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Establish a Branch vs. a Subsidiary in Singapore

Updated on Sunday 29th January 2017

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Foreign investors have several possibilities of registering companies in Singapore. Among these they can set up subsidiaries, branch offices or representative offices.

A subsidiary is usually registered as a private limited liability in Singapore with a foreign company as a shareholder. For many small and medium-size foreign companies, the subsidiary is the most preferred business vehicle in Singapore.  The registration procedure for a subsidiary is quite simple and only requires the approval of the company’s name and the submission of all required documents with the Companies Registrar in Singapore.

However, there are few requirements for establishing a subsidiary in Singapore, among which:

  • ·         - a Singapore resident director,
  • ·         - a Singapore resident company secretary,
  • ·         - the subsidiary must have a registered office,
  • ·         - open a corporate bank account.

Another requirement is to deposit the share capital. For private limited liability companies, the minimum share capital in Singapore is 1 S$.

Find out from the video below the main differences between Singapore branches and subisidiaries:

Documents required to open a subsidiary in Singapore

The following documents must be filed with the Accounting and Corporate Regulatory Authority (ACRA) when opening a subsidiary in Singapore:

  • -       the application form issued by ACRA;
  • -       the certificate of registration of the parent company;
  • -       a document released by the Trade Register in the parent company’s home country showing the address of the company and the directors;
  • -       a document appointing a local representative of the parent company in Singapore;
  • -       the personal identification data of each director of the subsidiary;
  • -       statements from the appointed directors in which they consent to their functions;
  • -       the registered address of the subsidiary;
  • -       the subsidiary’s documents of incorporation.

All documents must be filed in English.

Our specialists in company incorporation in Singapore will draft the Articles of Association for opening a subsidiary.

Registering a branch office in Singapore

A branch office represents an extension of a foreign company in Singapore and it must carry the same name as the parent companyThe registration procedure of a branch office requires appointing a resident agency that carries out the process, according to the Commercial Code in Singapore. Branch offices in Singapore will usually carry the same activities as the parent company.

In terms of registration, the branch office must submit the name for approval with the Trade Register and once it is approved the Singapore company registration representatives will submit all relevant documents. Following the registration, the Singapore branch will open its corporate bank account and register for taxation purposes with the IRAS (Inland Revenue Authority of Singapore).

In order to register a branch office in Singapore, the representatives of the parent company must provide the following documents to ACRA:

 

  • -       a certified copy of the parent company’s certificate of registration;
  • -       a certified copy of the documents of the incorporation of the parent company;
  • -       information on the directors of the foreign entity;
  • -       a statement appointing a Singapore resident to act as representative of the branch office;
  • -       information on the registered address of the Singapore branch office;
  • -       the latest financial statements of the foreign company.

A comparison between Singapore subsidiaries and branch offices

Compared to the branch office that is an extension of the parent company, the Singapore subsidiary is a distinct legal entity. In terms of liability, the subsidiary will be held accountable for the company’s debts and actions, while the parent company will be held liable for the Singapore branch office’s debts. The branch office’s activities are limited to the parent company’s activities, while the subsidiary may carry other activities than the parent company.

When it comes to the Singapore taxation systembranch offices will only be taxed on the income it makes in the city-state. Subsidiaries are taxed as resident companies and benefit from all local tax benefits and double taxation agreements Singapore has concluded with other countries.

What to choose: a branch or a subsidiary in Singapore?

Most of the times the representatives of foreign companies which want to open a Singapore company find it harder to decide between these two types of business forms: the branch office and the subsidiary. Our Singapore company formation consultants recommend them to choose based on whether the company intends to undertake other activities than the parent company, case in which the subsidiary is a better option. Taxation should be also taken into consideration, as the branch office will be taxed as non-resident company, therefore will not benefit from all the deductions available for subsidiaries in Singapore.

If you want to set up a company and need advice on the right type of company to register, please contact our company formation agents in Singapore.

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