Is starting a new business or expansion of your existing business to Singapore on your mind?
Singapore is known as an attractive hub for many foreign companies who want to set up or strengthen their business in the region. It’s an apt choice to register a foreign company in Singapore because of its booming business environment and attractive taxation schemes. The country also has a simple incorporation procedure and very transparent policies, which make it an attraction for foreign companies.
Key points to keep in mind when thinking of Singapore Company Incorporation
- The first step if you are a foreigner is to get the correct type of work visa or pass, which will enable you to start working in Singapore. For example – Employment Pass (EP) or EntrePass. In addition to it, the holder of EP or EntrePass has the liberty to act as a local director of a Singapore company (which is a key requirement of Singapore company registration).
- The complete company incorporation process needs to be done electronically using a simple online filing system.
- If you are a foreigner, it is better to appoint a company incorporation service to do all this work and submit your application.
- If you plan to operate your business without staying in Singapore, you are not required to get an EP or EntrePass. However, you could appoint a local nominee director who could take care of all the requirements of the process of company registration in Singapore by a foreigner.
What are the options to set up a foreign company?
There are three options for a company set up available to foreign companies. They are:
- Subsidiary Company
This is a locally incorporated and private limited company where the major stake is with some local person or a foreign company. The good news is that in Singapore, a foreign national could fully own the company or the company could be fully foreign-owned. This permits foreign companies to set up a subsidiary company in Singapore and also own all or 100% of its shares.
Under the law of Singapore, a subsidiary company is defined as a separate entity (which is different from its foreign parent company) and is considered a local Singaporean company. Therefore, the foreign company and its assets can never be held against the debts and liabilities that its subsidiary could have incurred.
A local subsidiary company is a brilliant tax-efficient option to set up business. Being a Singaporean company, it enjoys all favourable tax benefits and can also avail various government incentives and quicker access to local funds.
Thus, foreign companies and individuals are advised to establish a subsidiary company in case they own a small to medium-size business.
Points to remember while establishing a subsidiary company:
- The subsidiary company’s name could be different from the parent company’s name. However, the subsidiary company’s new name needs to be approved by Singapore’s Accounting and Corporate Regulatory Authority (ACRA).
- The Singapore Companies Act mandates appointing one or more directors. Out of these, at least one director should be a Singapore citizen and permanent resident of the country or an Employment Pass holder.
- A subsidiary company should have a registered office address located within Singapore and should maintain their statutory documents in that particular office.
- Branch Office
A branch office in Singapore is a registered legal entity, which is considered as a part of the foreign parent company.
A branch office is allowed to perform any kind of business activity, which is in the scope of its parent company and is also allowed to send home its earnings and capital. A branch office is only taxed for the earnings earned from its operations carried out in Singapore.
A branch office is a non-resident entity, and therefore, the foreign company’s actual head office is liable for any actions of commission or omission that are committed by the branch office in Singapore. The branch office is also excluded from some tax exemptions that any local or subsidiary company would get.
Companies or professionals are advised to opt for registration of a branch office in case they own a medium to large-size business, which has specialized operations or functions in international locations, and intend to conduct a wide range of business activities in Singapore.
Points to remember while setting up a branch office:
- The name of the branch office in Singapore cannot be different and must be exactly the same as that of its head office. It should also be approved before the registration.
- The Singapore Companies Act mandates the branch offices to at least appoint one authorized representative, who should be a Singapore resident and will accept the services of process and notices.
- A branch office should have a registered official address within Singapore.
- Representative Office
A representative office is typically a temporary establishment and it enables the foreign companies to test the waters or run the company’s business in Singapore without carrying any gainful business activity.
A representative office is not a legal entity and therefore isn’t permitted to sign any contracts, trade, raise any invoices, or open letters of credit be it directly, or on behalf of its foreign parent companies or lease warehouses. However, the foreign company has the liability for all the activities of its representative office based in Singapore.
Companies or professionals are advised to establish a representative office if their key purpose is to examine the Singapore market and business environment before they do any investment or in case they have some non-core activities to be carried on in Singapore.
Points to take consider while starting a representative office:
- A representative office should necessarily employ a representative from its foreign company’s head office.
- It can hire less than five support staff from Singapore, who should be locals.
- A representative office is not permitted to continue its operation for more than three years and should advance itself as a branch office or subsidiary company before the requisite period ends.
- If the representative office functions in the banking, insurance or financial sectors, you should first register your representative office with the Monetary Authority of Singapore (MAS). For any other representative offices in some other sectors, you have to do the registration process with International Enterprise Singapore (IE Singapore).
Select the best-suited profile:
It’s advisable to start with a Representative Office first if you have some doubts and want to test the market.
But if you have decided to set up a new business office in Singapore which is not going to be a part of a parent company, then you must go with the option of setting up a Subsidiary Company.
However, in case you have a thriving business already and just want to set up an office in Singapore to make your presence felt in the Asian market, then registering a Branch Office is a viable option.
To make this process of registering a foreign company in Singapore easy, you could consider taking the services of some professional agency that can turn it into a smooth and hassle-free experience for you. We at IMC, help you with your accounting services in Singapore, visa services in Singapore and assist you to register a foreign company in Singapore seamlessly. So just park your burdens with us and focus on your core goals.