is no distinction in the treatment of tax losses between a normal business and a holding company carrying on a business of holding investments and carrying on other businesses such as providing management services or carrying on the business of renting properties.
To avoid being labelled as an investment holding company and to exceed the 20% threshold, such companies will usually provide their back-office support services such as accounting, legal, tax, human resources, treasury, internal audit and, in some cases, they will also centralise their higher-end services such as technical support, cybersecurity and procurement.Generally, holding companies perform two sets of business activities.
However, in practice, there is a tendency for holding companies to assume that this restriction is only confined to interest costs and all other expenses can be carried forward as losses. Such carry forward of losses could be challenged by the Inland Revenue Board and therefore these losses may be in jeopardy.
The other issue that can complicate matters for holding companies is the allocation of costs between the two business segments.