There are three business arrangements in Singapore that have been specifically created for foreign entrepreneurs and business entities planning to have a presence in the country: a subsidiary company, branch office, and representative office.
These are the basic differences between these business entities for foreign entrepreneurs and investors:
1. Subsidiary company
This is probably the most ideal business entity for foreign companies planning to form a Singapore company or expand their presence in the country. This is because this formation provides countless of benefits especially when it comes to tax incentives and limited liability.
As a separate legal entity from its parent company, a subsidiary company may have a different name and is allowed to conduct any business activities in the country as long as these are legal.
A foreign company with a subsidiary company enjoys a limited liability, an arrangement in which it is not liable for any losses, liabilities, and debts of its Singapore auxiliary business.
And because a subsidiary company is incorporated in Singapore, it also enjoys local tax benefits even if it is 100 percent owned by foreign businessmen and entities.
However, this business setup is required to appoint at least one resident director who may be a Singaporean citizen or holder of EntrePass, Employment Pass, or Permanent Residence Status.
Meawhile, a subsidiary company may have one to 50 shareholders who may be a foreign or local individual or another business entity. To know more abour subsiday company follow this link:
2. Branch office
A branch office, being an extension of its business headquarter, is only allowed to conduct activities performed by its parent company.
Unlike a subsidiary company, a branch office is not provided with local tax benefits since it is treated as a legal extension of its parent company. And with this arrangement, the headquarter is directly liable for all the losses, debts, and liabilities of its Singapore branch office.
Meanwhile, it is a legal requirement for a branch office to hire two Singaporean resident agents who will oversee its business operation.
When it comes to government-imposed disclosure requirements, this business entity may not be appealing for some shareholders since they are also required to submit the audited accounts of their parent company. To know more about branch office, follow this link:
3. Representative office
Legally speaking, a representative office is not really a business entity as it is not allowed to engage in any revenue-generating activities.
A representative office is generally ideal for foreign companies who are not yet sure of the business viability of their services or goods in Singapore and want to conduct an extensive market research before engaging in a full-blown operation. To know more about representative office, follow this link: