Foreign Company Business Entity Types

Foreign companies wishing to setup a presence in Singapore can choose to register a Branch Office, Subsidiary Company, or a Representative Office.

Subsidiary Company

A subsidiary company is rendered a separate identity and is treated as a local Singapore company. It brings several benefits, the foremost being the limitation of liability of the foreign company in Singapore. The foreign company and its assets cannot be held for the debts and liabilities of the subsidiary. Raising funds locally or availing government incentives are easier. A subsidiary company will generally enjoy a resident status and can avail the benefits of several favourable tax treaties that Singapore has concluded.
 

Branch Office

A branch office affects unlimited liabilities for the parent foreign company. The branch office is required to submit its own audited accounts as well as that of its head office, which many foreign companies may not be comfortable with. The branch office wields a lesser commitment and is deemed to lack any long term vision. Thus securing investment and incentives will be relatively difficult. Tax considerations play a major role in deciding the form of business that is appropriate. A branch office, though registered with company registrar, is still treated as a foreign entity because the control and management is exercised outside Singapore. Therefore a foreign company’s Singapore branch will be deemed a non-resident company for tax purposes. As a non-resident entity, some of the tax exemptions available to resident companies such as subsidiary company will not be available to a branch office.

Representative Office

A representative office is a short term arrangement that is advisable when a foreign company wants to gather market intelligence or coordinate activities without any profiteering motive. Since this setup does not earn any revenue, a representative office acts as a cost centre to the parent company. Foreign companies that are keen on studying the Singapore business environment before committing investments or those who have considerable non-core activities to be managed should set up a representative office. In general, a representative office cannot continue its operations beyond three years and must upgrade itself to a branch office or subsidiary before or at the end of the three year period.