Singapore Subsidiary Company And Its Benefits To Foreign Companies
With its attractive corporate law and world-class infrastructure
, Singapore has always been considered as one of the most recommended business centers by the international community.
Currently, there are three business structures a foreign company in Singapore can adopt: a representative office, branch office, and subsidiary company which is considered as the most ideal for business organizations with a long-term plan of staying in the country.
Most business professionals believe that a subsidiary provides the most advantages in terms of taxation and other corporate benefits, making this particularly popular among small and medium enterprises and international companies.
Basic Features of a Singapore Subsidiary Company
A subsidiary company enjoys the local tax rates and benefits even if this is solely owned by its parent company from abroad. However, it is also allowed to have a maximum of 50 shareholders who may be a foreign or local individual.
Just like a locally incorporated company, a subsidiary stands on its own as a separate legal entity from its foreign parent company. With such arrangement comes a notable advantage: the main headquarter is not liable for the acts, lawsuits, claims, and financial losses of its Singapore subsidiary company.
Because a parent company and its subsidiary are two different business entities, the latter may choose a different name it if wants to. In addition, it is also allowed to engage in any commercial undertakings even these are not part of the activities of its parent company.
Being a locally incorporated company, a subsidiary is eligible for the tax exemptions which are usually given within three years of its registration in Singapore. Tax exemptions include Zero Tax and 50 percent tax break on its first S$100,000 and S$200,000 chargeable income, respectively.
But before a subsidiary enjoys these tax exemptions, it should exercise its management and control locally, and should have at least one individual shareholder who has a minimum of 10 percent shareholdings.
Other Options for Foreign Companies
Aside from a subsidiary company, foreign companies can also register other business structures such as a representative office and branch office.
In legal perspective, a branch office is an extension of its parent company which means that it should have the same name and perform the same business activities.
As an extension of its foreign parent company, a branch office is not treated as a local resident business, as a result, it is not eligible for the local tax benefits unlike a subsidiary.
Meanwhile, a representative office is only allowed to conduct market research and feasible studies and is prohibited from engaging in profit-generating activities.
by: Diane Enriquez
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