Singapore’s Economic Development Board has made an amazing work in offering incentives to international companies. Foreign companies looking for to set up their head office in Singapore are allowed to concessionary tax rates which range from 0 % to 15 % for up to five years.
The country also offers a wide-ranging network of trade agreements, covering over 20 free trade areas in 27 economies and 71 double taxation agreements. Apparent of all these incentives, it is not surprising to find a huge number of foreign companies forming the core of Singapore’s mainstream industries. A foreign individual/entity wanting to incorporate a company in Singapore has several options which one can select based on their long-term business goals, type of industry, company size and other factors.
The Accounting and Corporate Regulatory Authority is mandated with the task of registering all businesses, including foreign companies. The foreigner must take on the services of a registered filing agent to carry out their company registration.
Multinational companies may register a company in Singapore using three distinct structures. They are:
- Subsidiary Company
- Branch Office
- Representative Office
A subsidiary company is a private legal entity that is set up locally as a private limited company register with majority shareholding foreign-owned. In Singapore, registration of a subsidiary takes 1 to 2 days. The government treats a subsidiary company as a local entity, and thus, the parent company is exempted from paying taxes.
Since a subsidiary is considered a separate entity from the parent company, it can take up a different name from that of the main company, by getting approval from the Registrar of Companies. As well, it is important for a company to keep up a registered office in Singapore and maintain all its legal documents in that office.
A Singapore branch office is a registered legal entity like a subsidiary company. But, unlike a subsidiary, a branch office is considered as an expansion of the foreign company.
Unlike Subsidiary, a branch office in Singapore is considered a non-resident entity and therefore is not eligible for the tax exemptions and incentives available to local companies in Singapore.
Different from Singapore subsidiary company in which liabilities are not extended to the parent company, the foreign company’s head office bears the ultimate responsibility for any liabilities arising due to the acts of commission or omission of the Singapore Branch Office.
The branch office should use the same name of the head office and must be approved first before branch office registration. The company registrar generally approves the proposed name unless it’s identical to an existing Singapore company name.
A representative office is like a temporary admin office which a foreign company establishes to do market research, admin support for the large project etc. A representative office is not allowed to book sales. The registration for representative office is valid for 3 years, and it fails if not renewed.