" profits, you may face higher personal income tax on dividends received in your home country.
- No "Exit" Shield: Selling shares in the Indonesian company as an individual often triggers a 5% final tax on gross proceeds (not just profit) for non-residents, or standard personal income tax for residents.
Complexity: Managing two separate entities without a parent-subsidiary relationship makes consolidated accounting, inter-company loans, and IP licensing much more difficult.

Comparison Summary Table

Feature	SG HoldCo / ID Sub	ID HoldCo / SG Sub	Direct Individual Ownership
Capital Gains Tax	Lowest (0% in SG on exit)	Higher (ID taxes gains)	Higher/Complex
Dividend WHT	10% – 15% (ID to SG)	0% (SG to ID)	Varies by residency
Fundraising	Easiest (VCs prefer SG)	Moderate	Difficult
Legal Protection	High (SG Common Law)	Moderate (ID Civil Law)	Low (No corporate veil)
Setup Cost	High (Two countries)	High (Two countries)	Moderate

Key Consideration: The PT PMA Requirement

Regardless of the structure, an Indonesian company with any foreign ownership (via an SG HoldCo or a foreign individual) must be a PT PMA.

Minimum Capital: In 2026, the minimum investment plan is typically IDR 10 billion (~USD 650k), with a paid-up capital of at least IDR 2.5 billion.
Negative Investment List: Some sectors restrict foreign ownership to 49% or 67%.

Foreign Ownership Limits for Industries in Indonesia's "Positive Investment List"

In 2026, Indonesia continues to operate under the "Positive Investment List" (introduced via Presidential Regulation No. 10/2021 and its updates). The fundamental shift is that 100% foreign ownership is now the default unless a sector is explicitly restricted.

Recent 2025/2026 updates have also significantly lowered the barrier to entry for foreign investors.

1. Major 2026 Updates

Reduced Capital Requirement: The minimum paid-up capital for a PT PMA has been slashed from IDR 10 billion to IDR 2.5 billion (~USD 155,000) per company. This makes it much easier for SMEs and startups to enter.
Total Investment Value: You still need a total investment plan (equity + debt) of more than IDR 10 billion per 5-digit KBLI code, but the upfront cash requirement is lower.
Holding Companies: For the first time, "Investment Holding Companies" (KBLI 64200) are explicitly permitted as a primary business line for a PT PMA.

2. Sector-Specific Ownership Limits

The list categorizes industries into four main groups:

A. Priority Sectors (100% Foreign Ownership + Incentives)

These sectors are eligible for Tax Holidays or Tax Allowances.

Digital Economy: Software development, hosting, and web portals.
Renewable Energy: Solar, geothermal, and wind power projects.
Manufacturing: Particularly downstreaming (smelters), EV batteries, and pharmaceuticals.
Healthcare: Hospitals and medical device manufacturing are now largely open.

B. Conditionally Open (Ownership Caps)

Some sectors remain strategic or sensitive, requiring a local partner.

Broadcasting: Generally capped at 20% (and only for expansion).
Newspapers/Magazines: Capped at 49%.
Domestic Sea Transportation: Capped at 49%.
Postal Services: Capped at 49%.

C. Reserved for MSMEs & Cooperatives

Foreigners (PT PMAs) are prohibited from entering these small-scale business lines:

Low-technology industries (e.g., traditional batik, traditional crafts).
Small-scale plantations and street vending.
Small-scale F&B (though larger restaurants/cafes are 100% open).

D. Closed Sectors

Only seven activities remain completely closed to all private investment (foreign and domestic):

Cannabis/Narcotics (Class I).
Gambling and Casinos.
Chemical weapons manufacturing.
Ozone-depleting substance industries.
Extraction of certain endangered species/corals.

3. Summary Comparison of Your Three Structures

Industry Type	SG HoldCo Structure	ID HoldCo Structure	Individual Ownership
Tech / SaaS	100% Foreign Allowed	100% Local	100% Foreign Allowed
Logistics / Shipping	Max 49% Foreign	100% Local	Max 49% Foreign
Traditional Retail	Reserved for Local	100% Local	Prohibited for Foreigners

Pro Tip: Before setting up, you must identify your KBLI Code (the 5-digit Indonesian standard industrial classification). This code determines your exact ownership limit and licensing path in the OSS-RBA (Online Single Submission) system.

How Bestar Asia can Help

Singapore vs. Indonesia Holding Company Structures

In 2026, navigating the corridor between Singapore and Indonesia requires more than just administrative filing; it requires a strategic tax and legal "moat." Bestar Asia serves as a specialized partner for this specific cross-border structure, bridging the gap between basic digital incorporation apps and high-cost global consultancies.

Below is a breakdown of how Bestar Asia facilitates these structures.

1. The Singapore HoldCo + Indonesia Sub (PT PMA)

Best for: Startups looking for VC funding, IP-heavy businesses, and regional headquarters.

Tax Shielding: Bestar assists in leveraging the Singapore-Indonesia DTA to reduce Indonesia’s 20% dividend withholding tax down to 10%.
The "Exit" Advantage: Bestar structures your holding to ensure that when you sell the Indonesian subsidiary, the capital gains are realized in Singapore (where they are generally 0% tax), rather than triggering the 5% gross-revenue tax in Indonesia.
Substance Requirements: To qualify for treaty benefits in 2026, you must prove "Economic Substance." Bestar provides:
- Resident Nominee Directors with fiduciary expertise.
- Physical Office Solutions and dedicated corporate secretarial support.
- Accounting & Audit to ensure your HoldCo isn't flagged as a "shell" by the IRAS or Indonesia’s DGT.

2. The Indonesia HoldCo + Singapore Sub

Best for: Indonesian conglomerates seeking an international "window" for global sales or talent.

Global Reputation: Bestar helps Indonesian firms project a global image by establishing a Singapore entity for regional contracts, making it easier to hire international talent via Employment Passes (EP).
Currency & Capital: By holding regional revenue in SGD or USD within the Singapore subsidiary, Bestar helps businesses hedge against IDR volatility and gain access to lower-interest trade financing from Singaporean banks.
Repatriation Planning: Bestar’s tax advisors ensure that profits flowing from Singapore back to the Indonesian parent are handled efficiently under Indonesia's 2024/2025 updated rules on foreign-sourced income exemptions.

3. The Side-by-Side (Direct Individual) Structure

Best for: Small-scale lifestyle businesses or low-risk ventures.

Audit & Assurance: Even if you don't have a holding company, both entities must remain compliant. Bestar provides Xero-certified bookkeeping and statutory audits in Singapore, ensuring your personal tax liability doesn't get tangled across borders.
Regulatory Updates: Bestar monitors the Positive Investment List (KBLI) for you. If your business activity suddenly requires a local Indonesian partner, Bestar can help restructure your direct ownership into a holding structure to protect your equity.

Why Bestar Asia? (The "Goldilocks" Choice)

Feature	DIY / Digital Apps	Bestar Asia	Tier-1 Global Firms
Setup Speed	24 Hours (Basic)	24 Hours (Optimized)	2–4 Weeks
Expertise	Low (Bot/Ticket)	High (Chartered Accountants)	High (Partner-led)
Cross-Border Tax	None	DTA & 10L Optimization	Comprehensive
Pricing	Cheap	Moderate/Transparent	Very High
Local Licenses	Filing agent only	Licensed Employment Agency	Legal/Audit licenses

Bestar’s Strategic Value-Add for 2026

M&A Readiness: If you plan to sell your company, Bestar provides the Business Valuation and Financial Due Diligence that buyers demand.
IP Anchoring: Bestar helps you register and hold your Intellectual Property in Singapore, taking advantage of the 400% tax deduction for IP registration costs (available through YA 2028).
Human Intelligence: Unlike automated platforms, Bestar assigns a Senior Consultant who understands the nuances of Indonesian bureaucracy and Singaporean compliance.