Singapore Branch Office: A Legal Extension of Its Parent Foreign Company

A Singapore branch office is a business setup that allows foreign companies to have

a presence in the country and conduct activities related to their business. And since this setup is an extension of its parent company, its activities should be only limited to the nature of business of its main headquarter.

With this, a branch office cannot perform business activities that are not exercised by its main headquarter.

Another ramification of being a legal extension of its parent company, a branch office should bear the same name unless in some special cases such as deemed indecent or vulgar or the name is already being used by another local company.

One of the most notable features of a branch office is its non-resident status which means that it is not a "local business" and is not eligible for any local tax exemptions and benefits. With this setup, most experts believe that this office is not advantageous in terms of taxation.

While being a legal extension of its parent company does not provide tax benefits, at least the main headquarter will have more control over the management of its Singapore-based office.

Meanwhile, foreign companies do not enjoy the limited liability protection which is a legal arrangement in which they cannot be liable for all the debts, losses, and acts of their Singapore branch office.

To operate a branch office, the most important requirement is to appoint two local residents who may be a Singaporean citizen or a foreigner who holds EntrePass, Employment Pass, Dependant Pass, or Permanent Residence Status. These two individuals will be personally liable for the activities by a branch office and will face any penalties imposed against the business for breaching any policies or law.

The registration of a branch office is applied to the Accounting and Corporate Regulatory Authority (ACRA) that will review the foreign companies background, reputation, and business viability in the country. However, those companies that will operate in the financial and banking industry are also required to apply for a business license to the Monetary Authority of Singapore (MAS).

Most experts believe that a branch office is usually ideal as a short-term setup for foreign companies. However, they may shift to a subsidiary company which has a greater freedom in conducting business in Singapore.

Under the Singapore Companies Act, any foreign businessmen, organizations, and entities are prohibited to self-register their own business in the country and are legally required to hire the service of an ACRA-accredited business registration firm.

Singapore Branch Office: A Legal Extension of Its Parent Foreign Company

By: Diane Paz

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