Key Differences Between the 3 Types of Singapore Company Formations

By: zbenriquez | Posted: 16th November 2010

There are a lot of advantages that businesses in Singapore would enjoy- advantages such as it is near major markets, the government is practical and reasonable, the benefits that foreign companies would enjoy in terms of taxes and corporate laws. These are the advantages why Singapore has always been one of the favorite business spot in the Asia Pacific region

There are three business arrangements available for foreign entrepreneurs who already have an existing business abroad and want to setup a Singapore company in order to expand their operation. These are the three business entities a foreign company can adopt to legally operate in Sinagapore:

Singapore Subsidiary Company

Despite the fact that it is a subsidiary company, it is considered as a independent legal entity because it is not directly obligated to the losses, debts and other unfavorable activities incurred by the parent company in other countries.

Since the nature of the business is locally incorporated private limited company despite being owned by foreigners, a subsidiary company is enjoying the same benefits as the local residents are enjoying such as tax exemptions.

According to the Accounting and Corporate Regulatory Authority (ACRA), a foreign company is legally required to hire at least one director who must be a local resident or holder of Employment Pass, EntrePass, or Permanent Residence Status.

Maintaining a registered office is also a legal requirement since it is where a subsidiary company holds and store Singapore mandated documents.

Singapore Branch Office

A branch office is just like a subsidiary company which means that it can also engage in business activities performed by its main office. However, there some glaring differences between these two entities.

Foremost, unlike a subsidiary company, the parent company is directly accountable for financial losses, liabilities and other unfavorable business circumstances of the branch because the branch office is considered a legal extension of the parent company.

The next salient difference is that since the branch office is considered as a legal extension of the parent company from other country and thus, considered a non-resident business, it will not benefit from the tax exemptions and other benefits enjoyed by subsidiary companies and local businesses.

Singapore Representative Office

The major disadvantage of a representative office is that it cannot engage in a profit-generating and other activities deemed "commercial" because it is not treated as a legal business entity.

According to the Singapore Companies Act, a representative office is only permitted to conduct activities such as doing market research on the feasibility of the business in the country, directing local agents and distributors of its parent company and engaging in customer service provided that it will not engage in any technical or repairing inquiries and negotiations.

A foreign company is required to renew the permit for its representative office annually at a maximum of three years, and after this period, it must shift to a branch office or subsidiary company if it wants to maintain its business presence in Singapore.

So depending upon your needs, any one of the above mentioned business models can be your ideal setup when you decide to expand your company or business in Singapore. It is highly recommended that you seek professional advise from a reputable company registration firm to assist you in your endeavor.

Rikvin is the leading company registration firm and has successfully helped hundreds of both foreign and local entrepreneurs form a Singapore Sole Proprietor. The firm provides a complete corporate solution under one roof which includes assistance in Singapore Subsidiary Registration, with the opening of corporate accounts, business registration including accounting, tax, immigration related to work passes visa and compliance services.
This article is free for republishing
Printed From:

Back to the original article

Tags: parent company, financial losses, business activities, nature of the business, liabilities, foreigners, business entities, permanent residence, subsidiary company, tax exemptions, asia pacific region, private limited company, singapore company, accounting and corporate regulatory authority