Singapore has a zero restriction policy on foreign companies, and this makes it one of the most popular destinations for foreign companies to open a representative office, or subsidiary company. The country also has natural ports which enhance transport, which adds to the appeal of opening a representative office in the country for foreign companies.
The authorities and government in Singapore encourage foreign companies to incorporate in the country. Foreign companies can either register as subsidiaries, branch offices or representative offices, and have these local and subsidiary companies act as a separate legal entity from the parent companies.
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). 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.
Despite setting up a subsidiary in Singapore, the parent company must own 51% to 100% of the shares of the subsidiary company. Even if 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 Singapore citizen. The subsidiary company must also have a registered office address in 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. Most companies hire a local corporate services firm to assist with company affairs in establishing a subsidiary company.
Setting a Branch Office in Singapore
Unlike subsidiaries, which are registered as separate legal entities in Singapore, the branch office is an extension of the foreign parent company. Aligned with this notion, 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 needs to be unique in a way that it is not similar to the name of any other registered company operating in Singapore. Most foreign companies establish branch offices under their business name, or their trade name.
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, a physical office that is located in Singapore, and foreign company registration forms among other requirements.
Furthermore, the branch may reroute 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 business activities, and the operations of the parent company. The earnings made in Singapore are the only ones that will be taxed where all the local corporate rates of tax will apply.
Setting Up Representative Offices in Singapore
Another option when it comes to setting up a foreign company in Singapore is opening a Singapore representative office. This type of office acts as an extension of the parent company, but does not have the legal status that a Singapore branch office does.
Unlike subsidiaries and branch offices, this particular type of office is not allowed to participate in any commercial activities. Instead, it is only allowed to conduct research so as to establish whether the foreign parent companies can make profits in the country.
Consequently, the representative office does not have to submit any tax returns because it is not supposed to be making money from business activities in Singapore. Unlike a Singapore branch office, the representative office is not considered a business entity, as it does not generate profit through its market research.
The process of registering a representative office in Singapore takes between three to five days. 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 who may relocate from the headquarters of the parent company. Any foreign employee hired in the representative office must be an employment pass holder.
The representative offices that are dealing with insurance and banking services will need to comply with the set regulations and register with the 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.