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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.
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.
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.
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.
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