Setting Up a Singapore Branch Office: Guide to Foreign Companies

A branch office is a type of business model that will allow foreign companies to have a business presence and conduct activities in Singapore

. Legally speaking, this entity is an extension of its parent company.

As a legal extension, foreign companies should realize that the limited liability protection does not apply to them which means that they are directly liable for all the losses, debts, and acts of their branch office.

To operate a branch office, it is important that foreign companies appoint two individuals who will act as the legal agents responsible for accepting the official notices from the authorities and providing administrative services. In addition, these agents are also personally liable for the penalties that will be imposed against the company in case that it has breached a law or policy.

Meanwhile, these two legal agents may be a Singaporean citizen or foreigner with Employment Pass, EntrePass, or Permanent Residence Status who must have a residential address in the country.

Because a foreign company and its branch office is treated as a same legal entity, the latter does not enjoy local resident status which means that it is not eligible for the local tax incentives and exemptions.

Also, a branch office is expected to only perform the business activities of its parent company. For example, if the main headquarter is in the food sector, its branch office should only perform in the same industry.

One major disadvantage of having a branch office is that foreign companies are required to submit even the annual accounting reports of the main headquarter to the Accounting and Corporate Regulatory Authority (ACRA). Not surprisingly, many foreign businessmen are not comfortable with such legal requirement.

Meanwhile, these are the setup requirements for a Singapore branch office:

A registered office located in the country

A business name which should be the same as its foreign parent company

Employment Pass (work visa) for foreign directors and staff who will relocate in Singapore

Management and activities directly controlled by the parent company from abroad

During the application process, foreign companies should realize that they are prohibited to register their own branch office and are required to hire a professional registration firm that will act on their behalf.

For those foreign companies that will operate in the financial and banking sector, they are required to obtain a license to the Monetary Authority of Singapore (MAS), which is the governing body in this field.

Setting Up a Singapore Branch Office: Guide to Foreign Companies

By: Diane Paz

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