Setting Up a Branch Office in Singapore 2024-25
Singapore is still regarded as one of the most business-friendly countries in the world, because to its low corporate tax rate, low levels of corruption, and strong judicial system. Singapore has outstanding transportation, technology, and infrastructure facilities, making it an attractive place for anyone looking to establish a business in Singapore.
Foreign companies wishing to do business in Singapore typically form a Singapore subsidiary or open an office branch.A branch office in Singapore is a company that serves as an affiliate of a multinational corporation. The parent firm’s Singapore branch office is not a separate legal entity.
So, before creating branches, assess whether it is the best arrangement for your company’s needs.This article provides comprehensive information on opening a branch office in Singapore in 2024-25.
Key Facts About Starting a Branch Office in Singapore
Down below, we have mentioned the key factor for the setting up of a branch office in Singapore.
- Foreign corporations must utilise the services of a registered filing agent, such as a corporate service provider, to register a branch office with the Accounting and Corporate Regulatory Authority.
- Branch offices can be viewed as an expansion of the primary corporation.So, any debts or liabilities incurred by the branch offices are passed to the parent company.Furthermore, if the Singapore branch office is sued, the case will be decided by a Singapore judge, and the business that owns it is liable for any judgements rendered in its favour.
- The branch office follows the main company’s constitution, which means it must perform the same tasks as the parent organisation.
- In tax terms, Branch offices are considered to be a non-resident and not eligible to receive tax incentive grants, incentives, or tax exemptions. In addition, branches do not be eligible for tax freedoms on abroad sourced revenue, or dual tax relaxation under Singapore’s system of Avoidance of Double Taxation Agreements (DTAs).
- A Singapore branch must include 1 regional person who lives in Singapore as a permanent native, Singapore citizen, or an Employment Pass Candidate.
Registration essentials for Setting up a Branch Office in Singapore
To register a branch office in Singapore, foreign firms need to engage the services of an approved filing agent, which is typically a corporate service provider. The following list provides the basic requirements for setting up a branch office in Singapore for registration purposes.
- Local representatives:- Branch offices are expected to possess at minimum 1 regional diplomat who is existing in Singapore. The representative from Singapore must be at minimum 18 years old. They can be either a Singapore citizen or a permanent resident of Singapore or Employment Pass holders.
- Address for registration in Singapore:– A branch office should include an enlisted regional address placed in Singapore. It is important to point out that the location must not be an address that is a PO box.
- Name of the branch: The name of the branch should be the same as its parent organization.
Documents Required for Registering a Branch Office in Singapore
The necessary documents required to register a branch office in Singapore:
- The name of an associated firm.
- Address of associated firm, which is situated outside of Singapore
- An official copy of the corporate certificate of incorporation for the associated firm.
- The certified version of the firm’s establishment
- A director’s listed of the associated company.
- The specifics of the authorized local representative
- Written consent from a representative of a local Singapore citizen who is to act as the representative local for the branch office
- A notice that contains the following details:
- the number for registration of a foreign company;
- the category of corporation executed by the foreign corporation; and
- how the lawful structure of the overseas corporation
- An image of the audited monetary reports
Registration Procedure for Setting up a Branch Office in Singapore
The registration method is consist of 2 steps: name approval as well as registration of the entity:
The branch office must be named exact as the primary firm. In general, the name will be approved within one hour. It is important to note that the name should not be identical to an existing business.
You will be required to register the branch office with the ACRA and submit all necessary documents along with it. The required documents include the business name, business address, business activities, etc. When the agent files all the required documents in order the registration process may take just 20 minutes.
Taxation of Branch Office in Singapore
Singapore has tax rates on the earnings of a branch office. If necessary the branch office must also be registered to collect the goods and services taxes (GST).
To be tax-efficient Branch offices are taxed as non-residents. Existing a non-resident branch office is a non-resident. The Singapore branch office is not able to profit from Singapore’s tax incentives, grants, or tax breaks.
Additionally, branches don’t have the right to tax exemption for certain foreign-sourced income, and they are not able to claim double tax relief from Singapore’s extensive system of Avoidance of Double Taxation Agreements (DTAs).
Requirements for Opening a Branch Office in Singapore
Department offices are expected to meet the laws for filing annually as set by ACRA and the tax authority of Singapore called IRAS. Failure to adhere could result in fines or penalties.
The filing requirements for the annual year of the Singapore Branch office are as the following:
- Create Financial Statements:- In accordance with Singapore Firm law branches must create a monetary report using Singapore Financial Reporting Standards (FRS). FRS almost matches International Financial Reporting Standards (IFRS).
- A file that is compatible with ACRA:- Singapore branch offices must submit their financial statements audited for audit to ACRA within 60 calendar days from the annual general meeting.
- The file is estimated (ECI) using IRAS:- Within three months of the financial year’s closing date, A Singapore branch office must report its income and ECI using the IRAS. ECI refers to the amount generated by the branch, fewer items like capital gains or disposals of assets fixed.
- Tax returns for income earned annually using IRAS:- An Singapore branch office must prepare an annual income tax return through the IRAS. Singapore utilizes a previous year’s base to calculate tax.
Taxes are calculated by calculating the earnings of the preceding year. Branch offices must complete income tax filings using IRAS on or before November 30 for filing on paper or before December 15 for filing electronically.
Branch Office vs Subsidiary Company in Singapore
In order to incorporate into Singapore, foreign firms typically decide for setting up a branch office in Singapore or a subsidiary company.
A branch office in foreign companies is not required to have an office director in the local area or secretary of the company.
However, branches have some disadvantages to be considered:
- A branch office isn’t an entity legal in its own right, it is merely one of its parent companies. Thus, the obligations and liabilities that the office has been passed directly to the parent business.
- Being a non-resident for tax purposes, branch offices are not able to profit from Singapore’s lavish tax incentives grant as well as exemptions.
- A branch office follows the same corporate constitution as the parent company, and consequently is required to perform the same functions as the parent company.
In contrast, a Singapore subsidiary offers greater flexibility and protection against liability from foreign-owned companies who want to establish a presence in Singapore:
- A legal entity distinct from the parent company A Singapore subsidiary’s liabilities and debts doesn’t extend to the parent company in foreign countries.
- Singapore affiliates are tax residents in Singapore and are eligible in Singapore for incentives to pay taxes, tax exemptions, as well as grants that are available in Singapore.
- A Singapore subsidiary is governed by its constitution for the company which gives it the right to engage in other business activities that are not those of the parent company.
Opening a branch office in Singapore may be advantageous for businesses looking to expand their operations in the nation. In the case of a branch office, the parent firm is accountable for all financial obligations and debts of the branch. Foreigners can establish a business in Singapore and there are no limitations on the hiring of foreign workers. Setting up a branch office in Singapore as long as the requirements are fulfilled by the individual.
If you’re still having a query regarding setting up a branch office in Singapore or any other question, we are OnDemand International. We’re here to assist you at each step of your way.
A branch office is not able to contract legally. The foreign company is the one engaging the contract and thus is responsible for the entire activities in the branches.
A branch is essentially an office located at a different location that acts in the same way as the main office. It is not a distinct legal entity which is why the parent company has the responsibility for the branch office.
When establishing a branch office, it is essential to appoint a local representative who must be at least 18 years old, have a registered business address, and the branch should have the same name as the parent corporation.
The branch office can be described as an office, which is different than the main office where business operations are carried out. The majority of branch offices are smaller divisions that cover different aspects of the business including marketing, human resources, and accounting.
Singapore tax is levied on the earnings of a branch office. If required, a branch office must also be registered to collect goods and service taxes (GST). To be tax-efficient branch offices are deemed, non-residents.