What is a Branch?
A branch is an extension of a foreign company’s head office. It can engage in core activities such as sales and contracts in Singapore but is not a separate legal entity. This means the parent company bears ultimate responsibility for any liabilities incurred by the Singapore branch.
- The parent company is fully accountable for the branch office’s activities.
- It operates independently in different locations worldwide, distinct from the head office.
What is a Subsidiary?
A subsidiary company in Singapore is a private limited company, typically majority-owned by a foreign company. The subsidiary operates as a separate legal entity, which means it’s liable only for the share capital it subscribes to.
- The parent company retains control over the subsidiary’s financial and operational policies.
- The subsidiary enjoys limited liability, protecting the foreign company from financial or legal issues related to the subsidiary.
What is a Representative Office?
A Representative Office (RO) is a temporary setup with no legal status. It cannot engage in profit-generating activities or conduct business operations. Generally, it serves as a liaison, establishing business contacts and gathering market information for potential future business in Singapore.
Which Business Structure is Best for You?
Now that we’ve covered the different types of business structures in Singapore, let’s examine some key factors to consider when deciding which structure is best for your business:
- What is the liability impact?
- What are the tax implications?
- What is the commercial impact?
- How easy is the business structure to set up?
| Factors | Subsidiary | Representative Office | Branch | Related Company |
|---|
| Suitable For | Foreign or local companies expanding in Singapore | Foreign companies setting up a temporary office | Foreign companies expanding in Singapore | Sole owners expanding businesses internationally |
| Liability | Separate legal entity | Not a separate legal entity | Not a separate legal entity | Separate legal entity |
| Tax Treatment | Taxed as a Singapore resident entity, eligible for local tax benefits | Not applicable | Taxed as a non-resident entity, local tax benefits not available | Taxed as a Singapore resident entity, eligible for local tax benefits |
| Tax Benefits | Eligible for local tax incentives and rebates | No corporate tax, employees pay personal tax | Partial tax exemption | Eligible for local tax incentives and rebates |
| Commercial Impact | Full operational flexibility | Limited operational capacity; cannot engage in sales or contracts | Centralized control but exposes the parent company to liabilities | Flexibility with separate entities in different jurisdictions |
| Minimum Setup Requirements | At least one shareholder (individual or corporate), one resident director | Must appoint a Chief Representative from the head office | Requires two Singapore resident agents | At least one shareholder (individual or corporate), one resident director |
Conclusion
Selecting the right business structure is vital to your operations and growth in Singapore. Consider key factors like liability protection, taxation, regulatory compliance, and growth potential before making a decision.
At Stars Bridge, we specialize in guiding businesses through the process of establishing a company in Singapore. Whether you need advice on tax planning, compliance, or the best structure for your business, our experts are here to help. Contact us today for professional advice tailored to your business needs.
