If you are a foreign business or an investor and are looking forward to having a business in Singapore, then you may consider setting up a branch office in Singapore. This business entity is one of the three structures that foreigners can start easily.
What is a branch office of a foreign company?
A branch office is an outlet of a foreign company or, more generally, an organisation that does not constitute a separate legal entity, while being physically separated from the organisation’s main office. Unlike a Singapore subsidiary, the parent company of a branch office entity is liable for all the debts and liabilities of the branch office.
Some offshore companies prefer to set up a branch in Singapore. This choice is made mainly for legal or tax reasons based on the home jurisdiction of the main company. A branch is not a resident of Singapore for tax purposes, so it cannot avail itself of the Singapore double tax treaty network nor the tax concessions granted to Singapore incorporated companies. The person registering the branch of a foreign company is advised to engage a registered filing agent (eg law firm, accounting firm, or corporate secretarial firm like Acclime) to submit an online application on your behalf.
Advantages of setting up a branch office in Singapore
A Singapore branch office has certain advantages, particularly for well-established companies seeking to move to the country. The advantages include:
- Access to a new market
- Ownership of property through the branch office
- Expand overall corporate presence and brand recognition
- Greater level of control from the parent entity
Requirements for setting up a branch office
Setting up a branch is a little more involved than setting up a Pte. Ltd company, with the following requirements:
- You must have a branch name that is identical to the parent company’s name
- One local authorised representative of the branch is required. This person can be a citizen or permanent resident. A foreigner with a valid Employment Pass (EP) can act as the authorised representative as long as that EP is for employment with the branch for which he/she is the authorised representative.
- Several documents need to be submitted to ACRA, including:
- The certificate of incorporation of the parent entity
- The constitution/memorandum and articles of the parent company
- The latest audited accounts of the parent entity
- A company secretary is not required. However, filings with ACRA are still required by the branch, so we recommend that you appoint Acclime to act in this role.
Steps of setting up a branch office
1. Reservation of company name
You must have a branch name that is identical to the parent company’s name, save for “Singapore branch” as a suffix. The name application costs S$15. After approval of the name, the reservation will be valid for 120 days. If you miss this deadline, the name will be released for use to other businesses, and you will have to start the procedure all over again. The name will generally be approved unless it is identical to any existing company name or is vulgar.
2. Branch registration
The registration of the branch is done online through the BizFile+ portal. At the time of registration, you will be required to submit the following documents:
- A certified copy of the certificate of incorporation of the foreign company
- A certified copy of the constitution of the foreign company
- Latest audited financial statements of the parent company
- Particulars of the directors of the foreign company
- A memorandum of appointment and details of at least one person resident in Singapore who will act as the authorised representative for the Singapore branch
- A memorandum executed by or on behalf of the foreign company stating the powers of the local authorised representative
- Details of the registered office address in Singapore
If all documents are available, the registration procedure takes approximately 15 minutes. At the time of registration of the branch, the parent company directors do not need to be physically in Singapore.
Post-registration requirements and compliance
Following the successful registration of the branch, the foreign company will be required to file its annual report and the audited accounts of its Singaporean branch office within two months of its annual general meeting, or within seven months from the end of its financial year whichever is earlier. In addition, the Singapore branch will be required to file a tax return on an annual basis.
The Singapore branch is considered a non-resident company for tax purposes. This means that the branch is not eligible for tax benefits resulting from tax incentives and tax treaties exclusively reserved for resident companies.
Setting up a branch office in Singapore can be quite straightforward as it can be registered within 1-2 days, and the parent company would be responsible for all the debts and liabilities. As foreigners can set up this entity in Singapore, there are no restrictions on hiring foreign staff. If you need help or advice in setting up this structure, get in touch with Acclime.
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