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Any regular activity operating and aiming to generate profits in Singapore must register as a business entity with Accounting and Corporate Regulation Authorities (ACRA) first. For people residing in Singapore have a huge selection of business entity types to choose from—private limited company, public limited company, sole proprietorship, partnership and many more.
On the other hand, if a foreign company registered outside Singapore intends to start its operations in Singapore has limited options. If this foreign company wants to operate in Singapore, then it can either register its entity as a branch office with ACRA or register a separate subsidiary company. This guide will explain you, what is a branch office and how is it different from a company? Read this guide carefully and assess if a branch office will suit your business needs well in Singapore.
A branch office is not an independent business entity; it is just an extension of its parent company. It does not have a separate legal existence; it is just a branch office albeit it is in a foreign country.
Business owners usually get confused between a branch office and a subsidiary company, and they sometimes use the two different terms interchangeably. They will either refer to a branch when they are actually talking about a company or they will mislabel their preferred business entity. To give you a clearer picture of what a branch office is, read the example scenario below.
Suppose that you have a company registered in Sydney, Australia. Since you are experiencing good business growth, you have decided to diversify your operations by entering other markets, and lets say in this case its Brisbane. To pursue your new venture, you only have to open an additional branch and not register a separate and entirely new company. All the activities of your new office will be under its existing company. The reporting, profit and loss account creation, and preparation of financial statements of both operations in Brisbane and Sydney will also be summarized as one company.
Hence, a branch office is only an additional physical office of the company in another location.
Let’s use the concept of the previous example but this time, we will extend beyond geographical boundaries of the country.
Suppose that you have a company registered in Sydney, Australia, but you want to open a new office in Singapore. As a foreign business owner, you have two options when it comes to choosing a business structure for the company registration in Singapore: a branch office or subsidiary. If you choose to register a branch office in Singapore, it will still be considered as a part of its parent company in Australia even if it is located in another country. The financial results of your branch office now need to be filed with the financial results of its parent company in Australia. (Basically same concept of Branch Office is extended here but now it is spanning two countries)
However, the problem with this kind of arrangement is that your Australian company is not recognized in Singapore. For example, if you try to look for an office space in Singapore, you may have a hard time finding one. This is mainly because your company documents will show the landlord that your company originates from Australia. These landlords will not recognize your company because your Australian documents are not applicable to Singapore.
Your business operations may be also subjected to licensing conditions in Singapore, if you are in a regulated sector. However Singapore government authorities, may find it difficult to issue a license, as they will not recognize your Australian company. Similarly, if you try to open a corporate bank account, banks will also inquire about your company registration details in Singapore.
In summary, when you open a branch, you are only extending the operations of your company and are not essentially registering a new entity. However Since Singapore does not have any record of your company (Or branch), you will need to register your branch office with ACRA. This process is known as branch registration or foreign company registration in Singapore.
Technically here you register your company from your home country in Singapore so that the company can obtain business registration number in Singapore.
Remember these key points about a branch office:
If a business owner does not want to register a branch, then he or she can register a private limited company as a subsidiary company.
Foreign company owners typically choose a subsidiary when registering their companies in Singapore. Registering a subsidiary means creating an independent legal entity in Singapore, and owning shares in it. The parent company of a subsidiary can hold 100% of its shares. Being an independent legal entity, the liabilities of a subsidiary remain restricted to it, and do not reach back to the parent company.
Normally, when foreign entities register a company in Singapore, only 1% of its foreign entities will register as a branch office, and the remaining 99% will register as a subsidiary or an independent limited liability company.
Despite the complexities of a branch office, some business owners still prefer to choose this entity type when registering their companies in Singapore. In fact, there are circumstances when a branch office is more preferred and more necessary than a subsidiary company.
A reputable US pharmaceutical company wants to take advantage of its reputation and know-how in the business contracts in Singapore. Then, Singapore gives this company a contract to conduct a medical research on COVID-19. However, the Singapore government wants the research to be conducted by the parent company and does not want to have its independent company in Singapore. In this case, the parent company may decide to open a branch office in Singapore.
Another example would be the case of the airplane manufacturing company Boeing, which has a contract to provide and maintain aircraft components in Singapore. However, the contract has a warranty and schedule. If Boeing registers a separate entity in Singapore, there will be questions about the warranties and schedule of their aircraft components that are supplied. Their clients may not also agree to the new entity as they would want that the liabilities of the parent company remain in force. In addition, the contract may be a part of worldwide contracts that must be performed in Singapore. Therefore, Boeing may decide to register a branch office in Singapore and perform its activity here.
|Extension of Foreign Entity||Different Legal Entity|
|Liability reaches to parent Company||Liability of subsidiary is independent|
|No separate share capital. Parent Company’s share capital details entered||Separate share capital|
|No separate Directors. Parent company director details entered while registering branch||Directors can be separate from parent company Directors|
Resident Director / Agent
|1 Local Resident Agent||1 Local Resident Director|
|Must be same as parent Company (words “Singapore Branch” added)||Can be different from parent Company|
Memorandum and articles of association
|Parent Company M&AA needs to be submitted||Separate Constitution|
|Must be same as parent Company||Can be different than parent company|
|Must follow the parent Company Accounting year||Accounting year can be different from that of parent company|
|Compulsory||May not be Compulsory|
Filing Parent Company Accounts in Singapore
Changes in parent company constitution, Directors or share capital
|Must be lodged for the branch as a notification of change in Singapore||Parent company changes need not be notified|
Without a doubt, a subsidiary is easier to manage as far as compliance and maintenance are concerned.
Here are the major requirements of branch office registration in Singapore:
If you are a foreign company owner struggling to find a resident agent for your branch office, you may seek our help here at Epica. We can provide you with a nominee resident agent, which is an almost similar arrangement to a nominee director requirement during a company registration. We can also provide you with a nominee resident agent for a limited time during the branch registration process, in case you plan to apply for employment pass for your key staff after branch is registered.
A Know Your Client (KYC) is a procedure that collects the identification of business activities, the people behind these business activities, the identity documents of these people, and other related aspects. ACRA regulations mandates KYC to be conducted on every potential client. These are the following documents needed for KYC:
The directors, shareholders, and UBO of a company will be also required to submit identification documents. These include:
Unlike an independent limited liability company or subsidiary, a branch office is required to submit some additional documents for rergistration
The documents required when registering a branch office in Singapore include:
These documents must be written in or translated to English prior to submission. Your corporate secretarial provider (CSP) may also ask you for additional requirements.
When engaging our services, the branch office registration will have following broad steps.
When you contact us, our team will conduct initial engagement with you to handle all the important branch office registration formalities for you. This engagement may take two to three days, depending on your number of questions or clarifications. A phone interview or a Zoom call can be arranged for this process.
You have to provide us with your necessary details, such as identity documents for KYC, passport copy, proof of address, and more. This process may also take two to three days.
We will then prepare your documents for signing. If you are in Singapore, you can personally sign them with us. Otherwise, we can send them overseas. This process may only take one day.
In this step the actual branch registration happens. This process may take one day. The registration process of a branch office entails two fundamental measures: approval of the branch office name and registration of the business entity. Once the branch is registered, incorporation documents will be sent sent back to you via email.
We will introduce you to a bank representative for the opening of your corporate bank account.
The entire branch office registration can take six to seven days or longer if you have further questions or need more time to process the documents.
After you have registered your branch office, you will need to attend to some important matters. These may involve:
After successfully registering your branch office in Singapore, you will be required to open a corporate bank account. You can open a bank account in any local or international banks in Singapore. The bank account opening process may differ depending on the bank. Some banks also oblige company directors or agents to be physically present during this process.
If your branch is in trading operations, and if it intends to bring goods into Singapore (Or export it out of Singapore) then you will need to register it for customs purpose. This is a one time process and customs number is issued.
Depending on your specific circumstances, you may need to register for GST. The process usually takes 3 weeks.
If your branch operates in a regulated sector, then you may be required to take a license for the branch. The process duration will depend on what kind of license you need to take.
Singapore imposes taxes on the profits gained by a branch office. The income of the parent entity obviously is not taxed in Singapore. Every year you will be required to file Estimated Chargeable Income (ECI) and a tax return (Form C) for your branch office.
A branch office in Singapore is deemed as a non-resident company. Non-resident companies are not entitled to tax exemptions, incentives, treaties, and grants generally. However, the rules relating to it keep on changing. So please check with our team about the latest rulings.
A branch office in Singapore must also file certain annual requirements mandated by ACRA. Failure to comply may lead to penalties or fines. These requirements include:
Technical steps for registering a branch office in Singapore can take a few hours as the entire process is digital. Typical steps involved are:
If you really consider all the steps of collecting information, clarifying doubts etc, then we will say that the end to end process will take 6-7 days.
The Singapore Companies Act states that a branch office must comply with the following minimum requirements:
Many small- to medium-sized foreign company owners choose a subsidiary company because:
No. Registering a branch office in Singapore can be completed via emails or through electronic signing. Nevertheless, some banks require company owners to be physically present during the bank account opening process as it involves an interview with the stakeholders. Moreover, a personal meeting between the company owner and the bank officer can result in a more seamless process. If a company owner cannot personally visit Singapore during such process, then the bank may conduct a phone interview and the due diligence process can take longer.
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