Singapore is one of the leading business hubs in Asia. With a stable socio-political environment, foreign investors and entrepreneurs are enticed to do business in the region and are looking for legal ways on how to register company in Singapore.
Along with the business-friendly environment and strategic location, Singapore is also known for its hospitality to businessmen in that opening a business in the country is relatively easy. Additionally, Singapore has attractive tax exemptions and incentives, which likewise bolster the interest of international business.
How to register a company
For foreigners who are looking to expand their business in Singapore, there are certain options that are open for exploration. Depending on the nature of business, a company may register as a Subsidiary Company, a Branch Office or a Representative Office.
Singapore company incorporation should be registered under Singapore’s Accounting and Corporate Regulatory Authority or ACRA. Let’s have a quick look at what each option presents.
The Singapore government allows 100% foreign ownership, and businesses often opt to register as a subsidiary. As a subsidiary, the company is a separate legal entity from its parent. It adheres to the corporate veil of a business. This means that the parent company will not be accountable for the debts and liabilities of the subsidiary.
When it comes to taxes, the subsidiary will be considered a local company, and thus can enjoy Singapore’s qualifying tax exemptions.
To register a business as subsidiary, owners need to have at least one individual or corporate shareholder, an ordinarily resident in Singapore as the director, a company secretary who is also an ordinarily resident in Singapore, and an auditor. Additionally, the business should have an initial paid-up share capital of at least SG$1.
Unlike a subsidiary, a branch office is not treated as a local company but is instead regarded as an extension of a foreign business. The head office will be responsible for all liabilities under the name of the branch office.
Since a branch office is not considered as a Singaporean entity, it will not share the same benefits that a subsidiary enjoys (i.e. it will not be eligible for any local tax exemptions.) All the earnings of a branch office shall be remitted to the head office, but earnings from its Singapore operations will be taxed accordingly.
Registering as a branch office requires two ordinarily residents in Singapore who will serve as agents. The name of the branch office should also be the same as the main office, unless it is the same as another Singaporean company.
A representative office is merely a temporary Singapore company setup for international businesses. This type of setup is ideal for companies who want to test the waters in doing business in Singapore. Thus, it has no legal status, cannot operate for revenue and will not be taxed. All liabilities will be passed on to the head office.
The purpose of a representative office is to allow the parent company (a foreign institution) to conduct market research and feasibility studies before registering as either a Subsidiary or a Branch Office.
Despite not having a legal status, a representative office still need to be registered with ACRA. It has to bear the business name of the foreign company plus the words ‘Registered Office’. Registration needs to be renewed annually for 3 years. After which, the office must be registered as either a Subsidiary or a Branch Office, should the foreign company decides to pursue foreign operations in Singapore.
Incorporating a company in Singapore
ACRA provides the list of requirements needed for a foreign company to register a company in Singapore. Even though, this may seem like a rather straightforward transaction, there are certain rules and regulatory requirements applicable for some business.
Therefore, it will help to engage a local corporate services company to assist you in entering the Singapore business scene.