Foreign Businessmen Guide: What is the Most Ideal Singapore Company for Them?
Foreign companies that want to have a business presence in Singapore are required to register a subsidiary company, branch office, or representative office, depending on their main goal and purpose of forming a Singapore company.
This is a short description for each of the three business entities for foreign companies wanting to expand their operation in Singapore.
Representative office
This arrangement is not legally considered as a business entity since it is not allowed to engage in any commercial and profit-generating activities. Essentially, this office is only created to conduct market research that will allow a foreign company to determine the viability of its business in the country.
These are the other purposes of a representative office: overseeing the activities of the local distributors and agents of its parent company; engaging in negotiation deals but has no legal right to enter into a contract; and providing customer services as long as these are not related to technical and repair inquiries.
While there are several limitations on the activities of a Singapore branch office, this arrangement is ideal for foreign businessmen who want to determine the profitability of their business before investing huge sums of money.
Subsidiary company
For foreign companies wanting to engage in a full-blown operation in Singapore, a subsidiary company is the most ideal business entity with its several tax incentives and limited liability protection.
According to corporate lawyers, a subsidiary company is treated as a separate entity from its company. With this arrangement, the main office is not legally responsible for the debts, losses, and liabilities of its Singapore subsidiary company.
As a business incorporated in Singapore, a subsidiary company is considered as a local resident which means that it can also enjoy several tax incentives and exemptions provided to local businesses.
Branch office
Just like a subsidiary company, a branch office can also engage in business activities also performed by its parent company. But overall, there are glaring differences between these two business arrangements.
First, a branch office is treated as a legal extension of its main office which means that the parent company is directly liable for its losses, debts, and liabilities.
The second major difference is that a branch office, being a legal extension of a foreign company, does not enjoy tax benefits provided to any subsidiary companies or local businesses.
And lastly, a branch office is required to submit even the audited accounts of its parent company, a requirement which may put off some foreign companies and businessmen.
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