Singapore’s reputation as a strategic gateway to Southeast Asia has positioned it as a highly desirable hub for foreign companies looking to establish or consolidate their business in the region.
This is due to reasons such as its conducive business environment, robust innovation ecosystem, and strong intellectual property protection.
As a non-Singaporean considering setting up your company in Singapore, it would be beneficial to explore engaging the services of a professional firm to assist with the company registration process.
In this blog, we take a look at the available company types that foreign firms can consider when expanding here.
What Are the Company Types Foreign Companies Can Choose?
There are 3 types of companies foreign firms can choose to incorporate in Singapore:
- Subsidiary Company
- Branch Office
- Representative Office
We take a closer look at each of these company types below:
What is a Subsidiary Company?
A Singapore subsidiary office refers to a type of business entity that is incorporated as a private limited company in Singapore. It is wholly owned by a foreign company, known as the parent company, and operates under its own name.
What Are the Key Features of a Singapore Subsidiary Office?
Legal Status: A subsidiary office is considered a separate legal entity from its parent company. It has its own identity and is registered with the Accounting and Corporate Regulatory Authority (ACRA) in Singapore.
Limited Liability: The liability of the subsidiary office is limited to its own assets and operations. This means that the parent company’s assets are generally protected from the liabilities of the subsidiary office.
Activities: A subsidiary office can engage in a wide range of profit-generating business activities as permitted by law. However, it must comply with any industry-specific regulations or restrictions that may apply.
Ownership: The parent company owns 100% of the shares of the subsidiary office. This gives the parent company full control over the operations and strategic decisions of the subsidiary.
Taxation: The subsidiary office must adhere to Singapore’s tax regulations. It must file annual tax returns and pay taxes on its Singapore-sourced income.
Singapore offers various tax incentives and exemptions that can benefit subsidiary offices, making it an attractive location for international business operations.
Compliance: Similar to other business entities in Singapore, a subsidiary office must comply with regulatory requirements set by ACRA and other relevant government agencies.
What is a Branch Office?
A Singapore branch office refers to a business entity that is established by a foreign company in Singapore. It operates as an extension of the foreign company, allowing it to conduct business activities and represent its interests in Singapore.
It is important to note that the name of the branch office must be the same as what is registered in the country of incorporation. The branch office also has to appoint a locally resident authorised representative, unlike that of a subsidiary company.
This representative must be a Singapore citizen, Permanent Resident (PR), or an individual with a valid Employment Pass (EP) issued by MOM.
What Are the Key Features of a Singapore Branch Office?
Legal Status: A branch office is not considered a separate legal entity from its parent company. It operates under the same legal identity and bears the same name as the foreign company.
Parent Company Liability: The parent company is fully responsible for all liabilities and obligations incurred by the branch office. This means that any debts or legal issues faced by the branch office may impact the parent company.
Activities: A branch office can engage in profit-generating activities in Singapore, such as sales, marketing, and distribution. However, it cannot engage in activities that are prohibited for foreign companies or those restricted to specific industries.
Taxation: The branch office is subject to tax regulations in Singapore. It must file annual tax returns and pay taxes on its Singapore-sourced income.
Unlike a subsidiary office, a branch office cannot benefit from local tax benefits.
Compliance: A branch office must comply with the statutory and disclosure requirements as stated in the Companies Act.
What is a Representative Office?
Foreign businesses exploring possible business opportunities in Singapore can establish a representative office (RO) before committing to a business venture.
This way, the foreign entity can evaluate Singapore’s business environment to help them decide whether they should set up a permanent establishment, such as a branch office or subsidiary company.
What Are the Key Features of a Singapore Representative Office?
Legal Status and Activities: An RO is a temporary establishment without legal status. Hence, it cannot take part in any revenue-generating trading or business activities.
Parent Company Liability: Like the branch office, the parent company is fully responsible for all liabilities incurred by the representative office. Hence, any debts or legal issues the representative office faces may impact the parent company.
Taxation: Since a representative office cannot generate income, tax regulations do not apply and it is unable to receive any tax benefits.
Summary of Singapore Subsidiary Office vs Branch Office vs Representative Office
We sum up the main differences between the 3 options for you to decide on the best choice for your company:
|Features||Subsidiary Company||Branch Office||Representative Office|
|Legal Status||Separate legal entity||Same legal entity as parent company operating as its extension||No legal status|
|Liability Status||Limited liability||Parent company is liable for debts incurred by branch office||Parent company is liable for debts incurred by representative office|
|Name||Can be either the same as or different from the parent company||Must be the same as the parent company||Must be the same as the parent company and include the term “Representative Office”|
|Activities Allowed||Profit-generating activities||Profit-generating activities||Non-profit-generating activities|
|Ownership||100% ownership||100% ownership||100% ownership|
|Taxation||Taxed at 17%||Taxed at 17%||Need not be|
|corporate tax rate||corporate tax rate||taxed since it does not generate income|
|Compliance||Must comply with local statutory compliance laws||Must comply with local statutory compliance laws||Not applicable|
|Appointing Officers||Must appoint at least 1 local resident director||Must appoint at least 1 local authorised representative||Must appoint a Chief Representative who has to relocate from company headquarters|
Choose InCorp for Your Foreign Company Registration in Singapore
Obtaining the reliable help of experts in foreign company incorporation can ensure a smoother and more favourable experience for you. As specialists in the field, we can help you establish your company swiftly and with ease. Contact us now!
- Yes, it can establish operations in Singapore through a:
- Branch office
- Subsidiary company
- Representative office
A foreign company refers to a corporation, association, or any other legal entity that is incorporated outside of Singapore.
If a foreign company wishes to conduct business in Singapore, it has two options: incorporating a local company or registering as a foreign branch under the Companies Act.
- Yes, both branch offices and subsidiary companies must pay corporate tax at a 17% rate in Singapore.