Singapore Company Incorporation with Paul Hype Page
Company Registration at Paul Hype Page Singapore

Definition of the Term “Foreign Subsidiary”

In Singapore, a foreign subsidiary is defined as a private limited company which has been incorporated in Singapore and which has a corporate entity as its primary shareholder. Most small or medium-sized foreign companies that intend to build a presence in Singapore or the Asia-Pacific region in general will often choose to incorporate a foreign subsidiary.

How to Incorporate a Foreign Subsidiary in Singapore

According to Accounting and Corporate Regulatory Authority (ACRA) Requirement, to incorporate a foreign subsidiary in Singapore, a company must have a resident director, a shareholder, at least S$1 paid-up capital, a physical local address, a company secretary, a company constitution, and a company name.

Required Documents

There are certain required documents to incorporate a subsidiary in Singapore. To incorporate a subsidiary, Singapore resident individual shareholders and directors require a copy of a Singapore IC whereas the non-resident individual shareholders and directors will need a copy of a passport and a copy of residential address proof (e.g. a recent utility bill, residential phone bill, tax bill, or cable TV bill).

Types of banks in Singapore

Securing a corporate bank account is part of the subsidiary incorporation processes. There are different types of banks in Singapore that allow a subsidiary to open a business bank account. Local banks, foreign banks, and digital banks are some of the examples. A subsidiary does have a lot of choices in opening its corporate bank account. Depending on the subsidiary’s needs and preferences, opening a corporate bank account in Singapore can be easy or complex.

If a subsidiary is looking for a hassle-free business bank accounts opening experience, opening a business account with Aspire could be a good option. Aspire business account can be opened entirely online with Paul Hype Page. It is free, and no minimum deposit is required.

With Aspire, business owners can have fast and simple access to financial services for their business operations anywhere and at any time through their mobile phones. They can also enjoy cashback for their “online marketing” expenses. Aspire offers cashback for Facebook Advertising, LinkedIn Advertising, and Google Advertising as well as Software-As-A-Service (SaaS) like Google Suite and Mailchimp.

There are also no monthly fees, fall below fees, or FAST transfer fees. More features can be found on their website:

Want to Start business in Singapore
Want to Start business in Singapore

What Must Be Done After Incorporation of a Foreign Subsidiary

After the subsidiary has been incorporated, there is still much to be done. At this point, the subsidiary exists as a separate legal entity from the company to which it is linked.

Apply for a license

This subsidiary will often be required to apply for a license if it is to operate in any of several certain industries. The subsidiary is to apply for this license under its name.

Apply Employment Pass for employees

If the subsidiary’s foreign parent company is interested in sending some of its workers to work in the Singapore subsidiary, the parent company must apply for Employment Passes or any other relevant passes or permits. The parent company may refer to the Singapore Ministry of Manpower’s website for further information or Paul Hype Page will be happy to assist with this.

Learn Singapore Regulation

Of course, the new subsidiary is required to comply with all regulatory requirements in Singapore which are currently in force. There is much information on the Internet about such requirements, so learning about them is not a difficult task.

Required Documents for Incorporation Singapore Subsidiary

Benefits of Setting Up a Foreign Subsidiary in Singapore

Separate legal entities

There are several reasons why a foreign parent-company might choose to set up a foreign subsidiary in Singapore. Since a subsidiary and its parent-company are separate legal entities, the parent company will not be directly liable for any debts incurred by the subsidiary. It will also not be held responsible if any legal action is to be taken against the subsidiary.

Reduce liabilities

If the subsidiary were to become insolvent, the parent-company may be able to reduce its liabilities to the subsidiary’s assets. It can also prevent these assets from being claimed by a creditor.

Taxed Less

If the control and management of the subsidiary are in Singapore, a foreign subsidiary that has been incorporated in Singapore will be regarded as a tax resident of Singapore. This means that because Singapore’s corporate tax rates are among the lowest in the world. Therefore, the subsidiary will most likely be taxed less than it would have been if it had been operating from its home country.

Further Information About Singapore Foreign Subsidiaries

A subsidiary does not have to operate under the same name as its parent company. It may opt to operate under any name which has received approval from ACRA. It may also conduct business activities that are different from those conducted by its parent company.

Registration for subsidiary incorporation may be completed online at BizFile+. Therefore, one doesn’t need to go to Singapore to incorporate the subsidiary.

A foreign subsidiary may repatriate any of its capital or profits to its parent company. The Companies Act spells out any capital return requirements which may apply.

Tax for subsidiary

Just like any other company based in Singapore, foreign subsidiaries are taxed at the standard corporate tax rate of 17% on taxable income. Should the subsidiary’s annual turnover exceed S$1 million, the subsidiary will also be subject to a 7% Goods and Services Tax (GST) charge on most of the goods and services it supplies.

Subsidiaries are also eligible for some of Singapore’s tax exemption schemes and tax benefits. For the first three years of assessment (YAs), subsidiaries receive a complete tax exemption on the first S$100,000 of chargeable income and a further tax exemption of 50% on the next S$200,000. The subsidiary’s next S$300,000 of chargeable income will have its first S$10,000 given a 75% tax exemption and the next S$290,000 a 50% tax exemption. Subsidiaries may also receive tax reductions or exemptions on income from countries with which Singapore has signed Double Taxation Agreements (DTAs).

Subsidiaries that are incorporated in Singapore are automatically registered for corporate income tax after they have been incorporated. The Inland Revenue Authority of Singapore (IRAS) will be duly notified after the incorporation. Subsidiaries with an annual turnover of S$1 million or more will have to register separately for GST status with IRAS.

Incorporation Singapore Subsidiary Requirements FAQs

Must the subsidiary use the same name as its parent company?2020-10-26T09:17:33+08:00

A subsidiary does not have to operate under the same name as its parent company. The subsidiary can use any name that is approved by ACRA.

Can the shareholder be a corporate entity?2020-10-26T09:16:57+08:00

Yes. The shareholder can be a corporate entity. 100% local or foreign shareholding is allowed. 

Does a subsidiary’s parent company have to be Incorporated in Singapore?2020-06-24T15:03:02+08:00

There is no requirement for the parent company of a subsidiary to have been incorporated in Singapore. Although a certificate of incorporation is required by the authorities, this certificate may be received from the authorities of the country in which the parent company had been incorporated.

Is it possible for a Foreign Subsidiary to be a Sole Proprietorship?2020-06-24T15:02