Guide to Setting Up a Subsidiary in Singapore

Singapore's strategic location, pro-business policies, and attractive tax benefits make it a leading destination for multinational corporations looking to expand their operations in Asia. Setting up a subsidiary in Singapore is one of the most effective ways to establish a strong foothold in the region. This guide will walk you through the process of setting up a subsidiary, its benefits, and compliance requirements.

What is a Subsidiary?

A subsidiary is a private limited company incorporated in Singapore that is owned by a parent company, either local or foreign. It operates as an independent legal entity, separate from its parent company, and enjoys the same rights and privileges as a locally incorporated company.

Benefits of Setting Up a Subsidiary in Singapore

1. Limited Liability

The parent company's liability is limited to the amount of share capital it contributes to the subsidiary.

2. Tax Incentives

Subsidiaries in Singapore benefit from attractive corporate tax rates, tax exemptions for start-ups, and access to an extensive network of double taxation treaties.

3. Separate Legal Entity

A subsidiary is considered a separate legal entity, which shields the parent company from the subsidiary's debts and liabilities.

4. Ease of Operations

A subsidiary has greater operational flexibility compared to other structures like branch offices. It can conduct business locally and internationally.

5. Enhanced Credibility

Being incorporated in Singapore lends credibility to the subsidiary, which can enhance its reputation with clients, partners, and stakeholders.

Step-by-Step Guide to Setting Up a Subsidiary in Singapore

1. Choose a Name for Your Subsidiary

The subsidiary's name must:

• Be unique and not similar to existing company names.
• Not infringe on any trademarks.
• Be approved by the Accounting and Corporate Regulatory Authority (ACRA).

You can check the name's availability and reserve it via ACRA's BizFile+ platform.

2. Meet the Minimum Requirements

To register a subsidiary in Singapore, you must fulfill the following:

• At Least 1 Shareholder: The parent company can hold 100% ownership of the subsidiary, or there can be additional individual or corporate shareholders.
• At Least 1 Resident Director: A Singapore Citizen, Permanent Resident, or an individual holding an EntrePass, Employment Pass, or Dependant's Pass must be appointed as a director.
• Company Secretary: Appoint a qualified company secretary within 6 months of incorporation.
• Minimum Paid-Up Capital: The minimum paid-up capital is S$1.
• Registered Office Address: A physical address in Singapore (no P.O. boxes).

3. Prepare the Required Documents

The following documents are needed for incorporation:

• Proposed company name approval notice.
• Particulars of shareholders, directors, and the company secretary.
• Parent company's incorporation documents (if the parent company is foreign).
• Constitution of the subsidiary (formerly Memorandum & Articles of Association).
• Proof of registered office address.

4. Register via ACRA's BizFile+ Portal

Log in to BizFile+ and submit the application for incorporation. Once the application is approved, you will receive the following:

• Certificate of Incorporation
• Company Business Profile

5. Open a Corporate Bank Account

After incorporation, open a corporate bank account in Singapore to manage your subsidiary's financial transactions. Most banks require incorporation documents and proof of business activities.

6. Obtain Necessary Licenses

Depending on the nature of your business, you may need additional licenses or permits. For example:

• Food and Beverage businesses require food licenses.
• Financial services may require Monetary Authority of Singapore (MAS) approval.

Compliance Requirements for Subsidiaries

1. Annual Filing Requirements

• File annual returns with ACRA.
• Submit financial statements in XBRL format (if applicable).
• Hold an Annual General Meeting (AGM) within six months after the end of the financial year.

2. Tax Filing

• File annual tax returns with the Inland Revenue Authority of Singapore (IRAS).
• Register for Goods and Services Tax (GST) if the subsidiary's annual turnover exceeds S$1 million.

3. Maintain Statutory Records

Keep accurate and updated statutory records, including minutes of meetings, share registers, and financial records.

Common Challenges and How to Overcome Them

1. Understanding Regulatory Requirements

Regulations in Singapore are strict, and non-compliance can lead to penalties. Engaging a corporate advisory firm can help you navigate the complexities.

2. Managing Cross-Border Taxation

Work with tax professionals to leverage Singapore's double taxation treaties and avoid unnecessary tax liabilities.

3. Administrative Burden

Partner with experienced corporate service providers to handle administrative tasks like incorporation, accounting, and compliance.

Why Choose Apexia Corporate Advisory?

At Apexia Corporate Advisory, we specialize in helping businesses expand into Singapore by providing end-to-end support for subsidiary incorporation and ongoing compliance. Our services include:

• Incorporation of subsidiaries
• Corporate secretarial services
• Tax advisory and compliance
• Accounting and bookkeeping

With our expertise, you can focus on growing your business while we handle the complexities of regulatory compliance.

Conclusion

Setting up a subsidiary in Singapore is a strategic move for companies looking to expand into Asia. By following the steps outlined in this guide, you can establish a subsidiary efficiently while ensuring compliance with local regulations. Need professional assistance with subsidiary incorporation? Apexia Corporate Advisory is here to help. Contact us today for expert advice and support!