Singapore Foreign Company Setting Options
This page is based on various processes of foreign company establishment in Singapore. An overseas company can be registered as a branch office, a subsidiary company or a representative office. In order to know why Singapore is the best destination for doing business, read on to know why foreign companies choose Singapore to set up their business.
The infrastructure and pro-business policies of Singapore are structured in a way to draw the attention of foreign companies to set their business up over here. Today, it is recognized as the easiest country in the globe to incorporate a company. In addition, Singapore is known as Asia’s most competitive country.
Foreign companies that are interested to find opportunities to set up business operations in Singapore can choose any of one these structures for registration – subsidiary company, representative office (RO) or a branch office.
With the Corporate and Accounting Regulatory Authority, all the branch registrations and company should be registered. According to the sector, representative office needs registration with Singapore Monetary Authority or Singapore International Enterprise. In order to have a flawless process of company registration, it is recommended for foreign companies to hire professional services firm in Singapore.
1st Option – Registration as a Subsidiary Company
A private limited company which is entirely or frequently possessed by a holding or a parent company is known as a subsidiary company. The holding company can be foreign or local or majorly has around 50% of shares from a subsidiary company.
Such type of entity is set up as a limited liability firm and possess a specific identity provided legally from its holding company. This way, the liability of the shareholder is based upon the value of shared subscribed by it.
Foreign companies are permitted to keep 100% of shares of its subsidiary company in Singapore.
In addition, Singapore never interferes on repatriation of capital or any kind of profit of subsidiary company in the country. By getting the approval of the Registrar of companies, a subsidiary company can have a different name from its holding company.
According to the Companies Act, the subsidiary company in Singapore is required to have:
- One registered office in the country,
- Paid capital of at least $1 in any currency,
- Minimum of one director should be appointed, who must be a permanent resident in Singapore.
In Singapore, 17% is said to be the corporate tax rate. For the sake of taxation, the subsidiary company shall be considered as the resident company in Singapore and will gain eligibility for tax incentives and exemptions as well. With at least 10% of shareholding and a shareholder, a subsidiary is at liberty to get tax incentives. A subsidiary company in Singapore should have audited accounts filed every year. However, inactive companies in Singapore can file accounts reports that are unaudited. Please check out the guide to subsidiary registration in order to incorporate a subsidiary company in Singapore.
2nd Option – Branch Office in Singapore
Branch office in Singapore is considered as an extension of an overseas firm. This is why the head office of a company is totally responsible for the losses, debts and acts of its branch office. Before registering as a branch office, the name of branch office should remain unchanged as the name of the parent company. The branch office can perform business operations of any kind in Singapore in the scope of holding a company and is permitted to repatriate all of its capital and earnings.
According to the Companies Act, Singapore branch office should have:
- A registered office in the country
- Appointed at least two agents who are ordinarily Singapore resident
PARTIAL TAX INCENTIVES
From the viewpoint of taxation, branch office has a liability for getting only partial tax benefits and exemptions. This is so because it is just an extension of an overseas company which controls and manages its business activities. In addition, a branch office is liable to submit the audited financial statements of its head office as well as its own. Please check out the guide of branch office registration in Singapore to know more about incorporating a Singapore branch office.
3rd Option – Incorporating a Representative Office
By incorporating an RO in Singapore, a foreign company can enjoy the avenue for assessing all the opportunities in Singapore market prior making any commitment for long term regarding business relocation.
However, the representative office of a foreign company is not liable to engage in activities of generating commercial revenue, for example, getting engaged in trade, entering into contracts, rising bills, leasing warehouses, or introducing a letter of credit.
As a temporary setup, the representative office can start feasibility studies or market research on its holding company’s behalf. The representative office of a company should have the staff of only 5 employees at a time.
Even with having no legal position, a representative office should be registered by the Singapore authorities.
Apart from the companies working in finance, insurance and banking sectors, other companies are required to be registered with Singapore International Enterprise. Companies in former category should be registered under Monetary Authority.
When it comes to establishing a Singapore representative office, the parent or foreign company should fulfill these criteria:
- A Chief Representative should be appointed by the head office with relocation to Singapore
- With foreign entity, they should have annual turnover of at least US$250,000
- Should provide written proof that the company has been formed for over three years
- The application shall be approved by 10 business days.
In order to know more about establishing the RO in the country, please check out the guide to registration as a representative office in Singapore.