Subsidiary versus Branch Office in Singapore
There are two main legal structures in which a foreign company may conduct business in Singapore.
- Establishing a branch office by registering the foreign company in Singapore;
- Or establishing a subsidiary.
What is a subsidiary?
A subsidiary is a private limited company (PTE LTD) in which the parent company is a corporate shareholder.
With a subsidiary you will be able to conduct your Singaporean business as a separate legal entity, limit your liability to the subsidiary and enjoy asset protection by the subsidiary company.
- Business activity: in terms of business activity, you can run a business completely different from the parent company.
- Annual compliance: in terms of annual compliance, you would need to prepare a set of financial statements and submit it in XBRL format when filing your annual return with Accounting and Corporate Regulatory Authority (ACRA).
What is a Branch office?
A branch office is an extension of a foreign parent company that has been registered outside of Singapore.
A branch office is seen as a non-resident company, hence why it will not be eligible for tax incentives and exemptions in Singapore. As it is not a separate legal entity, the parent company is liable for all the debts and liabilities of the branch office.
- Business activity: your business activities have to be aligned with your parent company, meaning it cannot be different. It can also generate commercial revenue aligned to the parent company however, a portion of the profits is subjected to the local corporate tax.
- Annual compliance: a branch office is required to submit the audited accounts of Parent Company and audited financial statements of its branch office.
Pros and cons between the two structures
| Subsidiary | Branch |
Legal nature | • Parent Company as the shareholder • Enjoys separate legal entity and asset protection | • Extension of the Parent Company • Not a separate legal entity • No asset protection |
Business activity | Can be different from the Parent Company | Align with the activities of the Parent Company (cannot be different from the Parent Company) |
Annual compliance | Required to prepare and submit financial statements in XBRL format. | Required to submit the audited accounts of Parent Company and the branch office. |
Tax incentives | Can enjoy tax incentives | Not eligible for tax incentives |
Appointment of officers | At least 1 local resident Director & Company Secretary | At least 1 authorized representative |
Company name | Can be different from the Parent Company | Must be the same as the Parent Company |
Registered office address | Mandatory | Mandatory |
Foreign ownership | Yes – foreign ownership is allowed | Serve as an extension to the Parent Company |
Opening a bank account | Yes | Yes |
Paid up capital | Minimum $1 (at 1 ordinary share) | Not required |
Registration requirements | • 1 or more resident directors • Paid-up capital: minimum S$1 • A registered address in Singapore • Company secretary | • Name: The name of the Singapore branch has to correspond to the name of the foreign company • Officers: A branch has to appoint at least 1 authorised representative who is a Singapore citizen, Permanent Resident, or someone who is on a visa such as an Employment Pass • Constitution and Activities: There is no separate constitution for the branch office. The branch’s activities are directed by foreign company’s constitution • A registered address in Singapore |
