Options for foreigners when incorporating company in Singapore - PowerPoint PPT Presentation

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Options for foreigners when incorporating company in Singapore

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As the businesses are going global on 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 setup business in Singapore. A host of foreign companies have not only done company incorporation Singapore but have invested and earned heavy profits especially over the last decade, testimony to this is the latest list of Forex reserves. A foreign individual/entity wanting to incorporating 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. For More information visit this link: – PowerPoint PPT presentation

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Title: Options for foreigners when incorporating company in Singapore


1
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.

2
  • 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.

3
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4
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.

5
  • 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. 

6
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. 

8
  • 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.

9
  • 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.

10
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. 

11
  • 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. 

12
  • 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.

15
  • 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.

17
  • 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.

18
  • 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/

20
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