Different Ways for Foreigner Register Company in Singapore

Different Ways for Foreigner Register Company in Singapore

In 2016, Singapore ranked second in the ease of doing business index. Its sound financial system, tied with an advanced infrastructure, communications network and a stable political environment, makes Singapore an appealing destination for most multinational companies. Singapore’s Economic Development Board has done a wonderful job in offering incentives to multinational companies. Foreign companies seeking to set up their headquarters in Singapore are entitled to concessionary tax rates which range from 0 % to 15 % for up to five years.

The country also offers an extensive network of trade agreements, covering over 20 free trade areas in 27 economies and 71 double taxation agreements. In view of all these incentives, it is not surprising to find a considerable number of foreign firms forming the core of Singapore’s mainstream industries. The Accounting and Corporate Regulatory Authority (ACRA) is mandated with the task of registering all businesses, including foreign companies. Foreigner must engage the services of a registered filing agent (e.g. accounting firm or corporate secretarial firm, law firm) to perform their company registration.

Multinational companies may register company in Singapore using three distinct structures. These include:

• Subsidiary Company
• Branch Office
• Representative Office

Subsidiary Company

A subsidiary company is a private legal entity that is set up locally as a private limited company register with majority shareholding foreign-owned. In Singapore, registration of a subsidiary takes 1 to 2 days. The government treats a subsidiary company as a local entity, and thus, the parent company is exempted from paying taxes.

Nevertheless, a foreign subsidiary company is required to appoint a locally resident director (“nominee director”) and the company must comply with the Companies Act, which requires local companies to adhere to various regulations such as appointing company secretary in 6 months and holding an Annual General Meeting in 18 months.

Since a subsidiary is considered a separate entity from the parent company, it can adopt a different name from that of the main company, upon approval by the Registrar of Companies. Additionally, it is important for a company to maintain a registered office in Singapore and keep all its legal documents in that office.

Branch Office

Another way that multinational companies can establish themselves in Singapore is by opening a branch office. A branch office is a legal entity that is treated as an extension of the parent company rather than a local resident company. In view of this, the parent company is responsible for all obligations and liabilities incurred by the local branch. Unlike subsidiary companies, which often receive tax exemptions, branch offices are not eligible for these exemptions. This is because they are not considered local companies.

Approval times for registration of branch offices takes less than 2 days. However, the name of the branch cannot be different from that of the parent company unless otherwise stated by the Registrar of Companies. For a branch office to operate in Singapore, the company must appoint two agents who are residents in the country. Additionally, the office may only participate in activities similar to those of the parent company. Local corporate tax applies for operations within the country.

This option is particularly popular among banks and financial institutions who want to extend their operations in other countries. In Singapore, financial organizations and insurance companies have to approach the Monetary Authority of Singapore, to register their branch offices.

Representative Office

In some instances, a company may see the need to carry out a feasibility study before setting up business in Singapore. In this case, a representative office is the best structure for such an undertaking. A representative office is a temporary setup that does not have a legal status. Singapore is open to all types of business, and multinational companies are invited to carry out market research before settling in the country.

In contrast to the aforementioned structures, a representative office is not allowed to participate in any commercial activities. The office can only carry out research on the possibility of setting up in the country. In view of this, a representative office is not obliged to pay any taxes or any fees. However, the office has to undergo registration and can employ a maximum of five employees. Unlike the aforementioned structures, which have indefinite validity, a representative office is subject to renewal annually and may exist for up to 3 years, after which it has to cease operations, or choose to upgrade to a branch offices or a subsidiary.

A foreign company should consider and explore its options carefully when setting business in Singapore. Making the right decisions and choices will be critical in making sure the company’s presence in the Asia Pacific region is an enduring one.

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