Foreign Company Setup Option in Singapore
Once a foreign company establishes a presence in Singapore, the next crucial step is selecting the most suitable business structure for registration. This guide offers a comprehensive overview of foreign entities’ available business structure options.
Subsidiary Company vs Branch Office vs Representative Office
Subsidiary Company
A subsidiary company is the most popular structure chosen by foreign companies looking for incorporation of a company in Singapore. It is registered as a private limited company and operates as a separate legal entity from its parent company, offering liability protection and flexibility in operations.
A subsidiary company in Singapore can have a different name and business activities from its parent and enjoys Singapore’s low corporate tax rates and government incentives. This structure allows 100% foreign ownership and is ideal for businesses seeking to grow independently in Singapore.
Branch Office
A branch office is an extension of the parent foreign company and is not treated as a separate legal entity. It must use the same name and mirror the parent company’s business activities. While it allows foreign companies to operate in Singapore, the branch’s liabilities are directly tied to the parent company.
Branch offices do not qualify for local tax benefits or government incentives and require the appointment of two local agents to represent the branch. This option suits companies that wish to maintain tight control over their Singapore operations without forming a separate entity in Singapore.
Representative Office
A representative office (RO) is a temporary setup ideal for foreign companies exploring business opportunities in Singapore without engaging in commercial activities. It is not a legal entity and cannot generate income, enter into contracts, or undertake sales.
RO’s primary role is limited to conducting market research and feasibility studies. Valid for up to three years, an RO provides a low-risk entry route into the Singapore market. Still, businesses must upgrade to a subsidiary or branch office to start commercial operations.
What’s the Difference Between a Subsidiary, Branch Office, and Representative Office in Singapore?
This chart compares the three incorporation options for foreign companies intending to set up and operate in Singapore. Tax and compliance with regulatory requirements vary depending on the type of entity you choose to set up. As singapore company incorporation services expert, we aim to help owners choose the best option for their venture into Singapore and company registration in Singapore.
|
Types of Foreign Companies’ Structure |
Subsidiary Company Set up |
Branch Office |
Representative Office |
| Entity Name | Need not be the same as the parent company | Must be the same as the parent company | Must be the same as the parent company |
| Allowed Activities | Can conduct all business activities | Must be the same as the parent company | Can only conduct market research or coordinate activities |
| Suitable For | For local or Foreign Companies that wish to expand their operations in Singapore | For Foreign Companies that wish to expand their operations in Singapore | For Foreign Companies thatwant to set up a temporary vehicle in Singapore to conduct research and act as a liaison office |
| Disadvantages | Continuing Compliance Obligations, eg Financial Reports, Audit, AGMS, etc
* unless it qualifies for a certain exemption |
Continuing Compliance Obligations, eg Financial Reports, Audit, etc
** unless qualifications and exemptions are granted |
It is a temporary vehicle and cannot generate revenue |
| Ownership | Can be 100% foreign or locally owned | Owned 100% by the head office | No Ownership |
| Separate Legal Entity | Separate legal entity from the parent company | Separate legal entity from the parent company | Not a legal entity; temporary setup |
| Cap on Number of Members | Yes, max 50 | Not Applicable | Not Applicable |
| Minimum Setting Up Requirement | One shareholder, who can be an Individual or corporate (100% local or foreign shareholding allowed. Must have at least one resident director to set up the Company | Must have one Singapore Resident Authorised Representative to set up the Branch | Must appoint a Chief Representative who will relocate from headquarters |
| Limited Liability | Limited liability; parent company not liable for debts | Parent company bears full liability | Parent company bears full liability |
| Need for Audited Accounts | Yes * unless it qualifies for a certain exemption |
Yes ** unless qualifications and exemptions are granted |
No |
| Filing of Accounts with ACRA and IRAS | Yes * unless it qualifies for a certain exemption |
Yes | No |
| Annual Filing | Must file an audit report of the subsidiary * unless it qualifies for a certain exemption |
Must file branch offices’ as well as the parent company’s audit reports | Not Applicable |
| Tax Treatment | Taxed as a Singapore resident entity, local tax benefits are available, and it qualifies for group relief, and can claim foreign tax credit | Taxed as a non-resident entity, local tax benefits are not available, do not qualify for group relief, and cannot claim foreign tax credit | Not Applicable |
| Tax Benefits | A subsidiary company, with at least one individual shareholder with a minimum of 10 per cent shareholding, is entitled to local tax incentives and rebates | Partial tax exemption | No Corporate tax. Employees have to pay personal tax |
| Cessation of Business upon Death of a Member/Partner | No. Equity shares go on in perpetuity | No | Not Applicable |
| Validity Period | Perpetually until struck off by ACRA or liquidated | Perpetually until deregistered | Temporary and renewable on an annual basis for up to 3 years only |
| Normal Registration Time | 1 hour | 1 hour | 3 – 5 days |
| Appointment of Officers | Must appoint at least one resident director to set up the Company | Must appoint one resident authorised representative to set up the Branch | Must appoint a Chief Representative who will relocate from headquarters |
| Governing Body | ACRA & IRAS | ACRA & IRAS | International Enterprise Singapore |
| Bank Account | Can open a bank account in Singapore | Can open a bank account in Singapore | Can open a 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. |
| Requirement for setup | Not applicable | Not applicable | – Sales turnover of the foreign entity must be more than US$250,000- No. of years of establishment of the foreign entity must be more than 3 years- Proposed No. of staff should be less than 5 people |
| Local Person Requirement | 1 Nominee director is required for Company set up – $2,000 (W/GST $2,180) per year | 1 Local authorised representative is required | 1 Chief representative staff member from the head office who will relocate to Singapore. |
* All Singapore-incorporated companies must appoint an auditor within three months of the incorporation date, unless they qualify for an audit exemption under ACRA’s current “small company” framework, which remains in force as of 2025. To be exempted from audit requirements, a company must satisfy all of the following criteria:
For a company with its financial year beginning before 1 July 2015 (still applicable):
- The company does not have any corporate shareholders.
- The total number of individual shareholders must be less than 20.
- The annual turnover of the company must be less than S$5 million.
For a company with its financial year beginning on or after 1 July 2015 (which includes all companies assessed under the prevailing framework in 2025), they must qualify as a small company for the immediate past two consecutive financial years.
A company qualifies as a small company if:
(a) It is a private company in the financial year in question.
(b) It meets at least 2 of the three following criteria for the immediate past two consecutive financial years:
(i) Total annual revenue is not more than $10m.
(ii) Total assets are not more than $10m.
(iii) No. of employees is not more than 50.
For a company which is part of a group, to qualify for the audit exemption:
(a) The company must qualify as a small company.
(b) The entire group must be a “small group”.
For a group to be small, it must meet at least 2 of the three quantitative criteria consolidated for the past two consecutive financial years.
** A Singapore Branch that is dormant, is allowed to lodge with the Registrar, an unaudited profit and loss account concerning its operations in Singapore and an unaudited statement showing its assets used in and liabilities arising out of its operations in Singapore, without having to seek approval for waiver from filing of the documents of the Singapore Branch.
In conclusion, a Singapore branch office is considered a non-resident company for tax purposes, does not qualify for group relief, and cannot claim foreign tax credit. Non-resident companies are not eligible for tax incentives for new start-ups or resident companies. Besides, a Branch Office must appoint one local authorised representative to run its operations; therefore, most foreign companies prefer to set up a Subsidiary Company rather than a Branch Office. Last but not least, the authorities have been tightening the assessment criteria for setting up a Representative Office in recent years. Therefore, it is not advisable to always go with the option of a Representative Office.
To learn how to set up a subsidiary company, click Singapore Company Incorporation Services for details.
