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Open your Branch Office in Singapore
This will be your guide to starting a branch office in Singapore. Singapore provides new businesses with the lowest corporate tax rate in the world along with the necessary incentives to succeed. With a business-centric environment, companies are encouraged to grow and prosper in Singapore.
The Branch Office is the most cost-beneficial way to set up your foreign business’ presence in Singapore as it allows you to save lots of money by avoiding the corporate tax. The Branch Office acts as a local representation for the parent company that is situated overseas. This helps businesses make contacting their clients or consumers or even business partners that are based in Singapore to keep in communication or conduct business much easier.
What is a Branch Office?
The Branch Office is the most cost-beneficial business form that is directly connected to the parent company, ergo the word branch in the name. The Branch Office sets up a company with foreign business presence in Singapore and allows you to save a lot of money by avoiding the corporate tax. The Branch Office, however, has a significant drawback: it doesn’t protect the parent company’s assets because of the mutual legal entity they both share. The parent firm is liable before the Singapore law in the event of any breach, crimes or fraud committed. Being only the foreign firm’s extension, this form of business setup fits only those undertakings that aren’t associated with risks.
What is the difference between the Branch Office and the Representative Office?
There are several differences between the two business forms. Firstly, in terms of legal nature, the Branch Office is considered an extension of the foreign parent company (same legal entity), while the Representative Office has no legal entity at all. Second, the Branch Office is able to gain profit but the Representative Office is a non-profit organization. Lastly, the Branch Office is only free from corporate tax from profits outside of Singapore. The profits gained in Singapore through the Branch Office business will be subjected to taxes. This is in contrast to the Representative Office where taxes are waived fully.
- Lower tax rate: When compared to other profit-based legal entities, the BO is the cheapest one from the tax point of view. Singapore allows the income earned abroad to be repatriated tax-free. As the BO is not considered a tax resident in Singapore, it is not subjected to corporate tax unless the profit earned is within Singapore. Singaporean Branches are also exempted from paying the capital gain tax. This, in turn, allows you to save substantial amounts of money for you to use in other areas of your business.
- Benefits of incorporating: When incorporating your Branch Office, you can move crucial staff over by registering for the appropriate visas. As you are the employer, this saves you the trouble of finding a sponsor for your staff members. You are able to employ staff under the Employment Pass or the Entrepreneur Pass.
- Name Check: Your Branch Office’s name should resemble that to the parent company but should not replicate the name of an existing company in Singapore or sound vulgar. A proper name check should be conducted before incorporating your company to avoid any unnecessary issues during the process.
- Recruitment criteria: In order to set up a Branch Office, the foreign company is required to hire 2 adult Singaporean agents (citizens or PRs). The foreign company is also allowed to bring its executives and key employees to Singapore under the suitable work visas: the Employment Pass for employees and the Entrepreneur Pass for the Branch Director. All visa application (apart from the Branch Director’s application) are to be filed only after the Branch incorporation is completed.
- Address requirement: The Branch Office must be registered on a real Singaporean address.
- Post-incorporation: After a Branch has been registered, it will have to organize general meetings. In addition, accounts are to be audited and tax returns filed are to be filed every year.
- Private Limited: Although this might be the safest option, it is also very costly. This business structure fits undertakings that have a long-term outlook and are aimed at expanding, involving more investors, loans and buying property.
- Subsidiary: A subsidiary company retains all the benefits of a Private Limited Company, but the only difference is that the shares are held by one major shareholder that is a corporate body.
- Branch Office: If your business is not associated with risk, the foreign parent company can opt to register its Singapore firm as a Branch Office. The benefit of this structure is that it saves costs with regards to taxes as Branch Offices are not obligated to pay corporate tax. However, this business structure does not protect the parent firm as it is not considered a separate legal entity and is directly linked to the parent firm overseas.
- Representative Office: If a planned business activity is not aimed at gaining profit but its sole purpose is to represent, registering a Singaporean company under the Representative Office is what you will want. This business form is not subjected to taxes and filing.
How Can We Help?
Incorporation Advisory
Incorporation can be a hassle if you are unsure of the necessary documentation and legal paperwork required. Visa Express advises you on the best company form you should take to allow your business to grow and succeed. We will prepare you for what you will need in order to kick off your business immediately from the get go.
Local Address Services
In need of a local address? Unable to find one yourself? Visa Express will find one for you! We provide a fast and effective solution to your address problem. We will take you through the possible locations you could consider. Why trouble yourself with the minute details? Take away the unnecessary trouble and hassle of finding a local address today!
Local Directorship and Secretary Services
Visa Express can provide you with a local director and/or secretary if you are unable to find one before you move to Singapore on your business visa. This temporary solution to your problem allows you to ensure that authoritative power in your company will not be shifted.