A foreign firm has three options for setting up a shop in Singapore: subsidiary, branch, or representative office. The primary distinctions between these buildings are as follows:
The parent business owns all of the shares of a locally established company that is a subsidiary. It is subject to Singapore’s corporation tax rate and may take advantage of tax breaks and incentives offered by the government of Singapore. Last but not least, it is not responsible for the actions of its parent firm. Learn more about overseas company registration singapore.
An overseas firm’s branch office is not a distinct entity but an extension of the parent company. A bank branch is not eligible for the tax breaks afforded to a subsidiary since it is not a resident of the country where the parent business is based. Any debts accrued by a branch office are entirely on the parent firm. Get to know more about how you can setup company in singapore.
Foreign enterprises interested in researching the Singaporean market may set up a Representative Office (RO) there. Earning money as a RO is strictly forbidden. Since it is just a temporary administrative structure, it has no legal or tax consequences. An RO has a maximum life of three years and must be renewed annually.
In Singapore, most international firms employ a subsidiary company as their legal entity.
For the following reasons, several multinational corporations set their regional headquarters in Singapore:
Since private limited businesses in Singapore may have shareholders of any kind, including corporations, a subsidiary’s ownership structure can be quite fluid. If the parent foreign firm chooses so, it may be the only stakeholder in the subsidiary.
Unlike its parent corporation, a subsidiary may exist independently from its parent. This means it doesn’t have to use the parent’s name or engage in the parent’s business. The parent business is shielded from the subsidiary’s obligations and liabilities thanks to the subsidiary’s distinct legal standing. These obligations do not get transferred to the parent company.