In order for foreign companies to set up a business in Singapore and maintain presence, it is advisable for them to register their company as a subsidiary company. A subsidiary company is a private limited company whose major shareholder is a foreign (or local) corporate entity.
A Singapore subsidiary company, even if 100 percent owned by a foreign entity, is still eligible for tax exemption on its first S$100,000 chargeable income within three years of its incorporation. But to qualify for this exemption, a start up company should have at least one individual shareholder who has a minimum of 10 percent ownership.
In addition, this business model is also treated as a local resident which means that it can also enjoy the local tax benefits.
No wonder, a huge number of foreign companies and individuals have been attracted to doing business in Singapore due to the benefits the said business model provides.
In addition, foreign companies enjoy limited liability protection in which they are not legally liable for the losses and debts of their subsidiary company which is treated as a separate legal entity.
Another advantage is that a subsidiary company is allowed to conduct any business activities, even if not performed by its parent company, as long as these are legal in Singapore.
These are the other advantages of setting up a subsidiary company: no requirement when it comes to the number of staff (both foreign and local residents), no limit on the total business spending, and no need to file the audited accounts of its parent company from abroad.
Requirements for Setting Up a Subsidiary Company
A Singapore subsidiary company is required to have a registered local office where it should keep all its statutory documents.
It is a requirement to appoint a minimum of one resident director who may either be Singaporean citizen, permanent resident, or holder of Employment Pass in order for the company to legally operate in the country. In addition, it is important to take note that the appointed directors must be at least 18 years old and and free from any convictions of illegal practices.
Other requirements include an eligible secretary that will work for six months in the incorporation as well as an auditor who will be working for three months in the company registration.
In case that a parent company is planning to relocate its foreign staff to Singapore, it should assist its employees during the application of Employment Pass which is a work visa for professionals and skilled employees with college education.
As a separate legal entity from its parent company, a Singapore subsidiary company must exercise its management and control in the country which means that local resident directors can enjoy greater freedom when it comes to making decisions for their business.
In order to continue the presence of a company in Singapore there are other ways aside from a subsidiary company, it is through a representative office or branch office registration.
Since 1998, Rikvin (www.rikvin.com) consultancy has been providing highly professional company incorporation services, both in attractive standard packages as well as customised services. Online incorporation being a hallmark service, other services of Rikvin include Singapore Sole Proprietor Setup, Singapore Subsidiary Registration, Offshore Incorporation, EntrePass, Singapore Employment Pass, Personalised work Pass application, GST Registration, Accounting Services, Tax Planning & Consulting, and Business Plan Drafting.