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Registration of Foreign Company in Singapore

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Foreign companies wish to have setup in Singapore can choose to register a Branch Office, Subsidiary Company, or a Representative Office. Professional firm is indulge in order to register the foreign company.
Due to its fantastic location Singapore becomes the main hub for all the companies. Companies are keen to establish or consolidate their business in Singapore. Singapore is filled with all the essential elements to act as a runway to the regional markets with lucrative potentials. Foreign enterprises attract towards the Singapore due to its innumerous investment hotspots, growing consumer markets, effective production facilities and affordable resources.
We provide you the overview of the setup options for foreign companies in Singapore. Singapore subsidiary or a representative office should be established when the business is small to medium size but for the large companies the branch office is suggested.

Foreign Company Option 1: Subsidiary Company

Singapore’s subsidiary company is the incorporated private limited company whose maximum number of shareholder is another local or foreign company. 100% foreign ownership of companies are allowed in Singapore. Hence the foreign company can be incorporate a local limited liability company in Singapore with the name subsidiary company and own 100% of the shareholding.
A Singapore subsidiary company is mostly liked by every foreign company that are interested in establishing their presence in Singapore. When the Singapore subsidiary company is properly structured then it is an excellent option, tax efficient corporate body that has several benefits. It is considered as a separate entity from the foreign company even if the foreign company is the only shareholder. Parent company are not liable to any liability.
The name for a foreign company's Singapore subsidiary is approved by the registrar of the companies and it can  be different from the parent company. For the registration purpose the appointment of one or more directors is necessary. At least one director must be a resident of Singapore. A registered office must be maintained by the subsidiary company in Singapore and keep its statutory documents in that office. Singapore subsidiary company is eligible for the tax exemptions and incentives available to local companies.

 

Foreign Company Option 2: Representative Office

The motive of setting the Representative office in Singapore is to explore the market or managing the company affairs without conducting any business activity of profit yielding nature. This is the temporary set up without any legal persona. So these foreign companies can have certain limitations like

  1. it can have negotiation of contracts or deals but cannot enter into any contract, engage in trading directly or on behalf of the foreign company, lease warehouse, raise invoices, open letter of credit, etc.
  2. Representative office in Singapore is only for the promotional and liaison activities on behalf of its parent company.
  3. It can provide the customer service by answering queries on behalf of the parent company but cannot render technical advice or repairing service.
  4. It can oversee the authorized agents and distributors of the parent foreign company in Singapore.
  5. The foreign company can bear the implicit liability to the representative office in Singapore. The representative office must be staffed by a representative from the foreign company's head office and can engage Singaporean support staff.

To apply for the Representative office in Singapore International Enterprise Singapore (IE Singapore) is the authority. These includes the industries like manufacturing, business services, commerce and other sectors but excluding banking, finance, insurance that have to be registered with the Monetary Authority of Singapore (MAS).

 

Foreign Company Option 3: Branch Office

Like subsidiary company, Branch office of the foreign company in Singapore is a registered legal entity and treated as an extension of the foreign company. Any liability of the branch office is the responsibility of the foreign company's head office that arises due to the acts of commission or omission of the Singapore Branch Office. Branch office is considered a non-resident entity and hence it is not eligible for the tax exemptions and incentives available to local companies in Singapore. So setting up a branch office in Singapore is not a very attractive option for foreign companies in Singapore.
Regarding the name of the foreign company's Singapore branch office must be the same as that of the head office. The name must be approved by the company registrar first before branch office registration. According to the Singapore Companies Act the company's branch office must appoint 2 Singapore resident agents who accept services of process and notices and have a registered office address in Singapore.
Any activity can be conducted by the branch office in Singapore that falls within the scope of its parent company and can repatriate its earnings and capital. The income of the branch office that derived from the operations carried out outside Singapore will not be subject to taxes. The income derived from its operations in Singapore will be subject to the local corporate tax rates.

 

How to select the best Option?

When the objective of the company is not to make the profit but to gather the market intelligence or to promote the company’s product then it is advisable to have representative office in Singapore. These foreign companies does not earn any revenue, a representative office acts as a cost centre to the parent company. Those Foreign companies that are interested in Singapore’s investment then for the survey of the Singapore market they set up the representative office in Singapore or those who have considerable non-core activities to be managed should set up a representative office. At last the representative office is for the short term and cannot conduct its operations beyond three years and must upgrade itself to a branch office or subsidiary before or at the end of the three year period.


A branch office has to submit the audited accounts as well as that of its head office, which many foreign companies may not be comfortable with. Commitments are very less and are deemed to lack any long term vision. Hence securing the investment and incentives is very difficult. A branch office has to pay the tax according to the Singapore rules so there is no exception. As the control of the branch office is from the head office which is outside the Singapore that’s why company is still treated as a foreign entity. Hence foreign company’s Singapore branch is considered as the non-resident company for tax purposes.

A subsidiary company of a foreign company in Singapore is considered as the separate identity and is treated as a local Singapore company. There are many benefits of having the subsidiary company as there is no liability to the parent company in Singapore. Subsidiary company gains the benefit of raising its funds locally and also avail the government incentives. It is denoted by the resident status and has favorable tax exemptions.

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