Singapore has become a favored destination for foreign companies for setting up a company. The foreign companies have two options in starting a business in Singapore. They can either set up a branch office or by registering a company in Singapore. The company so registered will be the subsidiary company of the parent company. There are different benefits available for branch office set up and different benefits for setting up a company in Singapore. The benefits are the same in certain cases and varied in different cases.If it is a branch office, the office is not a separate entity. But in the case of a subsidiary company, it enjoys it’s independent entity right; meaning the assets of the subsidiary company are only liable in a legal dispute, and not the parent company. The parent company’s assets will not be in a bind but if it is a branch office the parent company’s assets are also liable in case of a dispute.
In the clause of activity, the branch office can only perform activities as chartered in the parent company’s articles. It cannot function beyond that. But the subsidiary company can have its articles and specify it functions according to the legal framework of the Singapore company laws. Having a separate legal status enables the subsidiary company in having its own functions.
The area of tax benefits, the branch office does not enjoy any tax benefits due to its non-residential status. The subsidiary company is a separate legal entity enjoys a host of benefits and exemption that are available to the Singapore resident companies.
In other words, being a branch office or a subsidiary company has its benefits, but the decision lies in the hands of the parent company in choosing the options based on its objective.
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