Foreign investors interested in opening a company in Singapore should know that they can choose from three legal options, according to the investor’s business plans and interests in Singapore. The foreign entrepreneur can choose to establish a branch office, a subsidiary company or a representative office. As a general rule, most of investors decide to set up either a subsidiary, or a branch office; our law firm in Singapore can provide you with assistance in the registration process for any of the business types mentioned above.
Subsidiary in Singapore
A subsidiary in Singapore is usually chosen by foreign investors who wish to open a small or medium company. A subsidiary is incorporated as a private limited company, in which foreign ownership is allowed 100%. Although the subsidiary can have 100% foreign ownership, at the appointment of the board of directors, it is required to name at least one director who is a Singaporean citizen (or a permanent citizen or the owner of a working permit).
The main aspect of setting up a subsidiary is that the company in Singapore is considered a different legal entity than the parent company. The subsidiary is liable for its debts and they cannot be extended to the parent company.
In terms of taxation, a subsidiary is considered to be a tax resident in Singapore and the taxes due from business activities in the city-state are to be paid here. The company can also benefit from tax incentives or deductions offered by the Singaporean government; our lawyers in Singaporecan offer you further information on the subject.
Branch office in Singapore
If you choose toregister your companyas a branch office, you should know that the office set up in Singapore will be considered as an extension of the parent company. Therefore, the parent company will be liable for the debts of the branch office in Singapore.
The ownership of the branch office belongs to the parent company and, because this entity is not a Singapore tax resident, it will not benefit of the local tax exemptions.
The Singaporean Companies Act states that the branch office should appoint two agents, who are required to be residents in Singapore; also, the local legislation states that a branch office must to have as a trade name the name of the parent company.
You should know that a branch office can repatriate the profits resulted from the business activity in Singapore.
Please watch the video below for more information on branches and subsidiaries in Singapore: