SUBSIDIARY ENTITY SET UP IN SINGAPORE

Considering a subsidiary entity set up in Singapore comes with risks. The venture can be costly, time-consuming and has no guarantee of success. Non-resident companies must open a legal entity to operate payroll in Singapore and generally opt for establishing a private limited liability subsidiary, particularly as a small and medium-sized operation, to gain a foothold in Singapore’s economy. Singapore is a financial and commercial powerhouse at the heart of Asian economies and a prime target for international expansion. Singapore’s pedigree is impressive. It is the only Asian nation with a Triple AAA credit rating, a hub for east and west shipping lanes (with the world’s second-largest port), while 50% of the world’s population is a six-hour flight away.

However, expanding overseas is a significant step, especially for companies opening a legal entity in their new territory thousands of miles from their home base. If the move fails, companies face the extra expenditure and stress of closing the business, selling property and paying off employees. The sensible alternative is to use a Professional Employment Organisation (PEO) and Employer of Record (EOR) such as Bradford Jacobs to locate the finest local talent and administer your payroll in Singapore speedily and risk-free. Your company will be up-and-running in days rather than weeks or even months.

How to Set Up a Singaporean Subsidiary?

A subsidiary entity set up in Singapore is a legal requirement for international companies planning to hire staff and run payroll. They typically choose to establish a limited liability company, which can be wholly foreign-owned and operates under the Singapore Companies Act. The Act covers incorporation, shares and shareholder regulations, duties of directors and officers, accounting, audits and other provisions.

General procedures and requirements include:

  • Verifying the company name is unique and reserving it with Accounting and Corporate Regulatory Authority (ACRA) via BizFile, then registering a company with ACRA to obtain the Unique Entity Number (UEN) that is used on all official documents.
  • Establishing business activities with the Singapore Standard Industrial Classification (SSIC) and obtaining any licenses relevant to business activities.
  • Registering with the Inland Revenue Authority of Singapore (IRAS).
  • Registering with Singapore Customs if the business involves importing and exporting.
  • Registering for Goods and Services Tax (GST), mandatory if taxable revenue exceeds SGD one million (€680,300, US$742,343).
  • Lodging details of directors, shareholders and SSIC code for the particular business activities with BizFile.
  • Once the application and reservation are approved, registering the business address, share capital and shareholders, directors and company secretary if applicable, company’s constitution and proof of paid fees with BizFile.
  • Completing Forms 45 and 45B for each director and company secretary.
  • Applying for the Central Provident Fund (CPF) Submission Number (CSN), enabling employers to undertake transactions with the CPF Board.
  • Once incorporated, with a minimum share capital of one Singapore dollar or equivalent in another currency, open a business bank account, complying with strict ‘Know Your Customer’ requirements.

Benefits of Setting Up a Singaporean Subsidiary

Specific advantages for a foreign company opening a private limited liability company in Singapore include the entity having a separate legal identity from the parent company. The subsidiary operates under the Singapore Companies Act, and the parent company’s liability is generally limited to its invested share capital. The same applies to its shareholders. The subsidiary is eligible for tax incentive schemes as a local and legal entity.

Through its subsidiary, the parent company has the advantage of maximizing opportunities of expanding further into Asia and the Pacific Rim. And Singapore is the ideal launch pad for such expansion. It is the only Asian nation with a Triple AAA credit rating, a focal point for east and west shipping lanes (with the world’s second-largest port), while 50% of the world’s population is a six-hour flight away.

Other benefits for a subsidiary:

  • Easier to obtain potential benefits and incentives and enter into contracts with other Singapore companies
  • More impact with clients and suppliers, as subsidiaries imply more permanency than branches
  • Employees feel there is more stability and job security than from being with a branch

In the broader commercial sense, opening a subsidiary makes a statement of a company’s commitment to expanding into foreign markets, in this case, the opportunities offered by Asian and Pacific Rim economies.

However, there is a more straightforward option to the risks and costs of setting up a subsidiary in Singapore by working with Bradford Jacobs. Using a PEO such as Bradford Jacobs means staff can be sourced, placed in their roles and be up and running within days rather than months. All the payroll, taxation and compliance difficulties are under control thanks to our EOR services.

Subsidiary Laws in Singapore

Foreign-owned subsidiaries in Singapore operate under the Companies Act and must incorporate under its laws.

Registration and Documentation:

  • Verified unique company name reserved with the Accounting and Corporate Regulatory Authority (ACRA) via BizFile
  • Registration with ACRA to obtain a Unique Entity Number (UEN)
  • Registering business activities with Singapore Standard Industrial Classification (SSIC) to obtain relevant licenses
  • Maintain registers as required by the Companies Act
  • Provide Certificate of Incorporation of the parent company, with an extract from Registrar of Companies, with registered address and details of shareholders

Accounts and Taxation:

  • Registering with the Inland Revenue Authority of Singapore (IRAS)
  • Registering with Singapore Customs if the business involves importing and exporting
  • Registering for Goods and Services Tax (GST), mandatory if taxable revenue exceeds SGD one million (€680,300, US$742,343)
  • Minimum share capital of the equivalent of one Singapore dollar unless specific business licenses stipulate a high amount
  • IRAS considers companies to be tax residents if they are managed in Singapore and its directors make decisions there
  • Corporate tax returns (Forms C-S or C) filed by November 30 (paper) or December 15 online
  • Supply annual audited accounts to ACRA

Management:

  • Lodging details of directors, shareholders and SSIC code for the particular business activities with BizFile
  • Completing Forms 45 and 45B for each director and company secretary
  • Minimum of one shareholder and a maximum of 50
  • Shareholders’ liability is generally restricted to their contribution, although courts can waive their rights.
  • Annual general meetings can be held within six months of financial year-end and returns filed within seven months. No legal requirement for board meetings
  • Register identities of shareholders and residential addresses of directors
  • The subsidiary must appoint at least one Singapore resident as a director, and the company secretary should also be a resident. No nationality requirements for shareholders

LOOKING TO EXPAND INTO SINGAPORE?

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