Foreign Company Registration Options In Singapore: A Comparative Analysis
Are you thinking of setting up a business in Singapore? Singapore routinely ranks well in the World Bank’s Ease of Doing Business rankings as one of the best places to establish a business. Many factors may influence someone’s decision to establish their firm on this island nation, from fostering a business-friendly climate with supportive government policies to housing a broad talent pool.
What are the options for the registration of a Foreign Company in Singapore?
Registering a company in Singapore is straightforward for foreign business owners. It can be worthwhile to look into hiring the services of a professional firm to register your company in Singapore if you’re a non-Singaporean who wants to start a business there.
Once a foreign business has decided to establish a presence in Singapore, the following step is to select the best business structure for registration.
The registration procedure of a foreign company in Singapore is straightforward once it gets going, but getting to the starting line may be more challenging than the voyage itself. A foreign corporation or multinational firm in Singapore has several choices to consider when deciding how to set up its activities in Singapore, depending on the anticipated amount and scope of operations.
Regarding company registration, a foreign business may consider opening a subsidiary company, branch office, or representative office in Singapore. This article highlights what goes into each of the registration options.
Subsidiary Company
You may opt for a subsidiary company, a locally established corporation with the parent firm holding the shares. However, they are individually accountable for their legal obligations. This is the most popular option for registration of foreign companies in Singapore for small to medium businesses. Subsidiary companies can repatriate their earnings and carry out all pertinent business operations here in Singapore.
If you choose to go for this option, there are a few things to keep in mind:
- Shareholding: The parent business may hold all of the stock in the Singapore-based subsidiary.
- Resident Director: A Singapore subsidiary must name at least one director who is typically a Singaporean citizen, permanent resident, or employment pass holder. Directors should be 18 years old, be clear of all felony convictions, and not be bankrupt.
- Share Capital: The minimum paid-up capital for a Singapore subsidiary company is S$1.
- Registered Address: A Singapore-based registered office is required for a Singapore subsidiary company. If you want to rent a business location, the registered address could be that location, or it could be your house. The subsidiary company’s statutory records must be kept at the registered office.
- The company must appoint a Company Secretary, who resides in Singapore, to serve as the company portfolio and administration manager at the time of incorporation.
- Auditor: An auditor’s service is mandatory within three months of the Singapore subsidiary company’s registration date. However, audit is exempted only if your company meets the exemption requirement. For more info, refer to Accounting and Corporate Regulatory Authority (ACRA) Accounting site.
- Certified Accounts: Annual audited financial statements must be submitted to the Inland Revenue Authority of Singapore (IRAS) by a Singapore subsidiary.
Important Documents Required
To successfully register a Singapore Subsidiary, you will need the following:
- Parent company’s incorporation certificate
- A copy of the Registrar of Companies displaying the parent company’s directors and current registration address
- A corporate decision or official resolution allowing specific individuals to sign important subsidiary documents on the parent company’s behalf
- Information about the people who will serve as directors of the Singapore subsidiary firm, including their passport information and residential address proof (e.g. bills, tax notices)
- Consent to Act as Director, in writing, from each Proposed Director
- Information about the Singapore subsidiary company’s registered address
- Articles of Association and Memorandum for the Singapore-based subsidiary firm
Subsidiary Registration and Timeline
When establishing a business entity in Singapore, foreign corporations must work with a reputable corporate services agency. Online registration is available for Singapore subsidiary firms, which takes only a short time. The Singapore subsidiary registration process consists of two independent steps – name approval and company incorporation. If all documentation is prepared with no delays in the name approval procedure, both procedures can be completed in 1-2 days.
Branch Office
Foreign companies can also register a branch office in Singapore if they choose to. It’s important to note that a branch office is not a distinct legal organization but only a branch or extension of a foreign business. As a non-resident corporation, a branch office is not entitled to the same tax advantages as a subsidiary business. Unlike a registered office, it has no limits on how many employees it can have; unlike a registered office, it can repatriate 100% of its earnings and income. In the long run, opening and registering a branch office in Singapore may be preferable to a representative office.
Also, a branch office’s liabilities are entirely the responsibility of the parent firm.
If this sounds more appealing to you, there are, however, specific statutory requirements and yearly compliance requirements you must meet.
- This office must have a registered office address situated in Singapore
- There will be one agent designated who regularly resides in Singapore
- Submission of the head office’s yearly audited accounts
- Submitting annual audited financial statements
Important registration requirements
Similar to the Subsidiary option, you will need to hire a reputable corporate service provider to assist you. As part of the registration process, below are essential things to keep in mind:
- The parent company’s name
- The parent company’s address is located outside of Singapore
- A certified duplicate of the parent company’s incorporation certificate
- Certified copy of the charter of the parent firm
- The list of the directors of the corporate parent
- Information about the local representative who is authorized
- A consent form from the Singaporean citizen who would act as the branch office’s local representative locally
- A notice containing the foreign company’s registration number; the nature of the foreign company’s operation; and the foreign company’s legal structure
- A copy of the original company’s audited financial statements
Registration Procedure of a branch office
When registering a foreign company in Singapore, it’s the responsibility of the corporate service provider you hired to handle the registration of the branch office. Thus, company executives are not obliged to be present during the registration process. The registration process involves the approval of name and entity registration.
Approval of name: The parent company’s name must also be used for the Singapore branch. The name will often be authorized in an hour. However, the name cannot be vulgar in character or identical to a Singaporean firm that already exists.
Entity registration: The company registrar will send an email confirming the registration of the Singapore branch. The registration procedure can be completed in as little as 20 minutes if the filing agent has all the required paperwork finished on time.
Bank Account Opening
A corporate account can be opened in several local and foreign banks in Singapore after registering a Singapore branch. The specific account opening process varies from bank to bank, and some institutions demand that the directors or agents be present in person.
Annual Filing Requirement
A branch office must adhere to all annual filing requirements set forth by the Accounting and Corporate Regulatory Authority (ACRA) and the Singaporean tax authority known as the Inland Revenue Authority of Singapore (IRAS). Suppose you fail to do so, you will be sanctioned. To successfully do this, you must carry out the following:
- Prepare financial statements: Branch offices should prepare financial statements by Singapore Financial Reporting Standards under Singapore Company Law (FRS).
- File with Accounting and Corporate Regulatory Authority (ACRA): After the parent company’s annual general meeting, the branch office should send its audited financial statements in 60 days.
- Declare your revenue with the Inland Revenue Authority of Singapore (IRAS): A Singapore branch office must notify the Inland Revenue Authority of Singapore (IRAS) of its revenue and ECI no more than three months before its fiscal year’s end.
- File annual income taxes: Branch offices must submit their income tax returns to the Inland Revenue Authority of Singapore (IRAS) by November 30 if they are filing on paper or December 15 if they are filing electronically.
Representative Office
The third option when registering a foreign company in Singapore is the Representative Office (RO) which gives foreign businesses who want to undertake market research access to Singapore. This is not a long-term solution, though, as these offices are not authorized to engage in lucrative business ventures or transactions that might have any kind of legal ramifications.
It is a temporary office that allows foreign companies to explore Singapore’s growing market. Only one year from the start date may pass before an authorized Representative Office (RO) can no longer operate in Singapore. Extensions are given individually and are only valid for three years.
Setting up a Representative Office: What you need to know
- Companies from abroad can open a representative office for three years in Singapore. Three-year renewals are also required for the representative office.
- Representative offices do not have legal standing and are not considered separate legal entities. As a result, all debts owed by the representative offices are the parent company’s responsibility.
- A representative office is not allowed to undertake any kind of business operation. Instead, market research and feasibility analysis of establishing a permanent presence in Singapore are done through a representative office.
- A representative office that lacks legal standing is not required to submit annual reports to the Accounting and Corporate Regulatory Authority (ACRA) or yearly tax returns to Singapore’s Inland Revenue Authority (IRAS).
- A representative office might become incorporated if a branch or subsidiary company is registered with the Accounting and Corporate Regulatory Authority (ACRA).
Requirements for setting up a representative office
The foreign parent company must fulfill the following prerequisites to register a representative office (RO):
- The overseas parent business must have annual sales of at least $250,000
- The foreign parent company should have been in the system for at least three years.
- The Singapore representative office’s recommended staff size must be five or fewer.
Documents required for registering a Representative Office
All documents should be in English. Otherwise, they must be supplied with an authentic English translation.
- Filled out application
- A copy of the parent company’s registration certificate or certificate of incorporation, if applicable
- The most recent annual report and audited financials of the parent firm
- A properly signed agreement to abide by the rules governing representative offices in Singapore
Representative Office Registration Procedure
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Foreign businesses typically register an office with International Enterprise (IE) Singapore as a representative office, and online registration is required to finish the process. The foreign company must pay a S$200 registration fee right after applying. The application is usually processed by IE in five business days, after which they send a Letter of approval confirming the registration.
Authorities may request more information in some circumstances to obtain more clarification on your application. Using a corporate service provider during registration is advisable to ensure no issues arise. You may be guided through the registration process by such a provider, from the initial document preparation to final approval. The service provider can also assist with the representative office’s continuing compliance requirements.
You need to note that since the representative office is not regarded as a distinct legal organization, the prohibition on commercial operations that generate revenue also applies to signing contracts and leasing any property, among other things.
Why Register Your company in Singapore?
Singapore is a great location for foreigners, investors, and businesses looking to expand in Asia. Its development into a financial hub that fosters trade, robust infrastructure, and a steady, progressive legal and regulatory environment make it appealing.
Tax Exemptions And Benefits
Singapore does not currently have inheritance, capital gains, dividends, or estate taxes. Companies with headquarters in Singapore are subject to a flat rate of 17% corporate income tax. Numerous tax benefits and incentives are available to businesses with headquarters or offices in Singapore, including the following.
Tax Incentives
The following tax exemption programs are available to businesses with tax residence in Singapore:
- Tax breaks for new businesses
- Partial Tax Exemption (PTE) scheme for companies
- Exemption from taxation for income earned abroad
Additional Tax Incentives
Based on specific conditions, these accompanying tax incentive programs are available to further lower a company’s taxes:
- Development and expansive incentive (DEI)
- Productivity and innovation credit (PIC) scheme
- Investment allowance
Overall, the Singaporean government’s efforts to sign ADAs have made it easier to form a business and grow worldwide without worrying about paying additional taxes on income from abroad.
It’s great for businesses
You may use Singapore’s infrastructure by forming a firm there, which is advantageous for foreign investors and businesses. Singapore has traditionally been regarded as one of the most accessible places in Asia for investors and entrepreneurs to conduct business. It has won awards for its efforts to protect intellectual property.
Personal Safety
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Singapore has traditionally been regarded as one of the most convenient places in Asia for investors and entrepreneurs to conduct business. It has won awards for its efforts to protect intellectual property.
Access to the Internet
When considering registering a company in a nation other than its primary location, the availability of fast internet facilities is crucial, especially in today’s globally digitalized and connected world. Singapore has a comprehensive telecommunications network, which has a high level of development and is easily accessible from almost every populated area of the nation.
Skilled Labour
Singapore has the leading percentage of high-skilled employment in Asia, with most of its workforce being highly skilled. The main factor driving Singapore’s foreign company registration options is easy access to qualified professionals and reasonably priced labor. Astute businesspeople understand that having a trained, efficient workforce may multiply their chances of success.
Flexible Immigration Policies
For business owners looking to relocate to Singapore, the country’s immigration policy makes it easy. The open immigration policy of Singapore makes it easier for foreigners who want to start enterprises here to relocate. The government has anticipated your demands and provided suitable Singapore work visa provisions if you are an entrepreneur who needs to migrate to Singapore to run your business or need to hire foreign professionals.
Singapore has a permissive immigration policy, making it more straightforward for foreign professionals to obtain Singapore Permanent Residence (PR) status to aid value-adding individuals settling down permanently.
Which option should you choose for registering a foreign company in Singapore?
Although considered a temporary registration option, it’s suitable for foreign businesses that merely plan to investigate if they may conduct business in the market. This may be an intelligent method to establish networks and understand the market, especially for foreign companies that want to join highly competitive areas before switching to a more flexible corporate structure, such as a subsidiary company.
A branch office is an unfavorable alternative for international business owners due to several restrictions. A subsidiary company is still the best choice for a foreign firm in Singapore. Also, since this is a resident company, it benefits from Singaporean tax advantages.
Bottom Line
A subsidiary company is the most typical corporate structure employed by international businesses in Singapore. However, professional service providers geared towards assisting the foreign business sector, specifically in Singapore, may provide you with the best options for Singapore business registration. When you register your business overseas, there are multiple options and considerations to take into account. To ensure that you find the best choice for your company and personal situations, it’s essential to conduct in-depth research into all available options and then solicit assistance from someone who specializes in providing solutions for such tasks. This can be a financial advisor, an attorney, a business consultant, or someone else. Whatever assistance you decide to pursue, be sure that this assistance is provided by an experienced professional who has worked through similar issues previously and has given special consideration to foreign businesses setting up shop in Singapore.