Comparison Between Branch, Subsidiary, and Representative Office in Singapore

Singapore is a hub for businesses looking to establish a presence in Asia, thanks to its strategic location, business-friendly environment, and robust infrastructure. When expanding to Singapore, companies often consider three primary options: Branch, Subsidiary, and Representative Office. Each has unique characteristics, advantages, and limitations. In this guide, we compare these three structures to help you decide which is the best fit for your business needs.

1. Branch Office

A Branch Office is an extension of the parent company. It is not a separate legal entity and operates under the same name as the parent company.

Key Features

• Legal Entity: Not separate from the parent company. The parent company is liable for all debts and obligations.
• Purpose: Can carry out profit-generating business activities similar to those of the parent company.
• Taxation: Treated as a non-resident entity for tax purposes and not eligible for local tax incentives.
• Regulation: Must comply with the parent company's governing regulations and Singapore's laws.

Advantages

• Simple to set up and manage.
• Direct control by the parent company.

Disadvantages

• No access to tax benefits.
• Parent company is fully liable for debts and obligations.
• Limited perception of independence.

2. Subsidiary Company

A Subsidiary Company is a locally incorporated Private Limited Company. It is a separate legal entity from its parent company.

Key Features

• Legal Entity: Separate from the parent company. The parent company's liability is limited to its share capital.
• Purpose: Can carry out local and international business activities.
• Taxation: Treated as a resident entity and eligible for local tax incentives, such as the start-up tax exemption scheme.
• Regulation: Must comply with Singapore's corporate governance and tax regulations.

Advantages

• Limited liability for the parent company.
• Access to Singapore's tax incentives and benefits.
• Enhanced credibility and operational independence.

Disadvantages

• More complex to set up and maintain.
• Requires adherence to corporate governance rules, such as filing annual returns and holding AGMs.

3. Representative Office

A Representative Office (RO) is a temporary setup designed for market research and business exploration. It cannot engage in commercial activities.

Key Features

• Legal Entity: Not a separate legal entity. The parent company is liable for its operations.
• Purpose: Limited to non-commercial activities like market research and establishing business contacts.
• Taxation: Not subject to corporate tax, as it cannot generate revenue.
• Regulation: Restricted from entering into contracts or engaging in profit-generating activities.

Advantages

• Ideal for market entry and feasibility studies.
• Low-cost setup with minimal regulatory requirements.

Disadvantages

• Cannot generate revenue or sign contracts.
• Temporary nature (renewable for a limited time).
• No access to tax incentives.

Key Comparisons at a Glance

Which Structure is Right for Your Business?

Choosing between a Branch, Subsidiary, and Representative Office depends on your business goals:

• Choose a Branch Office if:
  • You want direct control over operations.
  • You are willing to accept liability for debts and obligations.
  • Tax incentives are not a priority.
• Choose a Subsidiary Company if:
  • You want limited liability and operational independence.
  • You plan to take advantage of Singapore's tax benefits.
  • You aim to build long-term credibility in the market.
• Choose a Representative Office if:
  • You are exploring the Singapore market.
  • You need a low-cost setup for market research.
  • You do not plan to engage in commercial activities.

Why Engage Professional Help?

Navigating the legal, tax, and regulatory requirements for setting up in Singapore can be challenging. Engaging a professional corporate advisory firm like Apexia Corporate Advisory ensures:

• A smooth incorporation process tailored to your business needs.
• Compliance with Singapore's laws and regulations.
• Ongoing support for accounting, tax filing, and corporate governance.

Conclusion

Establishing your business in Singapore is a strategic move for regional growth. Whether you choose a Branch, Subsidiary, or Representative Office, it's essential to align your decision with your business objectives. Need expert advice to determine the right structure for your company? Apexia Corporate Advisory is here to help. Contact us today for personalized guidance and support!