Foreign Company Business Entity Types

Foreign companies wishing to setup a presence in Singapore can

choose to register a Branch Ofce, Subsidiary Company, or a
Representative Ofce.
Subsidiary Company
A subsidiary company is rendered a separate identity and is treated
as a local Singapore company. t brings several bene!ts, the
"oremost being the limitation o" liability o" the "oreign company in
Singapore. #he "oreign company and its assets cannot be held "or
the debts and liabilities o" the subsidiary. Raising "unds locally or
availing government incentives are easier. A subsidiary company
will generally en$oy a resident status and can avail the bene!ts o"
several "avourable ta% treaties that Singapore has concluded.

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Branch Office
A branch ofce a&ects unlimited liabilities "or the parent "oreign
company. #he branch ofce is re'uired to submit its own audited
accounts as well as that o" its head ofce, which many "oreign
companies may not be com"ortable with. #he branch ofce wields a
lesser commitment and is deemed to lac( any long term vision.
#hus securing investment and incentives will be relatively difcult.
#a% considerations play a ma$or role in deciding the "orm o"
business that is appropriate. A branch ofce, though registered with
company registrar, is still treated as a "oreign entity because the
control and management is e%ercised outside Singapore. #here"ore
a "oreign company)s Singapore branch will be deemed a non*
resident company "or ta% purposes. As a non*resident entity, some
o" the ta% e%emptions available to resident companies such as
subsidiary company will not be available to a branch ofce.
Representative Office
A representative ofce is a short term arrangement that is advisable
when a "oreign company wants to gather mar(et intelligence or
coordinate activities without any pro!teering motive. Since this
setup does not earn any revenue, a representative ofce acts as a
cost centre to the parent company. Foreign companies that are (een
on studying the Singapore business environment be"ore committing
investments or those who have considerable non*core activities to
be managed should set up a representative ofce. n general, a
representative ofce cannot continue its operations beyond three
years and must upgrade itsel" to a branch ofce or subsidiary
be"ore or at the end o" the three year period.
For Subsidary Company:
#he parent company can own +,,- o" the shareholding o" the
Singapore subsidiary
A Singapore subsidiary must appoint at least one director who
is local resident in Singapore. .irectors must be at least +/ years
o" age and must not be an un*discharge ban(rupt or convicted "or
any malpractices. Foreign companies that plan to relocate any o"
the sta& members "rom head ofce to Singapore can apply "or
their employment pass a"ter the subsidiary registration. An expatriate
on employement pass can be considered for this purpose.
#he minimum paid up capital "or Singapore subsidiary company is
S0+. #he parent company can be the +,,- shareholder. #here is
no concept o" authori1ed capital in Singapore.
A Singapore subsidiary must have a registered ofce in Singapore.
#he registered address can be a commercial ofce 2i" you plan to
rent one3 or a home ofce. #he registered ofce is the place where
you need to (eep the statutory records o" the subsidiary company
4pon incorporation, the directors must appoint a natural person
who is ordinarily resident in Singapore as company secretary.
A Singapore subsidiary must !le audited accounts annually with
Singapore income ta% authorities
An auditor must also be appointed within three months o" the
Singapore subsidiary registration.
Singapore employer need to ma(e Central 5rovident Fund 2C5F3
contributions "or any local resident sta& hired, as long as he or she
earns more than S06, a month.
For Branch Office:
A Singapore branch is a proper legal entity once registered with the company registrar in
Singapore. A Singapore branch is considered an e%tension o" the "oreign company and not as a
separate legal entity. 4nli(e a Singapore subsidiary, the parent company o" a branch ofce entity
is implicitly liable "or all the debts and liabilities o" the branch ofce. A claimant can approach the
Singapore courts o" law to initiate legal proceeding against the head'uarters, by virtue o" its
branch being located in the Singapore $urisdiction.
Recognition as a separate entity
A local subsidiary is a separate legal entity from the foreign parent company even if the latter may be its only shareholder
and will maintain control over its board of directors. This means that the foreign parent company does not have to bear
the losses and liabilities of the local Singapore subsidiary. On the other hand the debts and other liabilities of a branch in
Singapore would attach to the foreign company as a branch unli!e a local subsidiary is not a separate legal entity from
the foreign company"
Ta# $onse%uences
There are also different ta# conse%uences with respect to a branch and a local subsidiary.
&nder Singapore law the rate of ta# applicable to both a branch of a foreign company and to a private company
incorporated in Singapore is the same. 'enerally the applicable ta# rate is ()* +for year of assessment ,-(- onward
the applicable ta# rate is ()*. of income in respect of /gains or profits from any trade business profession or vocation
for whatever period of time such trade business profession or vocation may have been carried on or
e#ercised/ accruing in or derived from Singapore or received in Singapore from outside Singapore.
0n the case of a foreign company that has a branch in Singapore the foreign company is not ta#ed on income that is
directly derived from or attributable to that part of its operations that is carried on outside Singapore. This e#emption
could be lost if such income is subse%uently received in Singapore.
Accordingly and from a ta# perspective the issue of whether or not business activities should be carried out in
Singapore through the branch or through a local subsidiary will largely depend on the ta#ation system of the parent
company1s home country. 2or instance if the home country does not ta# foreign income whether carried out by a branch
or a subsidiary it should not ma!e any difference whether a branch or a subsidiary is established. 0f on the other hand
foreign income is ta#ed in the home country either when it is earned or when it is remitted then consideration must be
given to the ta# laws of the home country.
The following considerations are relevant3
+i. whether the home country will ta# income which arises in Singapore and if so whether it ma!es a difference if such
income is earned by a branch or a local subsidiary and further whether ta# liability e#tends only to income that is
remitted bac! to and received in the home country as against income that is !ept outside of the home country"
+ii. whether losses incurred in Singapore +by a branch as against a subsidiary. would be allowed in the home country"
and
+iii. whether dividends received from Singapore +from the locally incorporated subsidiary. which are already sub4ect to
ta# in Singapore would be sub4ect to further ta# in the home country.
Another significant factor in the choice of business form is withholding ta#. 0f a payment made to a non5resident relates to
interest or royalties it would be sub4ect to withholding ta#. Since a branch is not a separate legal entity but is considered
part of the foreign company withholding ta# is applicable. 0n practice sub4ect to certain re%uirements being satisfied the
$omptroller grants a waiver of withholding ta# on such payments made to the branches.
6e suggest that you obtain further advice from ta# attorneys before ma!ing any decision in this regard. 0n any event
please let us !now specifically if you re%uire us to see! advice on ta# issues including the impact of any double ta#ation
agreement.
The choice of business form will impact the residency of the entity for purposes of ta#ation under Singapore laws. 0n the
case of a branch where the control and management of the foreign company is not e#ercised in Singapore +which we
assume is the case for you. its Singapore branch will be deemed a non5resident for ta# purposes. &nli!e a resident a
non5resident will not be entitled to either claim relief for ta# suffered on income derived from countries with which
Singapore has concluded double ta#ation treaties or to favourable withholding ta# rates relating to certain categories of
payment made to the residents of treaty countries
Singapore Branch as a #ype o" Business 7ntity
Any activity that is carried in Singapore on a continuous basis with a pro!t ma(ing purpose needs
to be registered with the Accounting and Corporate Regulatory Authority 2ACRA3 o" Singapore. A
company incorporated outside Singapore is considered a "oreign company. A "oreign company
must register an entity in Singapore be"ore commencing its business activities here.
A Singapore branch is a proper legal entity once registered with the company registrar in
Singapore. A Singapore branch is considered an e%tension o" the "oreign company and not as a
separate legal entity. 4nli(e a Singapore subsidiary, the parent company o" a branch ofce entity
is implicitly liable "or all the debts and liabilities o" the branch ofce. A claimant can approach the
Singapore courts o" law to initiate legal proceeding against the head'uarters, by virtue o" its
branch being located in the Singapore $urisdiction.
8ey Registration Re'uirements
Any "oreign company wishing to register a Singapore branch must engage the services o" a
pro"essional services !rm in Singapore e.g. law !rm, accounting !rm, or corporate secretarial
!rm.
Name. #he name o" Singapore branch must correspond to the name o" the "oreign company.
Ofcers. A Singapore branch must appoint 9 agents who are ordinarily resident in Singapore,
i.e. a Singapore citi1en, a permanent resident, or a "oreigner who has been issued an
employment pass. #he agents should be natural persons o" at least +/ years o" age. Foreign
companies that plan to relocate one or more o" their sta& members "rom the head ofce to
Singapore, can apply "or employment pass "or such individuals a"ter the branch has been
registered.
Constitution and Activities. #he shareholders, structure o" company and its activities are
directed by "oreign company)s :emorandum and Articles o" Association 2:AA3. #here is no
separate :AA "or the branch ofce.
Registered Address. A Singapore branch must have a registered ofce located in Singapore.
As re'uired by Singapore Companies Act, the branch ofce must mention its name and the
place o" incorporation on all its business correspondence and also outside its place o" business
in Singapore.
.ocuments Re'uired "or Registration
n general, the "ollowing documents;in"ormation is be re'uired "or registerting a Singapore branch
ofce<
A certi!ed copy o" the Certi!cate o" ncorporation o" the "oreign company
A certi!ed copy o" :emorandum and Articles 2:AA3 o" the "oreign company
5artculars o" the directors o" the "oreign company
A memorandum o" appointment and details o" at least two persons resident in Singapore who
will act as the agents "or the Singapore branch ofce
A memorandum e%ecuted by or on behal" o" the "oreign company stating the powers o" the
local agents
.etails o" the registered ofce address in Singapore
Any documents not in 7nglish must be translated in 7nglish be"ore submission. #he !rm you have
hired may re'uire additional documents as necessary.
Registration 5rocedure and #imeline
#he pro"essional !rm hired to handle the branch ofce registration will ta(e care o" all the
necessary registration "ormalities. =o physical visit o" company e%ecutives is re'uired "rom
head'uarteres. #he registration process consists o" two basic steps< +3 name approval> and 93
entity registration.
#he name "or the Singapore branch must be the same as that o" the parent company. t will
generally be approved unless it is identical to any e%isting company name or is vulgar in nature.
Assuming necessary document are ready and there are no delays in the name approval process,
registration o" a Singapore branch can be completed in +*9 days.
#he company registrar will send an email noti!cation con!rming the registration o" the Singapore
branch. #he registrar no longer issues any hardcopy certi!cate, unless specially re'uested by the
company through a separate application post registration o" the entity. 7mail noti!cation is
sufcient in Singapore "or all business matters such as ban( account opening, signing an ofce
lease agreement, etc.
Ban( Account Opening
A"ter registering a Singapore branch, a corporate account can be opened in any o" the several
international and local ban(s in Singapore. #he e%act account opening procedure may vary "rom
one ban( to another and and some ban(s re'uire the directors or agents to be present in person
while opening the account. Further details about opening a corporate ban( account in Singapore
can be "ound in Singapore ban( account opening guide.
#a%ation o" Singapore Branch
A Singapore branch is generally considered a non*resident company "or ta% purposes. =on*
resident companies are not eligible "or ta% bene!ts resulting "rom available ta% incentives and ta%
treaties meant "or resident companies. For more in"ormation on corporate ta%es, see Singapore
corporate ta% guide.
Annual Filing Re'uirements
Section ?@? o" the Companies Act re'uires a "oreign company to !le its Annual Report and the
audited accounts o" its Singaporean branch ofce within two months o" its Annual Aeneral
:eeting, or within @ months "rom the end o" its !nancial year whichever is earlier. Also, each
Singapore branch is re'uired to !le a #a% Return on an annual basis.
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