A subsidiary is essentially an extension of its parent company, but it’s treated as a separate entity. Another company sets it up to perform a specific function. One example is the marketing or manufacturing of their goods.
This business structure is becoming a popular option in Singapore for several reasons. For one, opting for this structure limits one’s liability and legal obligations.
Another is that setting up a subsidiary company allows multinational companies to take advantage of the existing taxation system. This enables them to diversify their risk and make sure that they are compliant with the regulations in different countries. It also reduces the cost of hiring an international team or the cost of localization.
What Do I Need to Know Before Getting Started?
Setting up a subsidiary company in Singapore is a great way to grow your business. But before you embark on this journey, it’s essential to know what you need and how to get it.
Here are the main requirements:
- A minimum paid-up capital of SGD 1 is required to set up a subsidiary in Singapore
- The company must have at least one director who is a citizen or permanent resident of Singapore and has no criminal records, with the exception of directors who are also shareholders.
- You need to register your company with the Accounting and Corporate Regulatory Authority (ACRA).
- An office address must be registered, and residential addresses are accepted.
- Within the first three months, all newly created companies must register their accounts with the tax authorities, and an auditor has to be nominated within this period. This process is called audit registration, wherein all audited statements need to be submitted to the tax authorities every year.
What are the Post-registration Compliances?
Business compliance is a crucial factor in the success of any company, not just because it is legally required but also because it helps to protect your company’s reputation.
1. Permits and licenses
There are two types of business licenses in Singapore: the company license and the permit license. The company license is required for any company incorporated in Singapore or has an overseas branch office in Singapore. In contrast, permit licenses are required for commercial agents, estate agents, money changers, pawnbrokers, etc.
2. Customs registration
A company in Singapore can register as either a general importer or a specialist importer. General importers are registered for all types of imports, while specialist importers need to register for specific types of imports.
Singapore Custom introduced a new standard to keep up with the latest technology from January 1st, 2009, saying goodbye to CRN. All import and export numbers are now under UEN (Unique Entity Number).
3. GST registration
The Singapore Goods and Services Tax (GST) is a consumption tax levied on most goods and services supplied in Singapore.
The first step is to find out if your company is a GST registrant or not. If your company does not have any supplies or sales in Singapore, it does not need to register for GST in Singapore. However, if your company has any supplies or sales in Singapore, then you will need to register for GST even if you are registered with ACRA.
4. CPF registration
There are many reasons why one might need to register a CPF account.
One of the most common reasons is employment in Singapore. An employee needs to sign up for a CPF account to receive the benefits and contributions from an employer. Employees who are married and living with a spouse who is a Singapore citizen may also require CPF contribution.
5. Annual filing
Annual filing is a mandatory requirement for all Singapore businesses. It is the process of submitting reports and documents to the relevant authorities.
Annual filing requirements are set by the Ministry of Trade and Industry. These requirements vary according to the type of business, location, and other factors. The Annual Return form is filed with the Accounting and Corporate Regulatory Authority (ACRA). This form can be filed online or by post.
Setting up a subsidiary company in Singapore can be a time-consuming process. However, you can get the procedure done faster than you think with the right set of guidelines and advice.