It is important for international companies to adopt the best company structure for incorporation once they have decided on a location in Singapore. For multinational companies, the accompanying guide provides an overview of the many business structure options that are available. There is a lot of emphasis on these topics:
The Biggest Differences
A foreign firm may choose to set up a subsidiary, branch, or representative office in Singapore, depending on the nature of the business. The following are some of the most important differences between these two models:
As a general rule, a subsidiary company is one in which the parent business has a controlling stake. It’s subject to Singapore’s corporate tax rates and may take advantage of the many tax breaks and incentives on offer there. Finally, it has no commitment to the parent company. For foreigner open business in Singapore the practical networks are all clear.
Actually, a branch office is more of an extension of a foreign business than an independent legal entity. As a consequence, branch offices do not qualify for any of the tax benefits that are offered to subsidiary corporations, such as lower tax rates. All debts and obligations owed by subsidiaries of the parent company are the responsibility of the parent company.
The opening of a Representative Office in Singapore allows foreign companies to conduct market research in Singapore (RO). Profit-making activities are strictly prohibited for ROs. As a transitory administrative entity, it has no legal or tax consequences. ” An RO is only valid for a maximum of three years and must be renewed annually.
One of the most common corporate structures used by international firms in Singapore is a subsidiary company.
A business that is a subsidiary of another business
For the most part, multinational firms opt to create Singaporean subsidiaries for the following reasons:
People or corporations may own a private limited company in Singapore, which provides for a wide range of options in the ownership structure of subsidiaries. If the foreign parent company desires it, the subsidiary may be wholly owned by the foreign parent business.
An independent subsidiary firm is a separate legal entity from its parent business. As a result, it’s okay to go by a different name and do things independent from the parent.
Since the parent company and its subsidiary are legally independent entities, any responsibilities or liabilities committed by the subsidiary are shielded from exposure by the parent company. The parent company is not liable for these commitments and liabilities.
- As a genuine Singapore corporation, a subsidiary company is entitled to all of the same rights and privileges as any other local Singapore firm.
- Subsidiaries are taxed at the same low Singapore corporation tax rate as their parent firm.
- It is possible for a subsidiary to profit from Singapore’s business incentives, which include tax cuts and other advantages.
- The name of a subsidiary company may be different from that of its parent company.
If you want to set up a Singapore subsidiary, these are the most crucial things to keep in mind:
Although a Singapore citizen, permanent resident, or holder of an employment permit may serve as a director, at least one of the company’s directors must be Singaporean. The following are examples of ways in which this criterion may be met:
- Employees of a foreign corporation may be promoted to the position of director in their home country.
- When a foreign company relocates to Singapore, one of its overseas executives may be appointed as the company’s local director if the Singaporean government accepts their Employment Pass application.
- It is also possible to employ the nominated local director service supplied by the Singapore incorporation agency, which is less costly.
- Having a physical presence in the location where the company’s registered office is situated is required by law.
A local corporate services firm must be hired by the parent business to assist with the foundation of the subsidiary company.