Foreign Company Registration Options in Singapore

Over the years, Singapore has positioned itself as one of the most attractive countries for companies to build their business. From creating a business-friendly environment with supportive government policies to harbouring a diverse pool of talent, there are several reasons as to why one might choose to set up their company on this island country. Foreign company registrations in Singapore can be done using several methods as mentioned below:

1. Incorporating a Private Limited Company

   Foreign entities may choose to incorporate a private limited company (“Subsidiary”) in Singapore. The Subsidiary is a separate legal entity from its parent company and is solely responsible for all its debts and legal obligations.

   The Subsidiary shall adhere to the Singapore taxation system and is required to have one resident director. The shareholder(s) of the company may all be foreign individual(s) or foreign corporation(s).

   The application for registration of a subsidiary must be submitted to the ACRA for review and approval.

   Some key considerations:
   • Subsidiaries are taxed at the prevailing corporate tax rate of 17%, which is relatively lower than many other countries.
   • Low risk management is ensured, given that the subsidiary is a separate legal entity. Hence, the parent company shall not be responsible for the debts of its subsidiary.
   • The subsidiary can engage in different business activities from its parent company.
   
   
2. Registering a Branch of a Foreign Company

   Companies looking to venture into the Singapore market as a foreign entity may register a branch in the country. Generally, a branch is not granted any tax exemptions under the Singapore taxation system and the parent entity is held responsible for any legal actions taken against the branch. Having a foreign status would also mean that the branch will not qualify for any audit exemption. The branch is thus required to file its own (unless dormant) as well as its head office’s audited financial statements annually. The branch is also not allowed to conduct any business activities outside the scope of its parent company.

   Some key considerations:
   • Risk management is crucial, given that any legal action against the branch is an action against the parent company.
   • Branch offices are required to file the audited financial statements of both the Head Office and the branch with ACRA.
   
   
3. Setting up a Representative Office

   Foreign companies looking to assess the viability of doing business in Singapore can set up a representative office (RO) to further explore Singapore’s market. However, this option does not serve as a long-term solution as such offices are not allowed to conduct any profit-making activities and are confined to market research, promotion, and liaison activities. An RO may operate in Singapore for a period of one year only from the date of commencement. Extensions are granted on a case-by-case basis, up to a maximum period of three (3) years. Should the foreign company wish to continue its operations in Singapore, it should register a branch or incorporate a company.

   Some key considerations:
   • ROs cannot conduct any profit-making activities.
   • ROs usually operate for a period of 1 year. Subsequent renewal is subject to approval of the relevant government agency. 
   
   
4. Transfer of Registration (re-domiciliation)
   A foreign corporate entity can choose to transfer its registration to Singapore, also known as, re-domiciliation. Once this is done, the foreign entity will effectively be recognised as a Singapore company and be required to comply with the Companies Act.
   
   Re-domiciliation allows foreign corporate entities to take advantage of Singapore’s stable political, economic and legal environment, pro-business regulatory framework, competitive tax regime, highly skilled workforce, and access financial and capital markets, among many other benefits that the country provides.
   
   There are many benefits of re-domiciling a foreign entity, however, it is crucial that businesses carefully examine others forms of registration to see which suits their needs the most.
   
   Some key considerations:
   • Foreign entity can preserve its corporate history, identity and branding.
   • Re-domiciliation is a permanent move and cannot be reversed. Currently, Singapore does not have the option of outward re-domiciliation.

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