If you are a foreigner looking to set up a company in Singapore, you have the option to set up either a Singapore Subsidiary Company or a Singapore Branch Office. There is another option to set up a Singapore Representative Office with Enterprise Singapore and that topic will be covered in another article.

Singapore Subsidiary Company
A Singapore Subsidiary Company is a typical Private Company limited by Shares. This Singapore Subsidiary’s majority shareholder will be the foreign company. It has a legal identity that is distinct from the parent company’s and it can choose to have the same or different business activity from the parent company. The liabilities of the subsidiary are also limited to itself. The liabilities of the subsidiary will not affect the parent company. It can have a different name from the parent company and it will be taxed as a Singapore resident entity. Thus, it will be able to benefit from any local tax benefits. Only the accounts of the subsidiary need to be filed and it can open and operate a local bank account. There are no restrictions on hiring local and foreign staff so long as the hiring is in accordance with the Ministry of Manpower’s guidelines. There is a statutory requirement to have at least one local resident director.

Singapore Branch Office
A Singapore Branch Office is not a separate legal entity but an extension or branch of the foreign parent company. The name of the branch office must be the same as the parent company and the business activity of the branch office must be the same as the parent company. The liabilities of the branch office extend to the parent company which means that the parent company must undertake the liabilities of the branch office. It will be taxed as a non-resident entity and thus local tax benefits are not available. Accounts of both the parent company as well as the branch office are to be filed. It can have a local bank account. There are no restrictions on hiring local and foreign staff so long as the hiring is in accordance with the Ministry of Manpower’s guidelines. There is a statutory requirement to have at least one local authorised representative.

In most cases, setting up a Singapore Subsidiary Company may seem like a better option. The liabilities are confined to that separate legal entity and accounts of the parent company do not need to be filed.
Here is a comparison:

Singapore Branch Office:

  • Not a separate legal entity
  • The company’s liabilities are extended to the parent company
  • The name of the branch office must be the same as the parent company
  • The allowed activities of the branch office must be the same as the parent company
  • Taxed as a non-resident entity
  • No local tax benefits
  • Must file annual tax returns of both the parent company and branch office
  • Must appoint a local authorised representative
  • Can open a local bank account
  • Can hire local and foreign staff

 

Singapore Subsidiary Company:

  • A separate legal entity from the parent company
  • The company’s liabilities are not extended to the parent company
  • The name of the branch office can be different from the parent company
  • The allowed activities of the branch office can be different from the parent company
  • Taxed as a local resident entity
  • Local tax benefits apply
  • Must file annual tax returns of only the subsidiary company
  • Must appoint at least one local director
  • Can open a local bank account
  • Can hire local and foreign staff

 

Yours sincerely,

Daryl