Singapore boasts a favorable economic environment and offers a range of grants and enticing financial incentives to businesses. As a result, a significant number of multinational companies have selected Singapore as their regional hub in Asia.
The city-state benefits from a stable political and regulatory landscape, supported by an independent judiciary, which continues to attract investors worldwide on a daily basis. This conducive environment has propelled Singapore into becoming one of the premier global business centers.
Throughout this guide, we will navigate you through the comprehensive process of registering a company, within the dynamic startup ecosystem of the Lion City.
- What Are the Company Types Foreign Companies Can Choose?
- Tax Exemption Schemes and Rebates for Companies
- Company registration process in Singapore
- Conclusion
What Are the Company Types Foreign Companies Can Choose?
There are 3 types of companies foreign firms can choose to incorporate in Singapore:
- Subsidiary Company
- Branch Office
- Representative Office
We take a closer look at each of these company types below:
Subsidiary Company
A Singapore subsidiary office refers to a type of business entity that is incorporated as a private limited company in Singapore. It is wholly owned by a foreign company, known as the parent company, and operates under its own name.
Key features of the Subsidiary office
- Legal Status: A subsidiary office is considered a separate legal entity from its parent company. It has its own identity and is registered with the Accounting and Corporate Regulatory Authority (ACRA) in Singapore.
- Limited Liability: The liability of the subsidiary office is limited to its own assets and operations. This means that the parent company’s assets are generally protected from the liabilities of the subsidiary office.
- Activities: A subsidiary office can engage in a wide range of profit-generating business activities as permitted by law. However, it must comply with any industry-specific regulations or restrictions that may apply.
- Ownership: The parent company owns 100% of the shares of the subsidiary office. This gives the parent company full control over the operations and strategic decisions of the subsidiary.
- Taxation: The subsidiary office must adhere to Singapore’s tax regulations. It must file annual tax returns and pay taxes on its Singapore-sourced income. Singapore offers various tax incentives and exemptions that can benefit subsidiary offices, making it an attractive location for international business operations.
- Compliance: Similar to other business entities in Singapore, a subsidiary office must comply with regulatory requirements set by ACRA and other relevant government agencies.
Branch office
A Singapore branch office refers to a business entity that is established by a foreign company in Singapore. It operates as an extension of the foreign company, allowing it to conduct business activities and represent its interests in Singapore.
It is important to note that the name of the branch office must be the same as what is registered in the country of incorporation. The branch office also has to appoint a locally resident authorised representative, unlike that of a subsidiary company.
This representative must be a Singapore citizen, Permanent Resident (PR), or an individual with a valid Employment Pass (EP) issued by MOM.
Key Features of a Singapore Branch Office:
- Legal Status: A branch office is not considered a separate legal entity from its parent company. It operates under the same legal identity and bears the same name as the foreign company.
- Parent Company Liability: The parent company is fully responsible for all liabilities and obligations incurred by the branch office. This means that any debts or legal issues faced by the branch office may impact the parent company.
- Activities: A branch office can engage in profit-generating activities in Singapore, such as sales, marketing, and distribution. However, it cannot engage in activities that are prohibited for foreign companies or those restricted to specific industries.
- Taxation: The branch office is subject to tax regulations in Singapore. It must file annual tax returns and pay taxes on its Singapore-sourced income. Unlike a subsidiary office, a branch office cannot benefit from local tax benefits.
- Compliance: A branch office must comply with the statutory and disclosure requirements as stated in the Companies Act.
Representative Office
Foreign businesses exploring possible business opportunities in Singapore can establish a representative office (RO) before committing to a business venture.
This way, the foreign entity can evaluate Singapore’s business environment to help them decide whether they should set up a permanent establishment, such as a branch office or subsidiary company.
Key Features of a Singapore Representative Office:
- Legal Status and Activities: An RO is a temporary establishment without legal status. Hence, it cannot take part in any revenue-generating trading or business activities.
- Parent Company Liability: Like the branch office, the parent company is fully responsible for all liabilities incurred by the representative office. Hence, any debts or legal issues the representative office faces may impact the parent company.
- Taxation: Since a representative office cannot generate income, tax regulations do not apply and it is unable to receive any tax benefits.
Tax Exemption Schemes and Rebates for Companies
To support corporate start-ups, the Singapore tax authority has implemented a scheme offering sizable tax exemptions to resident companies. The two most common schemes are :
Start-Up Tax Exemption Scheme
The Start-Up Tax Exemption (SUTE) tax exemption scheme aims to support new businesses and entrepreneurs in the country.
This scheme is only available for the first three years of assessments. After this period, companies can apply for the partial tax exemption scheme (PTE).
To qualify, businesses must:
- Be a tax resident in Singapore; or
- Owned by no more than 20 shareholders (where all the shareholders are individuals; or
- At least one shareholder controls 10 percent of the issued shares).
Businesses must not be:
- An investment holding company; or
- Engaged in the property development industry, either for investments or for sale
Partial Tax Exemption
Companies that do not qualify for SUTE may be eligible for the Partial Tax Exemption (PTE) scheme.
Corporate Income Tax Rebate
A company is taxed at a flat rate of 17% on its chargeable income. However, resident companies will enjoy a 25% rebate of corporate income tax payable, subject to a cap of $15,000 per YA.
Company registration process in Singapore
Step 1: Fulfill the Eligibility Criteria
Before proceeding with the application to establish a Singapore private limited company through ACRA, you need to meet the following criteria:
- Have at least one shareholder, who can be an individual or a company, with the option to have multiple shareholders, up to a maximum of 50. Foreign shareholders are allowed, and there’s no restriction on full foreign ownership.
- Maintain a minimum paid-up capital of $1. You can increase the capital later as needed by informing the relevant authorities.
- Appoint at least one local or resident director. While Singapore residents or foreign residents can serve as directors, corporate directors are not permitted. If required, you can utilize nominee director service.
- Employ a minimum of one company secretary who must be a Singaporean resident to ensure compliance with regulatory requirements.
- Have a local registered address where all official documents of the company will be stored; a PO box address is not acceptable.
- Engage a reliable ACRA-registered filing agent who can assist you throughout the entire process of registering your company locally.
Step 2: Choose a Company Name
To proceed, you must secure approval for your company name from the Singapore Registrar of Companies.
Provide your agent with 3-5 potential names, and they will verify their availability through the ACRA’s BizFile+ portal, reserving them for 60 days. If necessary, you can extend the reservation for another 60 days while completing your application. Consider the following tips for smooth acceptance of your company name:
- Ensure it’s unique and relevant to your business.
- Avoid using vulgar or obscene language.
- Adhere to copyright and trademark guidelines to prevent infringement issues.
Step 3: Prepare and submit the required registration documents
Once your company name is approved, you’ll need to gather and submit various documents to ACRA for the registration process. These include:
- Company constitution
- Consent by each company director
- Appointed company secretary documents
- Declaration of the company’s controllers
- Brief details of your business profile and activities
- Your registered office address
- Details of shareholders, directors, company secretary, and business structure
- If you’re a foreigner, a copy of your passport, evidence of your address in your home country (e.g., India), local residential address, and permanent resident verification
- If you’re registering a foreign company, provide the Memorandum and Articles of Association (M&AA) and your company’s Certificate of Incorporation
Ensure that all documents are accurately prepared, signed, and submitted through your appointed agent, who will initiate the incorporation procedure via ACRA’s BizFile+ portal. Additionally, if any of your documents are not in English, make sure to have them translated by a reliable source.
Step 4: Finalize registration and initiate bank account setup
Upon submission, ACRA typically processes your application within 1-3 days. Occasionally, applications may be referred to higher authorities within ACRA, extending the approval timeline to up to two months.
Once your company is successfully registered, ACRA will issue a notice of incorporation via email, serving as a valid certificate of incorporation in Singapore.
Following registration, several crucial tasks must be completed before commencing business operations:
- First board resolution: Shareholders must convene a meeting to pass resolutions appointing directors, auditors, secretaries, and other necessary positions. A resolution to open a corporate bank account should also be approved.
- Share certificates: Your company secretary must issue share certificates to all shareholders, detailing their respective stakes in the company.
- Company seal and stamp: Obtain the company seal and stamp to authenticate documents.
- Bank account opening: Travel to Singapore to open a corporate bank account, streamlining financial transactions and maintaining separation between personal and business finances.
- Business license and permits: Determine if additional licenses or permits are required before commencing business activities. Apply to relevant authorities, pay applicable fees, and obtain necessary permits.
- Business insurance: Purchase appropriate commercial insurance to reduce liability in the event of work-related accidents.
Conclusion
Starting a company in Singapore is seamless. With its minimal requirements, it’s one of the easiest places globally to kickstart a business, even bagging the #2 spot in the World Bank’s Doing Business rankings.
Need help with registration or setting up a bank account? Let RBA lead you through a straightforward company registration process effortlessly!
