subject: Key Differences Between 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
Generally, foreign entrepreneurs who have business operating presently or who are eyeing on expanding their business in Singapore have three business arrangement options available for them to legally operate in Singapore, they are as follows;
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.
Since the nature of the business is locally incorporated private limited company despite being owned by foreigners, a subsidiary company is enjoying the same benefits as the local residents are enjoying such as tax exemptions.
A foreign company should hire at least one director as a legal requirement, according to the Accounting and Corporate Regulatory Authority (ACRA). In order for the director to be qualified, he must be a local resident or someone holding an 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
Although a branch office is similar to a subsidiary company in so many ways as it is allowed to do business activities by its main office, there are some salient differences between them which are as follows;
First, a branch office is treated as a legal extension of its parent company which means that the latter is directly liable for the financial losses and liabilities of its Singapore branch.
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
The major disadvantage of a representative office is that it cannot engage in a profit-generating and other activities deemed "commercial" because it is not treated as a legal business entity.
Under the Singapore Companies Act, a representative office is only allowed to conduct market research in order to determine the business viability of its company, oversee the local agents and distributors of its parent company, engage in customer service as long as it does not involve technical or repairing inquiries, and engage in negotiation.
The permit of the representative office is renewed annually but after three consecutive years, it can no longer be renewed. It is then advisable to move to another business structure such as a branch office or a subsidiary company to be able to continue doing business in Singapore.
Any of the aforementioned business structure can be used in getting your business started in Singapore depending your needs. However, it is highly recommended that one must approach a reputable company registration firm for consultation and assistance.
