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Epica FAQ Series

As a foreign organization, should we incorporate a subsidiary or register a branch office in Singapore?

Business Entities

As a foreign organization, should we incorporate a subsidiary or register a branch office in Singapore?

Subsidiary Company Vs Branch Office : Which one you should Choose?

A foreign company can choose to register itself as a subsidiary or a branch office in Singapore. You need to understand both to figure out which entity would work best for your business.

A Singapore Subsidiary

A company that is incorporated locally as a limited liability company is a subsidiary. The majority of stakeholder is a foreign or local company in a subsidiary. A subsidiary is a separate legal entity. However, the business activities carried out by a subsidiary can be the same or different from that of the parent company.

Most of the foreign companies who wish to establish a presence in Singapore chose this as an option. They can hold 100% of the Singapore subsidiary company’s shares and can enjoy all the tax benefits.

It is also exempted from the annual audit of the accounts as it qualifies as a small company

Your company would be considered a tax resident if you were to register a Singapore Subsidiary.

A Singapore Branch

A Singapore branch, however, wouldn’t be considered as a tax resident as the management and control is still owned by the parent company.

A subsidiary enjoys the tax benefits entitled:

  • Avoidance of Double Taxation Agreements (DTA) benefits
  • You are exempted from income tax from foreign-sourced dividends and foreign-sourced service income under section 13(8) of the Income Tax Act
  • 100% share allotment to corporate shareholders and partial exemption of tax if at least 10% shares to individual holders

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