Singapore Business registration firm AsiaBizServices believes that a subsidiary company is the most ideal business formation for foreign companies and entrepreneurs who want to expand their operation to Singapore.
“There are three business formations a foreign company or businessman can adopt—a representative office, branch office, and subsidiary company which we believe as the most ideal with its tax benefits, limited liability, and bankruptcy protection”, AsiaBizServices spokesman said.
A subsidiary company, which allows a 100 percent foreign ownership, can enjoy local tax benefits since it is incorporated in Singapore. With this advantage, this business entity has become popular among foreign entrepreneurs and investors.
Another advantage is that a foreign company can enjoy limited liability which means that it is not legally liable for any losses, liabilities, and debts of its Singapore subsidiary company.
When it comes to tax benefits, a subsidiary company has countless to offer since it is treated as a local resident (being incorporated in Singapore). This is not the case for a branch office which is considered as a legal extension of its parent company.
According to AsiaBizServices, a subsidiary company may have a different name from its main office and is allowed to conduct any business activities as long as these are considered legal in the country. Meanwhile, the business solutions provider added that this is not the case for a branch office which is only allowed to conduct activities performed by its parent company.
When it comes to disclosure requirement, a subsidiary company is better than a branch office since it is only obligated to submit its own audited account and not its parent company’s. This arrangement does not apply to a branch office which may not be appealing to some foreign investors and businessmen.
It is important to note that foreign businessmen and companies are prohibited by the government to self-register a subsidiary company or any business entity. With this, they need to hire a professional firm that will conduct all the processes involved in business registration and compliance matters.
In addition, it is a requirement to appoint at least one local resident director who may be a Singaporean citizen or holder of Permanent Residence Status, EntrePass, or Employment Pass; designate a qualified resident secretary; and maintain a registered office address where a subsidiary company’s statutory documents are kept.
“There are several compliance matters which must be met so that foreign businessmen can legally operate a Singapore company. With this consideration, they should hire a professional firm which must be accredited by the Accounting and Corporate Regulatory Authority (ACRA),” AsiaBizServices added.
Singapore EntrePass is a special employment pass designed specifically to facilitate the entry and stay of entrepreneurs who are ready to start a new business in Singapore. View more information on How to apply for a Singapore EntrePass to relocate to Singapore.
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