Singapore stands as a premier destination for entrepreneurs around the world. The Lion City has successfully drawn numerous foreign individuals who would like to establish a business in the city-state. One of the best moves that foreign entrepreneurs can make before opening their business here is to consider setting up a representative office (RO) in Singapore.
We have compiled the best insight related to setting up an RO in Singapore that can help walk you through the process of establishing such an office here.
What is a Representative Office?
The RO is considered as a temporary set-up which is just for three years. In this period, the RO is not allowed to carry out any such task which generates profit. They are also not allowed to indulge in any kind of business activities that generate revenue for the company. The RO does not possess any legal identity in the corporate association of Singapore and it’s just an extension of the foreign company. But, it is allowed to carry out activities like market research and feasible studies.
A representative office provides a great opportunity to assess the viability of conducting business in Singapore before making substantial investments. It serves as an ideal platform for foreign companies who are interested in entering the market. This short-term arrangement enables businesses to promote their product or services, collaborate with local professionals, and test the market in Singapore.
Taxation of Representative Office in Singapore
If a representative office is engaged in any kind of revenue-generating business, it does not need to file for annual tax returns. The income earned by the staff of the representative office including the Chief Representative is subjected to Singapore Personal Tax.
Key Facts about the Singapore Representative Office Registration
- The Name of the RO must be the same as the name of the parent company.
- The period of the RO is 1 year but it is extendable to 3 three years.
- The RO can hire a maximum of just 5 local employees in the office.
- Sales turnover of the foreign company should be US$250,000 annually, only then the company is eligible for registration in Singapore.
- The parent company must have an established identity of 3 years or more.
- The RO should have one Chief Representative who has the authority to make all the major decisions.
- In case of any kind of changes, a one-month prior notice is required by ACRA.
- If the name of the parent company gets changed, a certified copy of a legal name change certificate is required by ACRA.
- All RO staff including the Chief as well is subjected to Singapore personal income tax.
- The RO can obtain a Central Registration Number (CNR) to import and export product company samples.
- The company needs to have a registered office address. One can use the residential address for this kind of setup.
- A dormant RO that does not agree to the terms and conditions of the authorities will be de-registered.
- The RO must clearly state that it’s a representative office registered in Singapore on its business cards.
How to Set Up a Representative Office in Singapore?
Typically, foreign companies will need to register for a representative office through International Enterprise (IE) Singapore. This registration process is conducted online, with a required payment of S$200 upon submission of the application. Below is the list of documents that will be required for the Representative Office registration in Singapore
- Completed application process.
- Registration certificate of the parent’s company.
- Latest annual report and audited accounts of the parent company.
- An undertaking of the company that the RO will abide by all the terms and conditions of the authorities in Singapore.
Normally, the application process will take 5 business days, and upon approval, the IE will issue a Letter of Approval that confirms the registration.
To make your life easier, you can choose to enlist a professional corporate service provider service such as Wealthbridge to streamline the registration process. Our professional team can assist with everything from preparing initial documents to obtaining final approval!
Post-Registration Requirements & Compliance
The Singapore authorities take around 5 business days to approve one single application. Once your application is approved, you will receive a letter of approval via email. The approval is valid for just 1 year but it can be renewed for up to 3 years. In this period, the RO is not allowed to:
- Carry task that generates profit
- Indulge in business activities to get revenue
- Engage in trading activities
- Negotiating or entering into contracts
- Leasing warehouse
- Identifying suppliers
- Marketing their business
Since an RO lacks legal status, it is not obligated to file annual financial statements with the Accounting and Corporate Regulatory Authority (ACRA) or annual tax returns with the Inland Revenue Authority of Singapore (IRAS).
Once you get the approval and everything is set up, you can open a corporate bank account with any local or international bank in Singapore. If you are not able to come to the country, choose a bank that allows you to open an account without your presence, for example, SCB and HSBC.
Renewal Procedure
The authority will send you a renewal notice two months before the expiration date of the registration of the representative office. RO must complete the renewal process seven days before the expiration of the registration date.
If the RO fails to respond by the expiry date, a reminder notice will then be issued. Should there still be no response, a final reminder will be sent to the Head Office one month after the expiry. This will provide the Head Office with 14 days to take action. Failure to do so will prompt Singapore authorities to initiate the deregistration process of your RO.
Also do keep in mind that RO can only be renewed three times. Thus, after three years, the RO must be updated to the branch office.
The Final Word
A representative office in Singapore is a unique platform that allows you to test as well as prove your company and the brand. It is the best choice for foreign companies who want to incorporate their own and explore business opportunities in Singapore. Need help to open a representative office in Singapore? Get in touch with us to discuss your corporate service needs!