Foreign Company Registration Options in Singapore
Singapore Company Registration
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Overview
Singapore company registration is more and more straight forward process thanks to the digital system implemented by the government agency. However, to incorporate a company, you will need to under the different types of company structure and the tax implication before to proceed with the company set up in Singapore.
In the past consecutive years, Singapore has been praised as the world’s easiest place to run a business by the World Bank for several years. Country’s innovativeness, beneficial location in the very centre of Asia-Pacific, intelligent manpower, and cross-cultural mentality are other few advantages of setting up a company in Singapore.
With a relatively low corporate tax rate, effective business regulations and many other benefits, it is easy to understand why foreign businesses are moving to Singapore. If you are looking for a perfect launching pad for your new company, Singapore is the place to be. Read further to learn more about different types of company structure in Singapore.
Types of Companies in Singapore
Singapore has a few types of business structures for incorporation such as a Private Limited company, Subsidiary, Public Limited company, Branch Office, Representative Office, Sole Proprietorship. In our Singapore incorporation guide, we will cover the entities that are the most beneficial for your business.
Choosing an appropriate legal entity is crucial as it will affect your corporate tax structure and whether you are eligible for certain corporate benefits in Singapore. Also, certain entity may not provide you with the control that you need if you are a big multi-national company.
We provide consultation for every kind of company entities and based on your background and business background and advice on how to proceed with the next stage.
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Private Limited Company in Singapore
If you are seeking for the legal form that would allow your business to grow and enjoy the widest range of powers without exposing your personal assets to risks, the Private Limited is for you. This legal form belongs to Limited Liability firms whose peculiarity is in limiting owners’ business liabilities to the firm’s share capital. Pte Ltd (Private Limited) is preferred by serious businesses aimed at expanding and international influence.
Features and Advantages of Private Limited Company
Share capital.
Legal status & powers.
Company's Image.
As a firm with a limited liability, the Pte Ltd is more appealing not only to suppliers and clients but also to bankers and investors. If you plan to receive loans or involving new investors, it is crucial for your company to have a limited liability and a detached legal status that gives full play for bold business actions.
Ownership/membership.
Tax
On top of enjoying one of the planet’s lowest corporate tax rates (17%), the Private Limited as a legal form preferred by the government is granted plenty of tax rebates. New Pte Ltd companies having no more than 20 shareholders enjoy 100% discount for the first earned (during the first 3 years) 100k SGD and 50% discount for the next earned 200k SGD. All other companies enjoy such rebates:
- If the normal changeable income isn’t more than 300k SGD, the Pte Ltd gets 75% exemption for its first 10k SGD of income and 50% exemption for the rest (up to 290k SGD). This way, the firm can save up to 152.5k SGD.
- During 2016-17 years of assessment, a company can get a one-time rebate of 30% (but no more than 20k SGD per the accounting period).
Singapore doesn’t impose the capital gain tax on the revenue if the corporate tax was already paid from this income. No dividend tax is applied as well.
Annual filing
Registration Requirements
- If a Private Limited company is being set up by a foreign founder, the government insists on the appointment of 1 local director and 1 secretary (the Singaporeans/PRs) who are real persons aged 18 and older. Incorporation in Singapore doesn’t require relocation of a founder, but if he wishes to hold the reins in the Pte Ltd, he needs to shift to Singapore using one of the available business passes: EP or EntrePass.
- New company ought to have a unique name. It shouldn’t be obscene or imitate other Singaporean company’s name. The suggested name must be checked by an incorporation consultant beforehand.
- New firm must have a real address in Singapore.
- Registration doesn’t require a physical presence of founders/directors.
- Although the registration is brief and usually takes a day or so, the preparations (developing a strategy, name check, obtaining the physical address, and paperwork) will take additional time (up to 1 week).
Subsidiary Company
If you already have a successful business overseas and seek for expanding your operations to Singapore, consider opening a Subsidiary which will allow you to control the activity of your new Singaporean firm and secure your personal property at the same time. The Subsidiary has the same “limited liability” nature as the Pte Ltd does, but the difference is that the Subsidiary has one major shareholder – its parent firm.
Features and Advantages of Subsidiary Company
Share capital.
Legal status & powers.
Image.
Ownership/membership.
Tax.
The Subsidiary enjoys the same tax benefits as the Private Limited: low corporate tax rate (17%), exemptions, and rebates.
After the Subsidiary pays the corporate tax from its revenue, no capital gain and dividend taxes are imposed. If the Subsidiary earned a profit abroad through its professional business activity, the income doesn’t undergo taxation in Singapore unless it was transferred to Singapore.
Annual filing.
All subsidiaries (without exemption because they have shareholders which are corporate bodies) must file their tax returns (using the Form C) and audited accounts every year before November, 30 based on the principle of preceding year (for the financial year that ends in the preceding calendar year). Each Subsidiary decides about its financial year on its own. 3 months after the accounting period ends, the Estimated Chargeable Income must be filed. The Subsidiary must maintain its documentation (bank statements, financial transactions, source documents, and so on) for each accounting period during 5 years. It must be filed with ACRA.
Registration Requirements
- For opening a Subsidiary, the government insists on the appointment of 1 local director and 1 secretary who are real individuals aged 18 or older ordinarily residing in Singapore. A foreign director doesn’t necessarily have to relocate to Singapore; however, if he wishes to hold the reins in the Subsidiary, one of the available business passes (EP or EntrePass) must be obtained by him. He cannot work in Singapore without a working pass.
- Subsidiary ought to have a unique name. It mustn’t be obscene or imitate other Singaporean company’s name. The suggested name must be checked by an incorporation consultant beforehand.
- New firm must have a real address in Singapore.
- Registration doesn’t require a physical presence.
- Although the registration is brief and usually takes a day or so, the preparation (strategizing, name check, getting the physical address, and paperwork) will take additional time (up to 1 week).
Singapore Branch Office
If you are seeking for establishing a presence of your overseas company in Singapore and saving on taxes, the Branch Office is the option for you. Unlike the Subsidiary, the Branch doesn’t belong to the group of companies with a limited liability, and therefore, such business formation suits only low-risk businesses. The parent firm is responsible for actions of its Singaporean Branch because legally the Branch is its extension.
Features and Advantages of Branch Office
Share capital.
Legal status & powers.
Image.
Ownership/membership.
Taxing.
The Branch office has a complicated scheme of tax. Being only an addition to its parent firm, the BO isn’t treated as a tax resident. One the one hand, it is a relief: if the company earns a profit abroad, Singapore doesn’t impose taxes on it. On the other hand, if this profit was brought or transmitted to Singapore, it becomes subject to taxes, and no exemptions and rebates common for the companies-residents are applied. The same is about incomes earned inside or from Singapore.
Annual filing.
All Branch Offices (without exemption because they are founded by corporate bodies) must file their tax return (using the Form C) and audited accounts every year. Peculiarity of filing for the Branch is that the Office must file audited accounts both for its overseas parent firm and itself; this way the IRAS will track the source of the Branch’s income (as taxing varies depending on the source). The filing must be handled annually before November, 30 based on the principle of the preceding year (for the financial year that ends in the preceding calendar year). Each Branch decides about its financial year on its own. 3 months after the accounting period ends, the Branch ought to file its Estimated Chargeable Income. Documentation for each accounting period (bank statements, financial transactions, source documents, and so on) must be maintained during 5 years.
Registration Requirements
- For opening a Branch Office, the government requires an appointment of 2 local agents (real Singaporeans/PRs older than 18 YO). A foreign director doesn’t necessarily have to relocate to Singapore; however, if he wishes to take the full charge of the Branch, he needs to qualify for one of the available business passes (EP or EntrePass).
- Branch Office must have a name that is similar to the parent firm’s name, unique (doesn’t copy the name of an already existing firm in Singapore) and isn’t obscene. The suggested name must be checked by an incorporation consultant beforehand. If the parent firm’s name is “engaged” in Singapore, the authorities may offer a compromise.
- New Branch must have a real address in Singapore for business correspondence and other purposes.
- Registration doesn’t require a physical presence.
- Although the registration of the BO is brief and usually takes a day or so, the preparation (strategizing, name check, getting the physical address, and paperwork) will take additional time (up to 1 week).
Representative Office in Singapore
If you plan to start a business in Singapore or expand your existing company’s influence to the region and you need to study the business surroundings and potential in Singapore before making a serious investment, the Representative Office is a right option for you. This business structure implies no traditional legal status, and, therefore, it cannot be used for a profitable activity, but it perfectly caters for such goal as exploring potential market opportunities. This provisional (3-year) business formation is the cheapest incorporation option as you are freed from paying the taxes and bothering with annual filing.Features and Advantages of Representative Office
Share capital.
Validity.
Image.
Legal status.
Taxing.
Annual filing.
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Registration Requirements
- Only foreign companies whose sales turnover is more than 250k SGD and that have operated successfully during the last 3 years qualify for registering the RO in Singapore.
- Overseas parent company must relocate to Singapore one representative who will take the charge of the Office’s activity. The foreign candidate needs to obtain the Employment Pass for such relocation. Except the representative, the office can hire the maximum of 5 local employees.
- RO must have a name that sounds similar to the parent firm’s name but doesn’t copy the name of any other local firm or sound obscene. The suggested name must be checked by the incorporation consultant beforehand. If the parent firm’s name is “engaged” in Singapore, the authorities may offer a tailor-made version.
- New RO must have a real address in Singapore for business correspondence and other purposes. The office must produce various communication materials (e.g. name plaques, staff name cards and so on) that witness to the fact of the Singaporean registration of this RO.
- Registration doesn’t require a physical presence.
- Although the registration of the BO is brief and usually takes a day or so, the preparation (strategising, name check, getting the physical address, and paperwork) will take additional time (up to 1 week).
- When the registration is finalised, the Representative Office obtains its central registration number. The number cannot be utilised for trading, but only for exporting and importing materials or sample products.
- RO must undergo renewals every year and keep the authorities updated on any changes in the Office’s activity, address, or structure. If the RO fails to meet the terms of the authorities or becomes dormant, it gets de-registered.
If you are unsure of the Singapore company registration process and need guidance on the best business structure suitable for you. You can contact us for a risk-free assessment on your requirements.
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