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29 December, 2016
Singapore is one of the promising economies in the world that facilitates a vibrant business ecosystem to global entrepreneurs. The Republic is acknowledged for its prestigious World Bank accolades and awards across the diverse areas in the business domain. Perched at the junction of East and West region, it serves as a meeting point for entrepreneurs from both regions. Essentially, the Singapore company registration is another key factor that drives aspirants to immigrate to the shores of the island nation.
Reiterating, with a set of encouraging attributes such as pro-business policies, world-class infrastructure, state-of-the-art transportation and pool of talented workforce, Singapore is the ideal seat for business expansion. The authority is strict on corruption and imposes strong and protective law for intellectual property rights. These attributes of the nation attract the foreign investors and entrepreneurs to make the city-state as their second home.
Singapore Company Registration for Foreign Entrepreneurs
Every year, a horde of foreign entrepreneurs come to the island nation in search of the business opportunities. The ever-rising interest of foreigners in company registration Singapore prompted the company registrar i.e. ACRA (Accounting & Corporate Regulatory Authority) to introduce distinct incorporation options for them. There are three options available: 1) Subsidiary Company, 2) Branch Office and 3) Representative Office.
Let us dive a little deeper into all three options of Singapore company registration.
A subsidiary in Singapore is a locally incorporated private limited company. Its major shareholder is a local or foreign company. As 100% foreign shareholding is allowed in a Singapore company, a foreign company can set up its base here in the form of a subsidiary. It is the most preferred company incorporation option for small & medium-sized foreign businesses, due to its limited liability and legal identity status.
A subsidiary is an independent legal entity that is distinct from its parent company. It is considered to be a local tax resident of Singapore and entitled to all tax incentives and allowances available for locals. This is the reason why many international giants and MNCs incorporate a subsidiary company in Singapore.
A parent company is not liable for any loss or debt incurred by its subsidiary. The liability of parent company limits to the amount it spends to buy the share of the subsidiary company. Similarly, the name of a subsidiary can be different from its foreign parent company. A subsidiary company came into existence upon registering with the national regulator i.e. ACRA. All the necessary requirements for incorporating a private limited company will be applicable for a subsidiary in Singapore.
A Few Key Facts of Singapore Subsidiary:
A branch office is a mere extension of an overseas company. It has not separate legal identity, and its parent company is liable for loss and debt incurred by the branch office. By incorporating a branch office, a foreign-based parent company can conduct the business operations and generate revenue in Singapore. Unlike subsidiary, it is considered to be a non-resident for tax purposes and thus, not eligible for enjoying the tax incentive and allowances available for locals. While branch office option is popular among the MNCs, it is less attractive for small and medium-sized business.
As per the Companies Act, a branch office must appoint minimum one authorized representative who is a local resident of Singapore. A local registered office address is also needed prior to registering the branch office with ACRA.
Requirements of Branch Office in Singapore:
ACRA advises foreign companies to engage a third-party accounting firm to submit the online application through BizFile+ portal (an online filing system of ACRA).
A foreign company, seeking to explore the market and assess potentially without conducting any business activities to generate revenue, can incorporate a representative office in Singapore. It is a short-term setup that do not have legal identity. A representative office is allowed to conduct only market research for feasibility assessment and study on behalf of its overseas parent company. Hence, the filing of annual tax return is not applicable for this form of company registration. The parent company is responsible for bearing the implicit liability of the representative office.
Most importantly, International Enterprise Singapore (IE Singapore) is the authority that administers the registration of representative office for most of the industries including trading and manufacturing. Nevertheless, it is the Monetary Authority of Singapore (MAS) to whom entities from commerce and financial sectors must register their representative office setups.
There must be at least one chief representative who can be a local resident of Singapore or staff member of the foreign-based parent company. The number of the support staff of a representative office should be 5 or below.
You can choose any of the three options based on your company’s needs and business activities. Make sure to hire a trusted and cost-effective company registration firm to start your business.
SBS Consulting is a Singapore-based provider of corporate services. With the help of incorporation experts to assist individuals and companies to incorporate a company in Singapore. SBS also offers other services like bookkeeping, company secretarial. payroll services, XBRL filing and GST registration & accounting services in Singapore.
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