Subsidiary versus Branch Office in Singapore

Updated 2 years ago by QuentinC

  • Establishing a branch office by registering the foreign company in Singapore;
  • Or establishing a subsidiary.

The type of structure you decide to choose will affect a list of things such as the tax you will pay, liability and more. 

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).

To run a subsidiary in Singapore, you need to comply with the 5 required requirements.

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


Did this answer your question?