The same as the Private Limited Company, the Subsidiary is one of the most beneficial legal forms for doing business in SG. It combines the best perks of the Pte Ltd and the opportunity of being used for building up a presence of a foreign company in Singapore.
What is the Subsidiary company in Singapore?
- Firstly, it is a legal form that limits the owners’ liability to the firm’s shares. It means that the firm is responsible for its activity before the law on its own behalf risking only its shares while the personal assets of owners’/members’ are protected.
- Secondly, the Singapore Subsidiary definition implies that most of its shares are concentrated in the hands of one shareholder – the parent company. Legal entities of both the parent company and its Subsidiary are separated, and it means that the parent firm doesn’t risk its own business and personal assets in case of the Subsidiary’s failure.
- And thirdly, establishing a Subsidiary in Singapore is a perfect way to expand your business’ influence to the country without any personal risk: the parent company gets the profit, tax benefits, and protection in case of debts, legal prosecutions, and other harsh situations.
The same as the Pte Ltd, the Subsidiary can have no more than 50 shareholders with a foreign (parent) company holding most of the shares. As the subsidiary is a separate entity, it is authorized to sell its shares, pass them, and issue new ones for involving new investors. The SG government offers limited liability companies a beneficial tax mode that helps save a lot during the first years while the company expands.Opening a subsidiary in Singapore is the best choice for medium foreign businesses that are looking for new markets, tax benefits, protection in case of losses, and flexibility.
How to Set up Subsidiary Company in Singapore?
Incorporating a Singapore Subsidiary will be successful and strike your business target if you consider some crucial factors and fulfil the basic requirements of the Singapore Subsidiary legislation:
- This business model fits you if you have a company abroad which is going to hold the most of the Subsidiary’s shares. The total maximum number of shareholders is 50; however, the parent company can be the only shareholder and hold 100% of shares.
- There are no limits for the paid-up capital, but it has to be no less than 1 Singaporean dollar.
- Subsidiary must have a unique business name that doesn’t imitate the name of any other existing Singaporean firm or sound indecent. You should select this name before starting the Subsidiary registration procedure. We will assist you in selecting an appropriate name and getting it reserved for up to 60 days.
- Opening a subsidiary in Singapore requires appointing at least 1 local (adult Singaporean/PR) director. This requirement is usually challenging for foreigners as they have scarce connections in SG; that is why we will offer you one of our reliable candidates. Appointed director is a formality, and you will remain responsible for making all crucial business decisions from abroad. For shifting to Singapore and replacing the local director, a foreigner needs to obtain either the EntrePass or the Employment Pass.
- Your new Subsidiary firm must appoint a local Singaporean secretary within the first half a year after the incorporation. We will assist you in appointing this professional as well.
- Auditing is mandatory for some kinds of businesses. Find out your individual requirements from our Singapore incorporation team.
- If you plan to open a subsidiary for a financial activity (such as insurance or banking), you might need to get the approval of the authorities for the registration.
- Subsidiary ought to be registered on a real local Singaporean address.
- Obtaining a visa to SG isn’t obligatory for establishing a Subsidiary in Singapore unless you plan to shift to SG and lead your firm from inside. If you need to arrive before the registration for preparing the base for your future SG business, your only option is the EntrePass which, however, is challenging to get as it requires meeting lots of governmental “entrepreneurial” and “innovative” criteria and commitment. In contrast to that, getting qualified for the Employment Pass is much easier, but the Subsidiary’s director must be hired by this Subsidiary according to general conditions. If you don’t plan to shift to Singapore, you can run your Subsidiary from abroad and make short business visits using an appropriate short-term visa to SG.
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Advantages of Setting up Subsidiary Company
- Subsidiary means that most of the shares are concentrated in the hands of one shareholder and the liability of the firm’s members is limited with the paid-up capital. The subsidiary’s legal entity is separated from the parent company’s one, and, therefore in case of legal prosecution or debts, members risk nothing except the funds they contributed into the share capital in the very beginning.
- Subsidiary can conclude contracts, buy property, and manage its debts on its own behalf.
- Subsidiary has a form of ownership that doesn’t depend on its members’ death, resignation or insolvency. The firm continues its existence while its members can change.
- Firm registered as the Subsidiary can be sold by partial or total selling its shares.
- Banks and investors are more “open” to companies with limited liability, and as they risk less, they are more willing to give loans/invest into the Subsidiary company. New investors can be involved by issuing new shares.
- Opening a subsidiary in Singapore, you benefit from the tax incentives offered by the local government: the corporate tax rate ( 17%) is decreased to 8.5% for the first 300K SGD of the Subsidiary’s income. Members of the subsidiary don’t have to get their profit taxed with the income tax after the corporate tax was paid from this revenue.
- You can bring your own staff from overseas on appropriate work passes.
To get your Subsidiary registered with the ACRA, the company’s director needs to provide such information:
- Name of the company (you should check its availability in advance)
- Short overview of the Subsidiary’s business activity
- Data about the Subsidiary’s shareholders
- Data about the directors (1 local and foreigners)
- Data about the local Singaporean secretary
- Subsidiary’s registered address
- Standard MAA (Memorandum & Articles of Association)
Unless your papers are in English, you need to get them translated professionally and endorsed before moving on to the submission. In most cases, the paperwork for registering a Subsidiary in Singapore requires awareness of the government’s document standards and involves a great deal of time to manage it. As it is associated with doing the Subsidiary’s name check, appointing a Singaporean executive and staff, and address registration, it is wiser to get the entire paperwork managed by the same expert team that shoulders your Subsidiary registration. If you want us to orchestrate your incorporation, please provide us with such basic data:
- Parent company: its registration documentation.
- Singaporeans/PRs: copies of ID cards.
- Foreigners: copies of their passports, documents that prove the foreign registration, bank statements, business profiles and so on.
After you entrust us with your idea, we will do all administrative work and lead you through registration with minimum efforts from your side and maximum benefit for your business idea.
For opening a subsidiary in Singapore, foreign businessmen should involve expert incorporation services because the Subsidiary legislation Singapore doesn’t allow overseas individuals to the business registration backstage. We will be your mediator to introduce your business to Singaporean authorities and get brief approval and registration. Enlisting our business setup consultancy, you get the insight into how to register a private company in Singapore and reasonable guidance through every milestone of the Subsidiary incorporation scheme.
Incorporation in SG is praised for its streamlined and computerized business setup procedure: foreigners can get their companies registered in 1 single day. However, despite such easiness, you shouldn’t approach the matter light-heartedly as there are lots of crucial factors that ought to be taken into account and steps that must be made before the registration itself:
- Checking and reserving the Subsidiary’s name using the Company Registrar (reserved name is secured only for 60 days, and this term is extendable)
- Obtaining approval from the government (if your particular business needs it)
- Appointing staff for the director and secretary positions
- Subsidiary paperwork
- Obtaining the Singaporean address
- Developing visa applications for all staff and their family members that must be relocated to SG
- Registration at the ACRA
After your Subsidiary registration is finished, you will receive an email with the company registration number: this is your main incorporation document in Singapore as the country doesn’t use conventional hard copies for business regulations. You can get the hard copy by making an inquiry. The final steps of your business setup in SG would be creating a Singaporean bank account, getting business licenses (if needed) and undergoing registration for the value-added tax (it is needed only if your Subsidiary’s expected turnover promises to reach 1M SGD).
Our full Subsidiary incorporation service includes assistance and guidance in all described steps. You don’t have to visit SG for taking part in your Subsidiary’s registration. After you bring your business idea to us, our team will assess your particular situation, develop a strategy, and handle the registration in the most efficient way.
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Subsidiary Company Setting up Processing Time
Thanks to state-of-the-art technologies adopted by the Company Registrar, entrepreneurs don’t have to suffer from the red tape waiting in a long queue. Since the administrative groundwork for the Subsidiary registration is made, the registration procedure itself takes a day or two. The entire procedure (from the free Subsidiary assessment to paperwork to appointing directors/secretary to obtaining the official registration certificate) would take our team up to 10 days. If you want to get the excellent business result without messing with tedious administrative tasks, entrust our expert business incorporation team with your Singaporean Subsidiary registration!
Taxation Benefits of Singapore Subsidiary Company
Singapore is famous for its outrageously low corporate tax – 17%. But this isn’t the only reason to consider Singapore as your ultimate business destination: Singaporean government welcomes registration of companies with limited liability and, therefore, offers them unparalleled tax incentives:
- Like Private Limited companies, Subsidiaries are freed from paying the corporate tax for the first 100k SGD of revenue and for the next 200k SGD, get this tax halved (8.5%).
- After the Subsidiary has paid the corporate tax, its members don’t have to pay the gain tax.
- Subsidiaries which expected annual turnover is more than 1M SGD are obliged to pay the value-added tax of 7% which they add to the cost of their goods/services.
Difference between Company Types in Singapore
Despite the Subsidiary belongs to the group of limited liability companies and shares lots of similar features with the Pte Ltd, it is often compared with the Branch Office because both the Branch Office and the Subsidiary are used for setting up the presence of a foreign business in Singapore. Both business forms have strong and weak points, so if you need to resolve a dilemma – Branch vs Subsidiary Singapore – this list might help you to make a winning business decision.
- Legal entities of the Subsidiary and its parent company are detached from each other whereas the Branch Office shares one legal entity with its founding company.
- Parent firm of the Branch is liable for all office’s failures and problems (legal prosecutions, debts and so on) and can bear losses whereas the Subsidiary’s parent firm doesn’t risk anything but the funds contributed into the Subsidiary’s shares. Branch’s parent firm can be prosecuted for its Singapore office’s mistakes whereas the Subsidiary answers for its mistakes before the law on its own behalf. So in the dilemma Singapore Branch or Subsidiary concerning the personal safety of owners wins the Subsidiary.
- Subsidiary is authorized to conclude contracts and buy property independently whereas the Branch has to stay within the founding company’s activity scope.
- For registering the Subsidiary, 1 Singaporean director is needed whereas establishing the Branch requires no less than 2 Singaporean agents.
- Subsidiary is obliged to file its audited accounts yearly whereas the Branch is freed from doing it.
- In the dilemma Branch vs Subsidiary Tax Singapore wins the Branch as this business form isn’t considered as a tax resident, and, therefore, it is freed from paying the corporate tax which is 17%. The Subsidiary, however, is able to benefit from the tax incentives to cut down expenses.
In a nutshell, the subsidiary is safer while the Branch is cheaper. To find out what it better in your particular situation – Singapore Branch or Subsidiary – please refer to our experienced incorporation consultants.
Singapore Companies Annual Filing Requirements
Both the active and the dormant Subsidiaries are responsible for filing their financial accounts yearly according to the Singapore’s standards of financial reporting. Small Subsidiaries with modest documentation can handle their bookkeeping once in a year whereas medium and large Subsidiaries with extensive documentation should handle their bookkeeping every month to avoid missing deadlines. Here are some points of what your Subsidiary has to file:
- No later than 3 months after your Subsidiary’s financial year expires, you have to file your revenue and Expected Chargeable Income with the IRAS. Even if your profit or the ECI is equal to zero, you still have to file the “nil” form.
- Subsidiary needs making annual auditing because at least one of its shareholders (the parent firm) is a corporate body.
- Subsidiary must hold annual general meetings and file its annual return no later than 1 month after each meeting (as such meetings and the AR filing have lots of specific requirements, please refer to our incorporation team to find out your personal obligations).
- Until the end of every November, you have to file your Subsidiary’s tax return based on the revenues the firm got in the financial year that ends in the preceding one.
Despite the SG tax filing system is very effective and streamlined, overseas businessmen may naturally face some misunderstandings trying to deal with it. It is a normal situation. If you have some issues with calculating your taxes, please refer to our professional tax consultants for a piece of advice. Our competent guidance will help you to draft your tax picture and grasp the keystones of business success in Singapore.