Setting up a local company in Singapore requires you to comply with a series of statutory requirements upon incorporation. Instead, foreign entities interested in exploring potential opportunities in Singapore and the region may consider setting up a representative office.
Activities of a Representative Office
A representative office has the benefit of allowing a foreign company to assess the business environment in Singapore before deciding to set up a permanent establishment here.
Unlike a regular company, subsidiary or a branch office, a representative office is considered a temporary administrative office and has no legal status. As such, it is restricted to conducting non-commercial activities of a foreign company, such as market or feasibility studies and research activities. It also cannot conduct any business activities of a profit-yielding nature. This means that a representative office is not allowed to sign contracts, trade, or lease a warehouse.
Representative offices typically engage in:
- Collecting information about markets, competitors and/or customers
- Conducting research on the demand for the product and/or service.
- Gathering information on business regulatory requirement for subsequent set up of a permanent entity.
- Cultivating trade and business contacts
- Participating in exhibitions and trade shows
Requirements of a Representative Office
To apply for a representative office in Singapore, foreign entities must have a sales turnover exceeding US$250,000 and must have been established for 3 years or more. The proposed number of staff for the representative office should also not exceed 5 people.
Once a license is issued, representative offices are subject to the following terms and conditions:
- A representative office must be represented by staff from its own foreign entity, or Singapore staff.
- The name of the representative office must correspond to that of its parent entity.
- The representative office can only operate in Singapore for a maximum of 3 years, after which, the office must register itself as a subsidiary or a branch office.
- The representative office must clearly state that it is a representative office registered in Singapore on communication materials such as name cards.
If a representative office fails to comply with these terms and conditions, it may be de-registered.
While a representative office is viewed as a liaison office with no legal status, it is not regarded as a separate entity from the foreign parent company. This means that the foreign parent company is responsible for all the liabilities of the representative office.
As it is not an incorporated body, representative offices are not required to fulfil filing obligations nor maintain statutory documents or submit tax returns in Singapore.
However, a representative office is obliged to inform the relevant authority of a change in address or contact details within a month of the change. It must also alert the authority within a month in the event of closure.
Applications must be made to Enterprise Singapore. The following documents are required when registering a representative office in Singapore:
- Application form
- Copy of the foreign entity’s Certificate of Incorporation or Registration Certificate where applicable
- Softcopy attachments of the foreign entity’s latest annual report and audited accounts
All documents must be in English, otherwise an official English translation of the documents must be submitted.
If the representative office you intend to set up relates to the banking, finance, financial exchanges and insurance sectors, contact the Monetary Authority of Singapore (MAS) about your plans before submitting a formal application.
Foreign law practices may give notice of the establishment of a representative office to the Ministry of Law (MinLaw).
Discussing the registration requirements at an early stage with the relevant authorities helps to identify any issues that may otherwise affect your proposed application.
Should I set up a Representative Office, Branch Office or Subsidiary?
The purpose of a branch office is to facilitate the operations of a foreign parent company registered outside of Singapore. As a result, branch offices can conduct any type of business activity that falls within the scope of its parent company and will be taxed for the income derived in Singapore at non-resident tax rates.
A subsidiary, on the other hand, is treated as a separate entity from its foreign parent company and is viewed as a local Singapore company. As such, subsidiaries can perform business activities beyond that of their parent companies and can enjoy resident tax rates.
If you intend to simply explore the market opportunities in Singapore without signing any deals or conducting any profitable business activities, the best option for you is to set up a representative office. This allows you to study the business environment in Singapore before committing any large-scale investments here.
Click here for a more detailed comparison between a branch office, subsidiary and representative office.
Let Corporate Services Singapore Assist You
Foreign companies that intend to establish a presence in Singapore are advised to engage the services of a professional corporate services provider in order to remain compliant with the various local regulatory requirements. Besides leaving you with more time and resources to focus on your core business, this ensures that your start-up would never miss a submission or statutory filing.
At Corporate Services Singapore, we can assist you with the necessary registration paperwork and act as a contact point between your business and the authorities as required. Upon approval of the representative office registration, we can also follow up with you on the application of employment passes for your overseas staff members.
Corporate Services Singapore offers a complete suite of solutions, from company registration and corporate secretarial services to outsourced accounting, audit, tax and other professional corporate services. To set up your local entity in Singapore or find out more, give us a call at 6602 8286 or email us at email@example.com to get started today.