Foreign Company Setup

 Foreign companies seeking to establish a presence in Singapore can opt for the registration of a Branch Office, Subsidiary Company, or Representative Office. This registration process should be conducted through the services of a professional firm in Singapore. 

Option 1: Subsidiary Company :

A Subsidiary Company is a locally incorporated private limited company, with the majority of its shares owned by another local or foreign company. Singapore permits 100% foreign ownership in companies, allowing a foreign company to establish a local limited liability company in Singapore, known as a subsidiary company, and possess complete ownership of the shares.

For small and medium-sized foreign businesses aiming to establish their presence in Singapore, a Singapore subsidiary is the preferred registration option. A well-structured local subsidiary company serves as a tax-efficient corporate entity. Despite the foreign company being the sole shareholder, a Singapore subsidiary is considered a distinct entity, ensuring that the liabilities of the subsidiary company do not extend to the parent company.

 The name chosen for the subsidiary may differ from that of the parent company, pending approval from the Registrar of Companies. The Companies Act mandates the appointment of one or more directors, with at least one director being a Singapore resident (citizen, permanent resident, or employment pass holder). A Singapore subsidiary is required to maintain a registered office in Singapore and store its statutory documents at that location. From a taxation standpoint, the subsidiary may be classified as a Singapore resident company, making it eligible for tax exemptions and incentives applicable to local companies. 

Option 2: Branch Office

 A Singapore branch office, similar to a subsidiary, is a registered legal entity. However, unlike a subsidiary, a branch office is treated as an extension of the foreign company. This distinction is crucial as it implies that the foreign company's head office bears ultimate responsibility for any liabilities arising from the acts of the Singapore Branch Office. From a taxation perspective, a branch office is generally considered a non-resident entity and is therefore ineligible for the tax exemptions and incentives available to local companies in Singapore.

Setting up a branch office is consequently a less attractive option for small and medium-sized businesses.

The name of the Singapore branch office must match that of the head office and requires approval before registration. The company registrar typically approves the proposed name unless it is identical to an existing company name.

The Singapore Companies Act mandates that a branch office appoint two agents who are ordinarily residents in Singapore to accept services of process and notices. A branch office must also have a registered office address in Singapore.

A Singapore branch office is permitted to engage in any business activity falling within the scope of its parent company and can repatriate its earnings and capital. The income derived from or attributable to operations outside Singapore is not subject to taxes, with only earnings from operations within Singapore being subject to prevailing local corporate tax rates.

Option 3: Representative Office 

Foreign companies solely interested in market exploration or overseeing company affairs without engaging in profit-yielding business activities can establish a representative office in Singapore. A representative office is a temporary establishment without legal persona, preventing it from entering into contracts, trading directly or on behalf of the foreign company, leasing warehouses, issuing invoices, opening letters of credit, and similar activities. The representative office in Singapore is limited to undertaking market research or feasibility studies on behalf of its parent company.

The foreign company implicitly assumes liability for the representative office's activities in Singapore. The representative office must be staffed by a representative from the foreign company's head office and can employ a small number of local support staff, not exceeding five employees.

International Enterprise Singapore (IE Singapore) serves as the registration authority for representative offices across most industries, including manufacturing, business services, commerce, and others. However, industries such as banking, finance, and insurance must register with the Monetary Authority of Singapore (MAS).