Foreign Company Registration in Singapore
Good governance and business-friendly policies have consistently ranked Singapore as one of the best places in the world to incorporate and operate a business for foreign entrepreneurs.
This guide provides a comparative overview of the three business entities available for foreign companies, their registration requirements, their benefits, and their advantages.
Once your company has settled on Singapore as the place to incorporate, the next step is to determine the appropriate business structure for your foreign company’s office in Singapore.
A comparative overview is provided below.
Business Structures for Foreign Companies
A foreign company can register in Singapore as a subsidiary company, a branch office or a representative office.
A Singapore Subsidiary Company is a separate locally incorporated entity where the shares are held by the parent company. It is taxed at the local
Singapore corporate tax rates and benefits from local tax exemptions and incentives. Finally, its liabilities do not extend to the parent company.
A Singapore branch office is simply an extension of a foreign company, not a separate legal entity. It has none of the benefits that apply to a subsidiary.
A Singapore Representative Office provides access to Singapore for foreign companies who wish to conduct market research. However, it cannot engage in any profit-earning activities.
The chart below recaps the benefits and disadvantages of each business structure:
|Legal structure||A separate legal entity||Not a separate legal entity||No legal status|
|Liabilities||Parent company is not liable||Parent company is liable||Parent company is liable|
|Name||Can be the same or different from the parent's name||Must be the same as parent's name||Must be the same as parent's name and must include the phrase 'Representative Office' in it|
|Taxation||Taxed as a Singapore resident entity||Taxed as a non-resident entity||Since no income can be generated, no taxes are applicable|
|Valid for||Valid until closed||Valid until closed||Must be renewed each year with a 3 year maximum|
|Registration time||1-2 days||1-2 days||3-4 days|
A Subsidiary Company is the most commonly used corporate structure by foreign companies in SingaporeACRA
Most foreign companies establish their offices in Singapore as subsidiaries for the following reasons:
Singapore permits individuals or corporations to be shareholders of private limited companies thus, the shareholding structure of a subsidiary can be very flexible.
The parent foreign company can be the sole shareholder in a subsidiary if that is the structure that the parent desires.
- A subsidiary company is a separate legal entity from its parent company. Thus, it can have a different name and can conduct different activities from those of the parent.
- The separate legal status protects the parent company from any debts and liabilities the subsidiary incurs. These debts and liabilities do not flow to the parent.
- A subsidiary company operates like any other local Singapore company and thus enjoys the rights and privileges of being a true Singapore company.
- A subsidiary is taxed as its own entity, at the low Singapore corporate tax rate.
- A subsidiary is eligible for business incentives offered by the Singapore government.
The following are the key requirements to keep in mind when registering a subsidiary company in Singapore:
- A Singapore company must have one or more directors, at least one of whom must be a Singapore citizen, permanent resident, or an employment pass holder. Thus, the foreign company will need to find a local director. Often this service can be provided by the incorporation agent.
- If the parent company wants to move a foreign employee to Singapore to set up and run the office, the worker needs an employment pass.
- A Singapore company must appoint a local company secretary and have a local registered office address.
- A foreign person or company must hire a local firm to assist with the incorporation of the company. The Singapore corporate law mandates this requirement.
Learn more about how to register your business as a subsidiary by referring to the Singapore Subsidiary Company Guide.
As an alternative to a subsidiary company, a foreign business can set up a branch office in Singapore. A branch office is an extension of the parent company that lacks the liability protection, local tax rate and government incentives that are available to subsidiary companies.
The significant disadvantages of a branch office make it one of the least attractive options for foreign companies wishing to incorporate in Singapore.
Below are the key facts you need to consider before setting up a branch office:
- The branch’s corporate structure and activities must conform to the foreign parent company’s Constitution. Thus, it is restricted in the business activities it can undertake.
- The branch must use the same name as the parent company.
- All debts and liabilities accrued by the branch office are passed to the parent company.
- A claimant can file suit against the parent in a Singapore court and the case will be heard in Singapore.
- Because it is not a local company, branch offices are not eligible for business incentives offered by Singapore Government to Singapore-based companies.
- A branch office must use an intermediary to register with ACRA.
- Singapore mandates that two local agents must act on behalf of the branch, unlike the case of a subsidiary which requires only one local director.
- The agents must be “ordinary residents” of Singapore, meaning they must be Singapore citizens, permanent residents, or employment pass holders.
Learn more about how to register a branch office by referring to the Singapore Branch Office Guide.
According to the IE Singapore, “Foreign entities that are keen on exploring the viability of doing business in Singapore, or are interested in using Singapore as a launch pad into the Asia Pacific, may wish to set up a Representative Office (RO)”.
An RO does not permit you to conduct business activities in Singapore; it is a structure that is to be used only for performing exploratory or marketing activities before commencing profit generating activities. If you decide to commence business activities in Singapore, you must set up a subsidiary or private limited company.
Below are the key features of a representative office include:
- It has no independent legal status.
- It is a temporary arrangement with a maximum duration of three years.
- The entity setting up a representative office must be a foreign company incorporated offshore.
- The representative office can only engage in market research or feasibility studies. It is expressly prohibited from engaging in any activities that yield a profit.
An application to set up a representative office is subject to approval from Singapore government.
Learn more about how to register a branch office by referring to the Singapore Representative Office guide.
Which is right for you?
Singapore offers foreign companies a range of options in terms of how to structure their business in Singapore.
A Singapore representative office provides a structure but with very limited benefits. It may be suitable if you are not sure whether Singapore is the right location for your company and want to explore the market.
A branch office has several limiting factors that make it an unattractive option for foreign entrepreneurs. Namely, unlimited liability, foreign tax rate and exclusion from government incentives.
A subsidiary company remains the best option for your company if you wish to maintain full control of your business as a foreign Parent Company while still enjoying limited liability, local taxes, and access to government incentives.
Ready to start your business in Singapore?