How To Setup A Singapore Subsidiary Company

Setting up a subsidiary company in Singapore is one of the most strategic and accessible ways for foreign companies to expand into the Asian market. Singapore’s pro-investment legislation, competitive tax incentives, and strong regulatory framework make it a preferred location for international companies. Over 37,000 foreign companies have established regional headquarters here, leveraging Singapore’s business-friendly ecosystem.

This guide explains what a subsidiary is, how to register one, the benefits, KYC obligations, annual compliance, and common challenges.

What is a Singapore Subsidiary Company?

A subsidiary is a private limited company (Pte Ltd) that is wholly or majority-owned by a parent company. This structure allows the parent company to maintain control while limiting liability.

• Wholly Owned Subsidiary: Parent holds 100% of shares.
• Majority-Owned Subsidiary: Parent holds 50–99% of shares, with the remaining held by individuals or corporate entities.

Subsidiaries are separate legal entities and are treated as local tax residents, giving access to Singapore’s extensive tax treaties, exemptions, and incentives.
Example: To qualify for most government-funded grants, at least 30% of the company must be locally owned, either by a Singaporean or a local entity.

Share Ownership of a Subsidiary

• Foreign parent must hold minimum 50% of shares to classify the entity as a subsidiary.
• Ownership levels affect accounting, licensing, and corporate governance.
• Remaining shares (1–50%) can be held by individuals or corporate entities.

Subsidiary vs Private Limited Company

A subsidiary is essentially a Pte Ltd company:

• Maximum 50 shareholders
• Shares cannot be publicly traded
• Typically, the shareholder is the foreign parent company
• Fully independent under Singapore law
• Eligible for local incentives and grants

Advantages of Setting Up a Subsidiary in Singapore

1. Full Foreign Ownership

• Singapore allows 100% foreign ownership in Pte Ltd companies.
• Only one resident director is mandatory.

Example: A property developer forming a subsidiary for a new project protects the parent company’s assets. Lawsuits, debts, or taxes are limited to the subsidiary.

2. Limited Liability

• The parent company is only liable for the capital invested in the subsidiary.
• Debts and liabilities of the subsidiary do not affect the parent entity.

3. Tax Benefits

Singapore subsidiaries enjoy:

• Flat 17% corporate tax rate
• Partial tax exemptions for new startups
• Avoidance of double taxation through 90+ Double Tax Agreements (DTAs)
• Exemptions on dividends and certain foreign-sourced income

4. Business-Friendly Environment

• Fully digital incorporation process
• Quick and cost-effective registration
• Transparent regulatory framework and pro-investment policies

Know Your Customer (KYC) Requirements

KYC compliance is mandatory for both banks and Corporate Service Providers (CSPs) to meet AML and CTF regulations.

Bank KYC for Corporate Accounts

• Source of funds
• Business nature and industry
• Customer profiles and locations
• Projected financial activity
• Management and control (local or foreign)
• Local presence: staff and office

CSP KYC Requirements

• Verify directors and shareholders (passport, IC)
• Proof of residential address
• Corporate documents for parent company (if applicable)
• Professional and business background

Completing KYC early ensures smooth incorporation and bank account setup.

Filing Annual Returns for a Subsidiary

All Singapore subsidiaries must comply with annual statutory obligations under the Companies Act (Sections 175, 197, 201):

• Hold Annual General Meetings (AGMs)
• Present financial statements to shareholders
• File annual returns with ACRA

Corporate Secretarial Support ensures:

• AGM convened on time
• Annual returns filed promptly
• Financial statements comply with Singapore Financial Reporting Standards (SFRS)

Non-compliance may lead to penalties or striking off from the ACRA register.

ACRA Annual Compliance Overview

Singapore Tax Rates for Subsidiaries

• Flat 17% corporate tax rate for local and foreign-owned subsidiaries
• Partial tax exemptions for new start-ups
• Includes companies limited by guarantee

How to Register a Singapore Subsidiary

Requirements:

• At least one resident director (Singapore Citizen, PR, Employment Pass,  EntrePass, or Dependent Pass holder)
• Shareholders can be individuals or corporate entities (local or foreign)
• Minimum paid-up capital: S$1
• Registered office must be physical in Singapore
• Must appoint a Singapore-resident company secretary

Documents Required:

Resident directors/shareholders:

• Singapore IC copy
• Passport (if non-citizen)

Non-resident directors/shareholders:

• Passport
• Proof of residential address

Corporate shareholder:

• Certificate of incorporation
• Special director resolution

All documents must be in English or officially translated, certified true copies, or originals sighted by our team.
Once incorporated, you can open a corporate bank account locally or with international banks operating in Singapore.

Common Challenges When Registering a Subsidiary

1. Incomplete Documentation: Notarized, translated, or mismatched documents cause delays.
2. Legal Misunderstanding: Missing appointments for company secretary or failing to file taxes/annual returns.
3. Wrong SSIC Code: Leads to licensing issues or denial of tax incentives.
4. Resident Director Appointment: Foreign owners must appoint a local director, sometimes requiring nominee services.
5. Operational Integration: Understanding local market norms, labor laws, and HR regulations is essential.
6. Self-Registration Mistakes: Foreigners cannot self-register without a licensed filing agent.