Singapore Branch Office vs Subsidiary vs Representative Office
There are 3 entity structures for a foreign company to establish an office or expand their business in Singapore. They are namely the branch office, subsidiary company, and representative office. Nonetheless, each has its own benefits and drawbacks. Thus, it is recommended to consider those options carefully before setting up.
An important point to note is that a representative office can only engage in market research and liaising activities. Other than that, it cannot engage in any business activity that generates revenue. Do see the comparison table below for the information of each structure.
|Branch Office||Subsidiary Company||Representative Office|
|Legal Type:||Not a separate legal entity but an extension of the foreign holding company||Separate legal entity||Has no legal status, a temporary administrative arrangement|
|Liabilities:||Liabilities extend to foreign holding company||Liabilities limited to subsidiary||Liabilities extend to foreign holding company|
|Entity Name:||Must be the same as the foreign holding company||Can be the same or different from the foreign holding company||Must be the same as the foreign holding company plus must include ‘Representative Office’|
|Allowed Activities:||Must be the same as the foreign holding company||Can be the same or different from foreign holding company||Can only conduct market research or evaluate the viability of doing business in Singapore and the region|
|Validity Period:||Registered forever until closed||Registered forever until closed||Has to be renewed every year up to a maximum of 3 years|
|Criteria:||No criteria||No criteria||1. Sales Turnover of the foreign entity must be more than US$250,000 2. No. of years of establishment of the foreign entity must be more than 3 years 3. Proposed No. of staff for RO should be < 5 people|
|Registration Process:||1 to 2 days||1 to 2 days||3 to 5 days|
|Registration Fee:||Name Application: S$15 Registration: S$300 (Excluding Professional Fee)||Name Application: S$15 Registration: S$300 (Excluding Professional Fee)||Registration: S$200/year (Excluding Professional Fee)|
|Taxation:||Income will be taxed at 17% as a non-resident entity. Not eligible for any tax benefits.||Income will be taxed at 17% as a resident entity. Eligible for any tax benefits||Not applicable as representative office cannot generate income|
|Annual Compliance Filing:||1. Must file audited branch office accounts as well as foreign holding company’s accounts 2. File Annual Return 2. Annual Tax submission||1. Must file Annual Return and hold AGM 2. Prepare financial statements 3. Annual Tax submission||Not applicable|
|Bank Account:||Can open bank account in Singapore||Can open bank account in Singapore||Can open bank account in Singapore to run the cost centre operations. Must be funded by the foreign holding company.|
|Staff Hiring:||No restrictions on hiring local or foreign staff||No restrictions on hiring local or foreign staff||Chief Representative must be a staff member from the foreign holding company. Can have only five employees.|
|Appointment of Officers:||Must appoint at least one local authorised representative||Must appoint at least one local resident director||Must appoint a Chief Representative who will relocate from headquarters|
It is recommended to register a subsidiary company in Singapore compare to the other structures. Not only it provides a separate legal status from the parent company, but it is also eligible for the tax benefits as a resident entity. Furthermore, the business activities can be different from the parent company which give flexibility.
Accountancy Hub specialises in setting up local and offshore companies, providing support for all statutory requirements in different stages of a business. Do feel free to contact us for a discussion so that you can have a better understanding of doing business in Singapore.