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

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)