Company types in Singapore play an important part for every foreign company who wish to expand into Singapore. The Accounting and Corporate Regulatory Authority (ACRA) is the governing body that regulates all company registration, financial reporting, and more.
With that said, there are a few different types of business structures that business owners can choose from, namely:
To start off, we need to first understand the differences among the 4 company types in Singapore.
What is a Branch?
A branch is an extension of the foreign head office company, and it can engage in core activities like sales and contracts.
What is a Subsidiary?
A Singapore subsidiary company is a private limited company whose majority shareholder is a foreign company.
What is a Representative Office?
A Representative Office (RO) is a temporary set-up with no legal status so it cannot engage in any trading or business activities which yield a profit. Generally, the purpose of the representative office is to perform liaison services and establish business contacts, often as a precursor to the commencement of full-scale business activities in Singapore.
What is a Related Company?
This is the most common type of structure for sole business owners. For example, Jane can be the sole director and shareholder of her company in Singapore. In expanding to Malaysia, she can decide to set up a related company which is a separate legal entity whereby she is also the director and shareholder.
Which Business Structure is Best for You?
After understanding the different types of business structures in Singapore, we can now take a closer look at the deciding factors:
Factors | Subsidiary | Representative office | Branch | Related Company |
Suitable For | For local or Foreign Companies that wish to expand their operations in Singapore | For Foreign Companies that wish to set up temporary vehicle in Singapore to conduct research and act as liaison office | For Foreign Companies that wish to expand their operations in Singapore | Sole owners expanding their businesses overseas |
Liability | Separate Legal Entity | Not Separate Legal Entity | Not Separate Legal Entity | Separate Legal Entity |
Tax treatment | Taxed as Singapore resident entity, local tax benefits available. | Not applicable | Taxed as non-resident entity, local tax benefits not available. | Taxed as Singapore resident entity, local tax benefits available. |
Tax benefits | A subsidiary company, with at least one individual shareholder with minimum of 10 percent shareholding, is entitled to local tax incentives and rebates | No Corporate tax. Employees have to pay personal tax | Partial tax exemption | Entitled to local tax incentives and rebates |
Commercial Impact | Business parties might be less willing to work with RO as it is not a legal entity in Singapore. | |||
Minimum Setting up Requirement | Min One shareholder, that can be an Individual or corporate (100% local or foreign shareholding allowed). Must have at least one resident director | Must appoint a Chief Representative who will relocate from headquarters | Must have two Singapore Resident Agents | Min One shareholder, that can be an Individual or corporate (100% local or foreign shareholding allowed). Must have at least one resident director |
With the above factors in mind, we are one step closer to our final decision on the company type for your business. Let us break it down for you:
Why choose a Branch?
Why choose a Subsidiary?
Why choose a Representative Office?
Why choose a Related Company?
Conclusion
The features of different business structures in Singapore result in very different operations and planning. If you are unable to pinpoint your needs or require tax planning advice, approach Paul Hype Page. We have offices in multiple locations across Southeast Asia. Cross border incorporation and planning is our expertise.
FAQs
Singapore’s corporate tax rate has fallen dramatically over the past two decades. After peaking at 26%, the Singaporean government enacted many reductions to the corporate tax rate in the ensuing years. Today, Singapore’s corporate tax rates stands at just 17%.
Due to the unique characteristics of sole proprietorships and partnerships, IRAS does not consider them to be companies. Therefore, they are ineligible to receive any tax exemptions.
Ordinary business partnerships, limited partnerships, and limited liability partnerships differ in fundamental ways. The methods in which they are to be run contain significant differences. Therefore, these partnerships have to be classified separately.