Foreign companies that want to have a business presence in Singapore can setup a Singapore branch office that is treated as an extension of its parent company. With this arrangement, the head office has a direct liability for all the activities.
This business formation is considered as a non-resident entity which means that it is not eligible for any tax benefits and exemptions which are typically enjoyed by local companies in Singapore.
In terms of taxation benefits, this business arrangement is generally not appealing. However, it is important to note that only the sales and revenues of the branch office will be covered by taxes and not the parent company’s.
According to the Accounting and Corporate Regulatory Authority (ACRA), the name of a branch office should be the same as its parent company unless if the business name is already existing in Singapore.
Under the Singapore Companies Act, a foreign company is required to appoint at least two local residents who will act as a director to oversee the activities of the branch office. Meanwhile, there is no requirement on the number of foreign or local staff who will be employed by a branch office.
In addition, this Act allows a branch office to perform any business activities as long as these are in line with the parent company’s goals and nature of business, and are considered legal in Singapore.
One downside of a branch office is that even the parent company is required to submit its audited accounts every fiscal year, an arrangement that most foreign entrepreneurs are not comfortable with.
It is important to note that ACRA does not allow foreign individuals and business entities to self-register their own companies. With this consideration, it is important for foreigners to hire a professional firm that can assist them in the registration processes.
The processing for branch office registration generally takes one to two days. This can take place even without the presence of the foreign entrepreneurs or their employee-representatives (since their hired professional firm will act on their behalf).
Meanwhile, ACRA will send an email notification if the branch and its name has been approved. There is no hard copy provided unless a foreign company will request for this during the post registration process.
In Singapore, email notifications are sufficient for most business transactions such as the signing of office lease agreement and bank account opening.