Singapore Branch vs Subsidiary vs Representative Office
A foreign company planning to setup an office or expand their business in Singapore has several options that they may consider for their company structure. This article compares the three types of business entity to help a foreign company decide the best structure that is most suited to their particular needs.
A key point to note is that a representative office is not allowed to engage in any business activity except market research and liaisoning activities. Two ways in which a foreign company may conduct business in Singapore are by registering a branch office or setting up a limited liability company (i.e. subsidiary company).
| Singapore Branch Office | Singapore Subsidiary Company | Singapore Representative Office | |
|---|---|---|---|
| Legal Type: | Not a separate legal entity but an extension of the parent company | Separate legal entity distinct from its parent company | Has no legal status, a temporary administrative arrangement |
| Liabilities: | Liabilities incurred by the branch office extend to parent company | Parent company can limit liabilities to subsidiary | Liabilities incurred by the representative office extend to parent company |
| Entity Name: | Must be the same name as the parent company and sign contracts under the parent company name | Can be the same or different from parent company | Must be the same as parent company plus must include ‘Representative Office’ |
| Allowed Activities: | Limited to the same range of activities as the parent company | Can be the same or different from parent company | Can only conduct market research or feasibility studies. Not allowed to conduct business activities that yield profit. |
| Validity Period: | Registered forever until closed | Registered forever until closed | Has to be renewed every year up to a maximum of 3 years. RO status is evaluated and renewed yearly. |
| Normal Registration Time: | 1-2 days | 1-2 days | 3-5 days |
| Taxation: | Taxed a flat corporate tax rate of 17% as non-resident entity, local tax benefits and exemption not available | Taxed a flat corporate tax rate of 17% as Singapore resident entity, local tax benefits available | Not applicable as representative office cannot generate income |
| Annual Filing: | Must file branch office as well as parent company’s accounts | Must file accounts of the Singapore subsidiary | Not applicable |
| Bank Account: | Can open a new corporate bank account in Singapore or use the same as the parent company | Can open bank account in Singapore | Can open bank account in Singapore to run the cost centre operations. Must be funded by the parent company. |
| Staff Hiring: | No restrictions on hiring local or foreign staff | No restrictions on hiring local or foreign staff | Chief Representative must be a staff member from the parent company. Can have only five employees. |
| Appointment of Officers: | Must appoint at least one local authorised representative | Must appoint at least one local resident director | Must appoint a Chief Representative who will relocate from headquarters |
You may also wish to refer to the related guide foreign company options in Singapore for more information.
