How Can Overseas Companies Incorporate in Singapore?

Why should I incorporate a company in Singapore?

Singapore being an open economy and a major financial hub in the world is becoming more and more attractive to foreign companies to set up offices here. There are many reasons for relocating to Singapore, such as attractive corporate tax rates, stable political governance, and strategic location. In this article we share with you how can overseas companies incorporate in Singapore. There are basically 4 options for foreign entities:

1. Singapore Subsidiary

The first available option for foreign companies is incorporating a subsidiary. A subsidiary is a private limited company incorporated locally, the shareholders mostly being either a local or foreign legal entity. Subsidiaries can be entirely owned by foreign entities. As for the name of the subsidiary, it can be exactly the same, similar, or totally different from the parent company.

Different from branch offices (see below), subsidiaries are separate legal companies from the parent companies. This simply means that the parent (foreign) companies enjoy limited liability and will not be liable for any acts or omissions by the subsidiaries.

Just like all Singapore companies, subsidiaries must minimally have one local resident director in Singapore, known as Nominee Director. Besides that, subsidiaries will be treated as local tax residents and so they enjoy the same treatment as Singapore companies such as tax exemptions and incentives. Subsidiaries are allowed to engage in activities of different nature from their parent companies.

Registration can be done by engaging a registered filing agent such as us, to help complete the application on behalf of the parent company. The process for the incorporating of a subsidiary is the same as to a local company.

The majority of foreign entities will prefer incorporating a subsidiary than to a branch office, because of the limited liability protection and additional tax benefits. If you as an owner of a foreign company is looking to establish yourself for the long haul in Singapore, incorporating a subsidiary will be ideally the best option.

For more details on how you can set up a subsidiary in Singapore, click here.

2. Branch office in Singapore

The second option would be to set up a branch office. A branch office is regarded as an extension of the parent company. It is not a separate company legally. Hence, the parent company can be legally liable for any act or omissions of the branch office.

An important point to take note of is that branch offices are not treated as resident companies of Singapore, so they will not be entitled to the numerous tax exemptions compared to resident companies. Branch offices have to conduct their business activities of the same nature as the parent companies. They must file their own audited financial statements and of the head offices as well.

Same with a subsidiary, it is recommended that the parent company engage a registered filing agent such as a corporate secretarial firm to do the online application for them.

Similar to a subsidiary, the branch office must appoint at least one local nominee director who is a resident here in Singapore. Singapore citizen (SC), Permanent Resident (PR) and EntrePass holder will all be regarded as ‘ordinarily resident.’ The branch office’s name must be the same as the parent company as well.

Incorporating a branch office can be seen as a short-term commitment, the reason being it will be unlikely to attract any investment opportunities because of its non-resident status. The extension of liability imposed on the parent companies is a major factor that stops people from opening branch offices. Therefore, a Singapore branch office will be more suitable for companies looking to capture more market share in the short term.

Read more on how to set up a branch office in Singapore here.

3. Representative Office

The third option will be to set up a representative office. Unlike subsidiaries and branch offices, representative offices have zero legal personas and are simply extensions of the parent companies. Therefore, they are not allowed to enter into contracts of any form or engage in any form of profit-generating activities. The parent company will be legally liable for any acts and omissions of the representative office.

Representative offices are considered as non-resident tax status because they do not have any revenue and cannot be involved in profit-making activities. The scope of activities of representative offices will be mainly market research or feasibility studies. Representative offices are non-incorporated entities, so they are not required to adhere to any filing requirements, unlike branch offices and subsidiaries.

Representative office registration is done on the Enterprise Singapore website, not BizFile+. Again, you are highly encouraged to engage a registered filing agent to do up the application on your behalf and be a point of contact for the local authorities. The necessary documents and criteria are listed on the Enterprise Singapore website.

A nominee director is not needed, unlike branch offices and subsidiaries. But the parent company must send a chief representative to relocate to Singapore, in order to oversee the activities of the representative office.

Representative offices have a validity of only three years at the maximum. It can be renewed every year before its expiry date. Because of all the above reasons, representative offices are seen as temporary arrangements. For foreign companies that wish to gather market information first, before setting up a full-fledged, profit-making company, a representative office is definitely the most ideal option.

Refer here for more details on how to set up a representative office in Singapore.

4. Redomiciliation

Redomiciliation is simply a process where the foreign company transfers its country of registration from another jurisdiction to Singapore. After redomiciling the company to Singapore, it will cease to have its country of incorporation overseas but instead, becomes a company registered in Singapore.

Read our article on re-domiciliation to Singapore for more information.

Company incorporation in Singapore

Each option has its own advantages and disadvantages. In order for companies to decide on the best option, they must take into account what are their business objectives and the duration in Singapore. Some factors such as the tax exemptions, types of legal liability, and also the scope of activities of each option, should be discussed carefully before the foreign company starts incorporating in Singapore.

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If you need assistance in setting up your business in Singapore or have any questions, do get in touch with us today!

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