By Vlad Cuc, specialist in company formation matters
Foreign companies wanting to settle in Singapore can register branch offices. Compared to the Singapore subsidiary, the branch office is part of the foreign company that registered it and does not have its own legal entity. The advantage of being part of the parent company is that the foreign entity is fully liable for the branch office’s undertakings in Singapore. Singapore branch offices will not be subject to any tax exemptions unless they have a registered office or a management board in the country.
Our local consultants have the necessary experience to guide those who want to open a company in Singapore, including foreign companies interested in opening a branch office in Singapore.
As mentioned above, the branch office is mainly an extension of a foreign company in Singapore which is why it must carry the same name as the parent company. According to the Company Law in Singapore, a branch office requires two resident agents who must deal with the registration process and other activities on behalf of it. Branch offices are also required to have a registered office in Singapore. The Singapore branch office may carry any undertaking as the parent company does and has the right to repatriate the earnings and the capital. A Singapore branch will only be taxed on the income made in the country.
The main characteristcs of a branch office in Singapore are presented in this scheme creatd by our Singapore company formation agents:
A foreign company is required to hire a professional firm when incorporating a company which is why our specialists in company formation in Singapore can provide you with full services for company registration.
The first step when opening a branch office in Singapore is to submit the company’s name for approval with the Trade Register. The name will be approved unless it is identical with another’s company name. The second step will be the submission of the registration file with the Trade Register. The process should not take longer than 2 days. Once the registration is completed the Companies Registrar will send an email notification with the confirmation of the new Singapore branch office. The notification will usually serve for opening the bank account in Singapore or the registration for taxation purposes, but an incorporation certificate can be issued at the company’s request.
Branches can also opt for EORI registration in Singapore in order to trade on behalf of the parent company.
The following documents must be submitted for the registration of a branch office in Singapore:
One of the most important steps when creating a branch office in Singapore is the opening of the bank account. This must be opened with a local bank, be it a Singapore or an international bank. The procedure must be completed by one of the registered agents or one of the directors of the company.
The documents needed to open a corporate bank account for the Singapore branch are the same as for any local company and will imply the branch office’s Certificate of Registration and information about the parent company. It should be noted that the creation of a bank account for a company, no matter if it is a local business or a branch office, depends on the bank chosen. For example, some banks require the presence of one of the directors, while others do not. Either way, a representative of the company will need to meet with the bank officers to sign the paperwork related to the opening of the bank account.
Our Singapore company formation specialists can help foreign investors setting up branch offices through the entire procedure of creating the bank account.
As mentioned in the beginning, the branch office will be limited to completing the same activities as the parent company which means it will have to obtain the licenses and permits for those activities only. These licenses, however, must be obtained with the relevant Singapore authorities.
The documents required to apply for the necessary licenses in order to operate a branch office in Singapore are the same as for any other local business.
If you want to open a company in Singapore and need guidance in applying for any specific license, our consultants are at your disposal with personalized services.
You can also see below a scheme presenting the steps for opening a Singapore branch office:
From a taxation point of view, the branch office will be considered a non-resident business entity. This means that it will be levied the corporate tax only on the income generated in Singapore. The disadvantage of this business form is that it cannot take advantage of the incentives granted by the government to Singapore companies, however it can benefit from the provisions of Singapore’s double taxation agreements which imply the avoidance of imposing the same taxes on the income of branch offices in this country and in the parent company’s country of origin.
In order to be taxed in Singapore, the parent company will be required to file its annual accounts together with the audited accounts of the branch office with ACRA. These must be filed no later than 2 months after the parent company has held its Annual General Meeting. The Singapore branch office will also be required to file its tax returns with the Inland Revenue Authority in the city-state.
We remind foreign investors that Singapore imposes the corporate tax at a rate of 17% and even if a branch is required to compute its annual taxes based on this rate, it is one of the lowest corporate taxes in Southeast Asia.
Those who need accounting services related to their companies in Singapore can rely on our team of accountants who offer personalized assistance.
When it comes to the employees of a branch office registered in Singapore, it will be allowed to hire local workers or bring employees from the parent company’s home country. For foreign workers, the branch office will need to obtain work permits on their behalf.
Branch offices in Singapore will be subject to the same compliance requirements as all other companies, meaning the information about the address and the name are available for the public. Moreover, this type of business form must have the address and the name engraved in each place it has an office (provided it has more than one) and on all official documents used in its commercial activities. Also, any changes brought to the management or structure of the branch must be reported to the Accounting and Corporate Regulatory Authority (ACRA).
From an accounting point of view, the branch office is a Singapore resident only if it is managed from an office located in the city-state. In order to not pay the same tax twice, a branch office will fall under the incidence of Singapore’s double taxation agreements. Considering the parent company, even if located in a foreign country, will hold an annual general meeting, it must send its financial statements and accounts to the Singapore branch. These documents must be filed with ACRA no later than two months after the annual meeting of the shareholders or in maximum seven months after the end of its financial year. The branch must also file annual tax returns.
The branch office is ideal for foreign companies who seek to have an established presence in the city-state without registering a new company in Singapore. The branch office is also a more suitable option than the representative office which cannot undertake any type of commercial activity. Combined with the fact that the parent company does not have to prepare any separate incorporation documents or obtain approval for a new trade name simplifies a lot the company formation process.
We also invite you to watch our video on how to start a branch office in Singapore:
1. Which one is best: the branch office or the subsidiary?
If you plan on extending your company in Singapore, both options are viable, as long as you decide on what types of activities you want to undertake. We remind you that the control over the branch office will be complete, while in the case of the subsidiary a certain degree of independence will be attributed.
2. Do I need to come to Singapore to open a branch office?
No, there is no need for a personal visit to Singapore if you decide to set up a branch office here.
3. What can I do if I cannot appoint a local director?
There are specific services for those in need of local directors for their branch offices in Singapore. These are called nominee services and are offered based on a contract.
4. How long does it take to set up a branch office in Singapore?
The registration procedure of a branch office is not long or complicated and can take a few days.
We offer professional company registration services and if you need help with the incorporation of any type of business, including a Singapore branch office, you can rely on us.
Please feel free to contact our company incorporation agents who can provide you with more details about the process of opening a company in Singapore. Also, contact our partner law firm in Singapore for litigation and other legal inquiries.
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