Foreign Companies And Their Singapore Representative Office

Foreign companies planning to have a presence in Singapore may adopt any of these

three business models: branch office, subsidiary office, and representative officewith each of these arrangements having a specific purpose and certain advantages.

For foreign businessmen who want to conduct market research before jumping into a full-blown operation, a representative office is the most ideal business model they can adopt as this will allow them to assess the long-term viability of their companies.

Aside from performing market research, a representative office can also oversee the activities of local distributors and agents of its parent company; act on behalf of its main headquarter in negotiation deals (but is prohibited to enter into a contract); and provide customer assistance as long as this will not involve repair and technical services.

To register a representative office, foreign companies should file an application to the International Enterprise Singapore (IE) which is the corresponding registration authority. However, foreign businessmen should appoint a professional firm during the application process since they are prohibited to self-register their business.

Meanwhile, it is important to note that this business model should be only seen as a short-term arrangement since the Singapore government does not allow any foreign companies to operate this office for more than three years.

Every year, foreign businessmen should renew their application for a representative office. But in case that they want to discontinue its operation, or want to engage in a commercial and revenue-generating activity, they can delist this auxiliary office any time they want.

Legal Ramifications of a Representative Office

This office is considered as an extension of its parent company which means that the latter is directly responsible for all its debts, liabilities, and acts. And because this business setup is not a separate legal entity, it should also have the same name of its main headquarter.

It is also important for a representative office to print its status on its name plaque, staffs name card, and communication materials such as a business letter.

Meanwhile, it is a legal requirement for foreign companies to appoint and relocate a chief representative who will head and supervise the Singapore representative office. In addition, the number of staff should be limited (based on the authorities decision) in the most possible way.

(Note: All the staff of this office, including the chief representative, will be subjected to personal income tax.)

Being prohibited to engage in commercial activities, a Singapore representative office is not required to submit any audited accounts except during the application process in which it has to show the financial statements of its parent company.

Resource Box:

AsiaBiz has successfully helped foreign and local entrepreneurs who wish to setup their Singapore Subsidiary company by securing their work visas using employment pass route once they have incorporated a Singapore Company.

by: danielyio

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