Latest news with #holdingcompany
Khaleej Times
22-06-2025
- Business
- Khaleej Times
From GIFT to Singapore: How global hubs are shaping the new playbook
- Associate Partner, MICS Everyone has heard of the UAE's headline single digit nine per cent corporate tax rate. But what most people don't realise is that some of the world's biggest companies despite being based in high-tax jurisdictions, have consistently paid effective tax rates in the single digits, typically ranging from six to nine per cent. How is that even possible? One simple answer: Smart, strategic tax optimisation. So how did these companies structure themselves to achieve such outcomes? Is it still feasible in today's complex and constantly evolving global tax environment? And if so, how complicated is the playbook? Let's unfold the global tax game – and how building the right structure can be your winning move. Where it all begins: Structuring with purpose When companies set up operations, their primary considerations often revolve around ease of doing business, customer proximity, and market access. Surprisingly, tax is rarely the top factor at least initially. But not all functions in a company are tied to these operational dependencies. Some, like headquarters, treasury centres, intellectual property (IP) ownership, holding companies, and SPVs, can be located with greater flexibility. And when done right, these choices can be game-changers for both operational efficiency and tax savings. The big Fours: Holding companies, HQ, treasury, and IP Here's where strategy enters the game: • Holding company: Often used to centralise ownership of subsidiaries and assets, and to efficiently manage dividends, capital gains, and group-level financing. • Headquarters: Can be placed in jurisdictions that offer not only strategic access but also favourable tax regimes. • Treasury functions: Since these involve managing global cash flows and financing, tax and regulatory predictability matter more than physical proximity. • Intellectual Property (IP): IP holding companies are frequently located in countries that offer tax incentives on royalties and capital gains. Locating these functions in jurisdictions with stability, feasibility, predictability, and favorable tax treatment can significantly enhance the bottom line. Equally important are withholding tax (WHT) implications and the availability of double taxation avoidance agreements (DTAAs), which directly impact the tax efficiency of cross-border payments such as dividends, interest, and royalties. Jurisdictions with strong treaty networks often provide reduced or zero WHT rates, making them particularly attractive for housing holding companies, treasury hubs, and IP ownership. There are famous examples – Apple and Google, among others – who have reaped enormous tax benefits simply by strategically housing their IP in favourable jurisdictions. Top jurisdictions for strategic tax functions Each jurisdiction has carved its niche: • Singapore: A globally trusted IP hub offering attractive tax incentives for IP development and commercialisation. • GIFT City (India): Rapidly emerging as a preferred jurisdiction for treasury operations and regional headquarters due to its regulatory clarity and tax exemptions. • Ireland and Luxembourg: Historically favoured for IP and financing structures, though tightening global tax norms have nudged companies to reassess. • UAE: Supported by an extensive network of DTAAs and evolving tax infrastructure, it is gaining ground as a versatile base for several strategic functions. UAE: A strategic player in the evolving tax landscape With the introduction of its corporate tax regime in 2023, the UAE repositioned itself as a credible and competitive jurisdiction in the global tax planning ecosystem. Operating from a qualifying free zone can allow key functions – including HQ, treasury, holding companies, SPVs, and IP – to potentially benefit from a zero per cent corporate tax, subject to meeting substance and activity-based requirements. In addition, access to a growing network of DTAAs allows for potentially favorable withholding tax treatment, enhancing the efficiency of global structures. Rather than aiming to be a low-tax outlier, the UAE is adapting to global standards while still offering targeted advantages that businesses can leverage based on their specific needs. A final reflection In the modern tax environment, where compliance and optimisation must go hand in hand, no single jurisdiction offers a one-size-fits-all solution. Singapore continues to lead as a preferred jurisdiction at least of Asia, for IP and regional HQs due to its R&D incentives and robust legal framework. GIFT City is rapidly gaining ground with focused benefits for treasury operations and financial entities. Ireland and Luxembourg, while reassessing their frameworks post-BEPS, still retain relevance for certain financing and licensing models. The UAE, with its blend of flexibility, treaty access, and evolving infrastructure, is now a serious consideration for global tax planning. Ultimately, the winning move lies in aligning your operational footprint with a tax strategy tailored to your business's functions, risk profile, and growth vision.
Wall Street Journal
27-05-2025
- Business
- Wall Street Journal
Thyssenkrupp Plans to Become Holding Company of Independent Businesses
Thyssenkrupp TKA 8.76%increase; green up pointing triangle plans to make all of its divisions independent and open to outside investment, a major overhaul that aims to turn the German industrial group into a holding company after more than two centuries as a manufacturer. The company said Monday that it would start preparations to separate its materials-services and automotive-technology segments in the coming years and that its decarbonization-technologies unit would follow suit. It aims to retain a majority interest in its businesses in the medium term. The plan marks the latest attempt by Thyssenkrupp, which traces its roots back to industrial-revolution Germany, to reinvent itself. The company has long sought to reduce its complexity, become more competitive and spur profitability, but it has stumbled in its efforts. Thyssenkrupp in 2017 planned to combine its steel business with the European unit of India's Tata Steel, but the deal was blocked by European Union antitrust regulators in 2019. The company launched a plan to split its operations into two companies in 2018, but abandoned the proposal a year later. It opted instead to list its elevator unit, but ended up selling it to a private-equity consortium in 2020. The company has been confronting weak markets and macroeconomic uncertainty. It issued several profit warnings in recent years. In the year to September, Thyssenkrupp cut its outlook three times. Its new plan looks to replicate the playbook it followed for the spinoff of its hydrogen business, Thyssenkrupp Nucera, in which Thyssenkrupp kept a majority stake after the business was listed in 2023. 'We want to build on this. We are convinced that the segments can and will best leverage the global growth opportunities in their industries as independent entities,' Thyssenkrupp Chief Executive Miguel Lopez said. The core idea of the restructuring is to separate Thyssenkrupp's businesses and open them up for third-party investment, it said. Frankfurt-listed shares in Thyssenkrupp closed the day up 8.8%. The stock hit an all-time low in September, but has more than doubled in value since the start of the year, helped by the company's plans to list its warship business. The company is already working on the spinoff of Thyssenkrupp Marine Systems, with the aim of listing of the business in Frankfurt by the end of 2025, it said. And it is in the process of negotiating a 50-50 joint venture with Czech billionaire Daniel Kretinsky's EP Corporate Group for its steel business. Thyssenkrupp sold a 20% stake in its steel operations to EPCG last year. In coming years, Thyssenkrupp will prepare its materials-services and automotive-technology units for the capital markets and to be standalone businesses as soon as conditions are met, and its decarbonization-technologies segment will also become independent, it said. The company said it aims to retain controlling interests in the businesses with the exception of the planned steel joint venture. Thyssenkrupp plans to present this strategic realignment to its supervisory board before the end of September. Write to Pierre Bertrand at
Bloomberg
26-05-2025
- Business
- Bloomberg
Thyssenkrupp Plans to End Conglomerate Era in Bid for Turnaround
Thyssenkrupp AG plans to transform itself into a holding company with majority stakes in standalone business units, marking the end of its era as a fully integrated industrial conglomerate. The German engineering group will spin off its materials services trading arm and its automotive-technology division, building on previously announced plans to sell or partially sell its steelmaking and naval shipbuilding operations, the company said Monday. The shift caps a drawn-out breakup of a company that traces its roots to Germany's Krupp steel and armaments empire.
