Options for foreigners when incorporating company in Singapore

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Options for foreigners when incorporating company
in Singapore

• As the businesses are going global at a rapid
  rate like they have never been before, Singapore
  because of so many good and valid reasons has
  been one of the first and most preferred choices
  for foreign individuals and companies wanting to
  set up business in Singapore.

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• A foreign individual/entity wanting to
  incorporate company in Singapore has several
  options which one can choose based on their
  long-term business goals, type of industry,
  company size and other factors.
• In this post were discussing all the options
  that are available for foreigners to incorporate
  company in Singapore. By reading this post, you
  will be able to determine what option works best
  in your situation.

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Option 1 Subsidiary company registration in
Singapore 

• Subsidiary company in Singapore is an
  incorporated private limited company whose
  majority shareholder is another local or foreign
  company.
• Since Singapore allows 100 foreign ownership in
  companies, a foreign company may incorporate a
  limited liability company in Singapore.

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• Here are some important facts about Singapore
  subsidiary companies
• A properly structured local subsidiary company
  enjoys all the tax benefits that a private
  limited company enjoys, which means that such a
  company can take advantage of Singapores low tax
  rates as well as exemptions that are provided
  under various schemes. 

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Option 2 Branch office

• A Singapore branch office is a registered legal
  entity like a subsidiary company is. However,
  unlike a subsidiary, a branch office is treated
  as an extension of the foreign company. 
• Different from Singapore subsidiary company in
  which liabilities are not extended to the parent
  company, the foreign companys head office bears
  the ultimate responsibility for any liabilities
  arising due to the acts of commission or omission
  of the Singapore Branch Office. 
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• Different from Singapore subsidiary company in
  which liabilities are not extended to the parent
  company, the foreign companys head office bears
  the ultimate responsibility for any liabilities
  arising due to the acts of commission or omission
  of the Singapore Branch Office. 
• Unlike Subsidiary, a branch office in Singapore
  is considered a non-resident entity and therefore
  is not eligible for the tax exemptions and
  incentives available to local companies in
  Singapore. 

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• Singapore Companies Act requires that a branch
  office appoints at least one authorized
  representative who is ordinarily a resident in
  Singapore to accept services of process and
  notices. A branch office must have a registered
  office address in Singapore.
• Due to these factors, branch office is usually a
  less-preferred and less-attractive option by
  small and medium size foreign companies looking
  to incorporate company in Singapore.

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• A Singapore branch office is allowed to conduct
  any type of business activity that falls within
  the scope of its parent company and can
  repatriate its earnings and capital. The portion
  of the income of the branch office, which is
  derived from or attributable to the operations
  carried out outside Singapore, will not be
  subject to taxes. Only the earnings derived from
  its operations in Singapore will be subject to
  the prevailing local corporate tax rates.

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Option 3 Representative Office

• For a start, many foreign companies at times are
  only interested in exploring the market or
  managing the company affairs without conducting
  any business activity of profit, allowing them to
  understand the market first.
• Such a company, as per Singapore laws can setup
  business in Singapore under a representative
  office. Since representative office is a
  temporary setup without any legal persona, it
  cannot enter into any contract, engage in trading
  directly or on behalf of the foreign company,
  lease warehouse, raise invoices, an open letter
  of credit, etc. 

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• Representative office in Singapore can only
  undertake market research or feasibility studies
  on behalf of its parent company.
• The foreign company bears implicit liability for
  the activities of the representative office in
  Singapore. The representative office must be
  staffed by a representative from the foreign
  companys head office and can engage a small
  number of local support staff not exceeding five
  employees. 

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• International Enterprise Singapore (IE Singapore)
  is the registration authority for representative
  offices for most of the industries including
  manufacturing, business services, commerce and
  other sectors but excluding banking, finance,
  insurance that have to be registered with the
  Monetary Authority of Singapore (MAS).
• This is usually best for the companies that are
  looking to do some kind of market research/study
  in Singapore.

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Which Option to Choose?

• The answer to which option to choose depends on
  various factors, mainly the goals, purposes and
  company sizes. 
• If you are only looking to do market research in
  Singapore and arent looking for a lengthy
  procedure of registration, tax and audit, A
  representative office is a short term arrangement
  that is advisable.
• In general, a representative office cannot
  continue its operations beyond three years and
  must upgrade itself to a branch office or
  subsidiary before or at the end of the three-year
  period.

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• A branch office affects unlimited liabilities for
  the parent foreign company. The branch office is
  required to submit its own audited accounts as
  well as that of its head office, which many
  foreign companies may not be comfortable with.
  The branch office wields a lesser commitment and
  is deemed to lack any long term vision. Thus
  securing investment and incentives will be
  relatively difficult. Tax considerations play a
  major role in deciding the form of business that
  is appropriate.

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• A branch office, although registered with company
  registrar, is still treated as a foreign entity
  because the control and management are exercised
  outside Singapore. 
• Therefore a foreign companys Singapore branch
  will be deemed a non-resident company for tax
  purposes. As a non-resident entity, some of the
  tax exemptions available to resident companies
  such as subsidiary company will not be available
  to a branch office.

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• A subsidiary company is rendered a separate
  identity and is treated as a local Singapore
  company. It brings several benefits, the foremost
  being the limitation of liability of the foreign
  company in Singapore. The foreign company and its
  assets cannot be held for the debts and
  liabilities of the subsidiary. Raising funds
  locally or availing government incentives are
  easier. A subsidiary company will generally enjoy
  a resident status and can avail the benefits of
  several favourable tax treaties that Singapore
  has concluded.

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• Most foreign companies and individuals,
  therefore, choose either of subsidiary or
  acquiring partnership in a local Singapore
  company. Its however very subjective and its
  best that you choose it carefully and wisely to
  keep yourself protected, profitable and complying
  with local laws. 
• Even if youre sure what type of company you want
  to incorporate in Singapore, the best advice is
  to still discuss this in detail with a Singapore
  company incorporation consultant. 

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• For More information visit this link
•  
• http//precursor.com.sg/options-foreigners-incorpo
  rating-company-singapore/

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