subject: Key Differences Between The 3 Types Of Singapore Company Formations [print this page] There are a lot of advantages that businesses in Singapore would enjoy- advantages such as it is near major markets, the government is practical and reasonable, the benefits that foreign companies would enjoy in terms of taxes and corporate laws. These are the advantages why Singapore has always been one of the favorite business spot in the Asia Pacific region
There are three business arrangements available for foreign entrepreneurs who already have an existing business abroad and want to setup a Singapore company in order to expand their operation. These are the three business entities a foreign company can adopt to legally operate in Singapore:
Singapore Subsidiary Company
Despite the fact that it is a subsidiary company, it is considered as a independent legal entity because it is not directly obligated to the losses, debts and other unfavorable activities incurred by the parent company in other countries.
Essentially, this business entity is a locally incorporated private limited company which just happens to be owned by foreigners instead of local residents. With this arrangement, a subsidiary company enjoys the same tax benefits and exemptions provided to local businesses.
According to the Accounting and Corporate Regulatory Authority (ACRA), a foreign company is legally required to hire at least one director who must be a local resident or holder of Employment Pass, EntrePass, or Permanent Residence Status.
Maintaining a registered office is also a legal requirement since it is where a subsidiary company holds and store Singapore mandated documents.
Singapore Branch Office
A branch office is just like a subsidiary company which means that it can also engage in business activities performed by its main office. However, there some glaring differences between these two entities.
Foremost, unlike a subsidiary company, the parent company is directly accountable for financial losses, liabilities and other unfavorable business circumstances of the branch because the branch office is considered a legal extension of the parent company.
The next salient difference is that since the branch office is considered as a legal extension of the parent company from other country and thus, considered a non-resident business, it will not benefit from the tax exemptions and other benefits enjoyed by subsidiary companies and local businesses.
Singapore Representative Office
A representative office is not treated as a legal business entity per se as it is prohibited to engage in any profit-generating and commercial activities.
According to the Singapore Companies Act, a representative office is only permitted to conduct activities such as doing market research on the feasibility of the business in the country, directing local agents and distributors of its parent company and engaging in customer service provided that it will not engage in any technical or repairing inquiries and negotiations.
A foreign company is required to renew the permit for its representative office annually at a maximum of three years, and after this period, it must shift to a branch office or subsidiary company if it wants to maintain its business presence in Singapore.
Any of the aforementioned business structure can be used in getting your business started in Singapore depending your needs. It is highly recommended that you seek professional advise from a reputable company registration firm to assist you in your endeavor.
