Singapore Company: Business Entities For Foreign Entrepreneurs And Investors
Singapore has always been considered as one of the best business centers in the Asia
Pacific region due to its proximity with major markets, pragmatic government, tax benefits for foreign companies, and viable corporate laws.There are three business arrangements available for foreign entrepreneurs who already have an existing business abroad and want to setup a Singapore company in order to expand their operation.
These are the three business entities a foreign company can adopt to legally operate in Sinagapore:
Singapore Subsidiary Company
A subsidiary company is treated as a separate legal entity which means it is directly responsible for its own losses, debts, and activities rather than its parent company from abroad.
Essentially, this business entity is a locally incorporated private limited company which just happens to be owned by foreigners instead of local residents. With this arrangement, a subsidiary company enjoys the same tax benefits and exemptions provided to local businesses.
According to the Accounting and Corporate Regulatory Authority (ACRA), a foreign company is legally required to hire at least one director who must be a local resident or holder of Employment Pass, EntrePass, or Permanent Residence Status.
It is also a corporate requirement to maintain a registered office in Singapore where a subsidiary company should keep its statutory documents.
Singapore Branch Office
A branch office is just like a subsidiary company which means that it can also engage in business activities performed by its main office. However, there some glaring differences between these two entities.
First, a branch office is treated as a legal extension of its parent company which means that the latter is directly liable for the financial losses and liabilities of its Singapore branch.
The second difference is that a branch office, being an extension of its foreign company, is treated as a non-resident business which means that it will not enjoy the same tax benefits provided to subsidiary companies and local businesses.
Singapore Representative Office
A representative office is not treated as a legal business entity per se as it is prohibited to engage in any profit-generating and commercial activities.
Under the Singapore Companies Act, a representative office is only allowed to conduct market research in order to determine the business viability of its company, oversee the local agents and distributors of its parent company, engage in customer service as long as it does not involve technical or repairing inquiries, and engage in negotiation.
A foreign company is required to renew the permit for its representative office annually at a maximum of three years, and after this period, it must shift to a branch office or subsidiary company if it wants to maintain its business presence in Singapore.
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