The vibrant city-state of Singapore has consistently outranked the world as the city that has the most business conducive environment. For the ninth consecutive year, the Republic has been hailed as the most business-friendly city in the world. Its ideal strategic location right in the heart of opportunity-rich Asia continues to be advantageous to entrepreneurs who are looking to establish a regional business presence. Any foreign individual or corporation who wishes to establish a business presence in Singapore may choose to set up a Branch Office, Representative Office or Subsidiary Company.
Singapore Subsidiary Company
A Singapore subsidiary company is defined as a private limited company incorporated in Singapore that has a local or foreign firm as its major shareholder. Considered a separate entity from the parent company, this is the most preferred company type by small to mid-sized foreign firms owing to its tax efficient nature. This means that any liability caused by the subsidiary company does not directly affect the parent company.
The Singapore’s Companies Act mandates a subsidiary firm to have at least one company director who is either a Singapore citizen, Employment Pass holder or Permanent Resident. Similar to any Singapore company incorporation, the subsidiary is subject to government’s statutory requirements. In terms of taxation, a registered subsidiary may be treated similarly to a local company which provides it with the same tax exemptions and incentives.
Singapore Representative Office
A representative office allows a foreign firm to assess the viability of the business before fully setting up a company in the city-state. It is ideal for foreign firms that are only looking into exploring the local market, liaising and managing non-income generating business operations. Mostly established for business feasibility purposes, the representative office is bound to certain limitations including the inability to engage in trade, negotiate credit letters or conclude contracts. Unlike a subsidiary firm, the parent company has implicit liability for its representative office. A foreign commercial entity’s representative office may operate in Singapore for three (3) years upon its commencement date.
Singapore Branch Office
A branch office in Singapore is a registered legal entity. However, unlike a subsidiary, a branch office in Singapore acts as an extension of its parent company. It may conduct the same business activities as its parent company. Unlike the subsidiary, the parent company has complete responsibility for any liability caused by the branch office.
In terms of taxes, a branch office is not entitled to tax exemptions and incentives that are accessible to local Singapore companies. A Singapore branch office must be named exactly the same as that of its head office. However, it must be approved first before branch office registration.
Like any other company in Singapore, a branch office is required to comply with government’s statutory requirements. Singapore Companies Act requires mandates a branch office to appoint two (2) ordinarily resident agents in Singapore to accept process and notices services. A branch office must have a registered office address locally.
If you are interested in starting a business in Singapore, simply get in touch with us so we can assist you in your Singapore company registration.