Singapore is a thriving marketplace for many types of businesses. The country is full of numerous business opportunities in every industry. Remember Crazy Rich Asians? Singaporeans love to earn and spend faithfully. Every social class wants the best that their money can buy for them. As of 2019, Singapore’s GDP Per Capita reached USD65,233.
The city-state is deemed one of the most competitive economies. It is an excellent place for companies to learn marketing strategies and multiply their profits. All of this makes Singapore an irresistible market for any company that’s serious about expanding their business.
When a brand finds enough success to step into foreign markets, it should definitely give Singapore a chance. Here’s what you need to know.
Singapore Branch Vs. Singapore Subsidiary
Before opening a foreign branch in Singapore, it’s necessary to understand the types of office structures one can choose from. As a Singapore foreign company, there are a couple of discourses that offer different operational permissions.
The specifications are as follows:
Singapore Representative Office
Before setting up a company branch in the country, it might be useful to observe the market you’ll be engaging in. This is an excellent step in analyzing the goals and strategies when planning to set up a Singapore branch office.
A representative office is a temporary set up that is administrative in nature. Its liabilities are extended towards the parent company. It has no definite legal status, so it isn’t eligible for earning income either. However, the rep office can set up a bank account to cover operational costs. These costs are covered by the company’s fund. Since the office doesn’t have to perform any monetary activity, it’s also exempt from all taxations and annual filing.
The representative office takes about 5 to 8 days to register in Singapore. This registration lasts one year and can be renewed twice. In total, a representative office gets a maximum of 3 years to observe and plan. The Chief Representative must be a staff from the parent company, who shall relocate with five other employees. The office shall keep the parent company’s title as its name and ‘Representative Office.’
Once the representative office has collected the data for company purposes, it’s time to set up either a company branch or a subsidiary branch.
Singapore Branch Office
The Singapore branch office of any company is an extension of its parent company in Singapore. It isn’t recognized as a separate legal entity, so its liabilities are extended to the parent company. The entity operates under the name of its parent company. This way, the foreign branch of the company can function identical to the parent company.
Consequently, it’s also open to taxation. A branch office is taxed as a non-resident and cannot avail tax incentives. The company should file both the foreign branch and parent company’s bank accounts for annual filing. It can also set up bank accounts in Singapore to manage financial activities.
The registration takes two days (14 days to 2 months if application needs to be referred to another agency for approval or review) at most and lasts until the branch winds up its business. A foreign branch office in Singapore can hire both foreign as well as local staff without any restrictions. Moreover, the company must have a local authorized representative.
Singapore Subsidiary Company
Another way to set up a foreign company branch in Singapore is as a subsidiary company. This is kind of an offshoot of the original parent company but isn’t explicitly associated with it. The subsidiary company is recognized as a separate legal entity, which also handles its own liabilities.
The subsidiary company is allowed to have a separate name from its parent company. However, it can also retain the parent company’s title if it wants to. Since the subsidiary registers itself as a separate legal entity with a specific code of conduct, it doesn’t need to conform to the parent company’s operations. It can change internal policies and strategies if it’s in the company’s best interests.
The registration takes 1-2 days and is forever valid unless the company winds up its operations and shuts down. The subsidiary company is recognized as Singapore’s local and is taxed as a resident entity. By extension, it’s also allowed to offer local tax benefits, which a branch office cannot.
The subsidiary is supposed to file its own accounts only. It can open accounts in Singapore’s banks as well. There are no restrictions on the hiring of either local or foreign staff. Lastly, it is necessary to appoint at least one local resident director as a part of the board of directors.
Guide to Set Up Singapore Branch and Requirements
The first step to setting up a company’s branch in Singapore is getting registered from ACRA. Short for Accounting and Corporate Regulatory Authority, ACRA is the country’s iron-strong financial system’s backbone. The ACRA registration doesn’t usually take more than a week, but that depends on how efficiently the company plays its part.
For starters, it can visit ACRA’s online portals to find out the prerequisites for registration. A thorough understanding of their regulatory policies can be pretty helpful prior to registration. The website lets you know details regarding required documents as well as further steps.
Here’s a list of documents you will likely need for registration:
- Certified copy of the Certificate of Incorporation
- Constitution of the Foreign Company
- Particulars of the directors of the company
- A memorandum of appointment and details of at least one Singapore resident who is the authorized representative for the Singapore branch office
- A memorandum of the foreign company stating the powers of a legal permanent resident of Singapore, who will be the authorized representative of the foreign branch office
- Registered address details of the Singapore branch office
- Latest audited financial statements of the parent company
As a foreign entity, it’s recommended to keep the account details verified and updated. The company can also pick a branch location and hire staff on a conditional basis. This will help to speed up other formalities while the registration is still underway.