Singapore has a zero restriction policy on foreign companies and this makes it one of the most popular destinations for foreign companies. This country is also strategically located where it is the crossroad of East and West. The country also has natural ports which enhance transport. The authorities and government in Singapore in fact encourage foreign companies to incorporate in Singapore. Foreign companies can either register as subsidiaries, branch offices or representative offices. To register any form of the three types of companies it is necessary for a professional firm in this country to register the company to the Accounting and Corporate Regulatory Authority (ACRA). This means that without such a firm setting up a foreign company will not be possible. Consequently, it is paramount to know how to register the three forms of foreign companies in Singapore.
Setting Up a Subsidiary Company In Singapore
Setting up a subsidiary company in Singapore means that the subsidiary will have a parent company. This subsidiary will most likely even carry the name of the mother company even though this is optional. But despite being set up in Singapore the subsidiary can be owned a hundred percent by the mother company. Even though the subsidiary is owned by foreigners it will still qualify for the tax incentives and exemptions which are given to local companies.
The registration of a subsidiary in Singapore usually takes one to two days. The main requirements that the subsidiary must meet include having one or more directors with one of the directors appointed being a permanent resident or citizen of Singapore. The company must also have an office in Singapore and ensure all the legal documents are available from the office. After registering the subsidiary company there is the permission to open a bank account in the country or anywhere else. It is possible to even do the registration online provided all the requirements are met.
Setting a Branch Office in Singapore
The main difference between subsidiaries and branch offices is that the branch offices are part of the parent companies. This is unlike subsidiaries which can be registered as separate companies in Singapore. Because of this the branch offices do not qualify for tax incentives and exemptions which are usually given to the local companies. The branch office is also required to bear the name of the mother company. The name just needs to be unique in a way that it is not similar to the name of any other company operating in Singapore.
Registering a branch office in Singapore can take between one to two days. The main requirements that need to be met include appointing two agents who are residents of Singapore. It is also necessary for the branch office to have a physical office that is located in Singapore. The branch office can deal with anything that is dealt with by the parent company. Furthermore, the branch can return all its earnings to the parent company. To ensure taxation is done properly the branch office will be required to submit audited accounts from both its operations and the operations of the parent company. The earning made in Singapore is the only one that will be taxed where all the local corporate rates of tax will apply.
Setting Up Representative Offices in Singapore
Another available option when it comes to setting up a foreign company in Singapore is opening a representative office. This particular type of office is just an extension of the parent company and as a result it does not have any legal status. Unlike subsidiaries and branch offices this particular type of office is not allow to participate in any commercial activities. Instead, it is only allowed to conduct research so as to establish whether the parent company can make profits by upgrading to a branch office or a subsidiary. Consequently, the representative office does not have to submit any tax returns because it is not making money.
The process of registering a representative office in Singapore takes between three to five days. The main requirements include having the same name as the parent company with an additional tag of –representative office-. The office can have a total of five employees with the chief representative being someone who will be able to relocate from the headquarters of the parent company.
The representative offices that are dealing with insurance and banking services will need to comply with the set regulations and register with Monetary Authority of Singapore (MAS). Industries need to be registered with International Enterprise (IE) in Singapore. The representative offices are required to be renewed annually for a maximum of three years. After the three years these offices are upgraded to either subsidiaries or branch offices. Therefore, setting up a foreign company in Singapore is relatively easy provided the set procedures are followed.