Definition: What Is Representative Office in Singapore?The Representative Office is a special form of establishing a business presence in Singapore that, due to its specific legal nature, faces both tax benefits and serious limitations in activity. Unlike the Branch and the Subsidiary, the Representative Office isn’t considered a traditional corporate organism with a distinct legal entity. For this reason, this form of business can be used only for non-profitable activities such as studying the market, building connections, and doing the groundwork before launching a profitable activity.
Benefits and Features of Opening a Representative Office in Singapore
- RO hasn’t any legal status and doesn’t perform as a traditional corporate body. It means that this organization cannot conclude contracts, buy property, and be engaged in any profitable activity.
- Allowed activities are market research, developing connections, data analysis, and so on.
- Representative Office is a transient 3-year formation that must undergo the renewal every year. The Office’s validity cannot be extended. In 3 years, the foreign company must upgrade its Representative Office to another legal entity that permits profitable activity.
- RO has to keep the authorities updated on changes: new Singaporean address, switching over to another registered activity, changing the person of the representative, and so on.
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Advantages of Setting up Representative Office in Singapore
- As the RO hasn’t any legal status, it isn’t obliged to pay any taxes, have statutory documentation and handle yearly filing.
- Foreign company can appoint its own representative for the Singaporean Office.
Disadvantages of Representative Office Setup in Singapore
- RO isn’t permitted to get involved in such activities as trading, consultancy, supervising, advertising, mediating between the overseas parent company and clients, renting, and so on.
- If the Representative Office violates the governmental regulations or it is spotted in profitable activity, it will be deregistered. Dormant offices get deregistered as well.
- Except the chief Representative, the Office isn’t allowed to hire more foreigners. The RO’s must be staffed with local Singaporean (5 positions is maximum).
- RO is valid only during 3 years without an option of extension. If the foreign company fails to convert its Singapore Office into another legal entity, the Office will be wound up.
Difference between Branch and Representative Office SingaporeBoth the Representative Office and the Branch are used by their foreign parent companies for establishing their presence in SG; however, these business formations have lots of differences.
- Representative Office and the Branch have dissimilar legal natures: the Branch performs as an extension of its overseas company and uses its legal entity while the Representative office doesn’t possess any legal entity at all.
- Representative Office doesn’t perform as a traditional company because gaining profit is strictly prohibited for it: the Office can be used only for the “representative” activity such as the market study. On the contrary, the Branch Office can be used for a profit-making activity.
- Legal entity of the Branch Office requires audited accounts to be filed yearly and not only for the Branch itself but also for its foreign parent company. On the contrary, as the Representative Office hasn’t any legal status, annual filing and even maintaining statutory documentation isn’t needed.
- Branch can avoid paying the corporate tax only for revenues earned abroad while the Representative Office isn’t obliged to pay taxes at all.
Singapore Representative Office Requirements
- Representative office’s name must copy its parent company’s name and be unique in Singapore in the same time. To avoid a coincidence, it is better to check the name’s availability before starting the Representative Office registration. If the foreign company’s name cannot be used in Singapore, a custom decision will be made.
- Not all random foreign companies qualify for the RO registration. The foreign business must show a good track record during the last 3 years. Its annual sales turnover mustn’t be less than 250,000 SGD.
- All printed and other materials that will be used for the “representative” activity must mention the Singaporean address (registration) of the Office.
- Foreign company must appoint its own representative to take the charge of the Representative Office. The candidate must get a suitable work visa (usually, the Employment Pass). The visa application can be made only after the Office is registered. Except the representative, the office can hire no more than 5 local employees.
- The Representative Office cannot use its registration number for trading. It can be used only for the exportation/importation of some sample products.
- If the foreign company operates in the financial sector, it must take a piece of expert advice while registering the Singapore Representative Office in this niche due to restrictions. Our full Representative Office setup service includes consultancy and developing a winning company setup strategy.
- If the RO became dormant or failed to meet certain requirements (for example, undergoing renewals or staying within the scope of the registered activity), it must be deregistered. The same must be done if the foreign parent company became dormant itself.
Representative Office Singapore TaxAs the Representative Office doesn’t make profits due to the absence of the legal entity, it isn’t obliged to pay any taxes.
How to Set up Representative Office in Singapore: the Best Scheme and TimelineIn Singapore, you can have your Representative Office set up in a record-breaking short time – a single day. High-end technologies adopted by the Company Registrar enabled a fast business setup procedure free of any red tape. However, to benefit from such privileged Representative Office registration, a massive groundwork must be done:
- Name check. Ensure that the suggested name fulfils such criteria: it must sound unique and non-vulgar in Singapore and copy the parent company’s name in the same time. We will check your suggested name for availability and get it reserved for the period of time you need.
- Getting the Singaporean address. It must be the address of your real Office’s location that can be used on communication materials.
- Appointing the representative. We will help you to get qualified for the suitable work visa and prepare the outstanding application.
- Deliberate strategizing (for finance niches).
- Handling the paperwork for the Representative Office setup according to the local incorporation standards. All certified copies you are going to use must be endorsed and translated into English if they are non-English.