Private Company vs Branch Office vs Representative Offices in Singapore

Legal type

• Legal entity established as a regional holding company or subsidiary of a foreign holding company.
• Can be wholly-owned by a foreign individual and/or corporate investor.

Legal extension of a foreign holding company.

Short-term, temporary arrangement with a limited purpose.

Business activities

• Business activities, can be different from the parent company.
• The company must obtain the relevant business licenses for its operations in Singapore.

Business activities, must be the same as the parent company.

The RO is confined to activities set out by Enterprise Singapore, which include:

• Gathering of information on markets and potential clients;
• Carrying out research to ascertain product/service information;
• Developing trade contacts and manage product enquiries;
• Participating in trade shows and exhibitions; and,
• Gathering information on regulatory requirements for the set-up of a permanent entity.

Criteria for eligibility

• At least one shareholder.
• One Singapore resident director.
• One company secretary.
• Initial paid-up share capital of at least S$1 (US$0.74).
• Registered address in Singapore.

• At least one local representative (Singapore citizen, permanent resident of Singapore, or Employment Pass holder).
• Registered address in Singapore.
• Name of the branch office must be the same as the parent company.

• The parent company has been established for more than three years;
• The parent company has incurred an annual sales turnover of more than US$250,000;
• The foreign chief representative is from its headquarters; alternatively, the RO may appoint a Singapore citizen to fulfil the role of the chief representative.

Liabilities

No liability by holding company of its subsidiary. Liability is limited to the share capital subscribed in the holding company’s subsidiary.

Parent company bears ultimate legal responsibility for all liabilities and must be registered with ACRA.

Parent company bears liability for the activities and is responsible for financing operations.

Tax treatment

Taxed at the flat corporate income tax rate of 17 percent.

Taxed at the flat corporate income tax rate of 17 percent.

Not applicable since a representative office generates no income.

Can the entity benefit from local tax incentives?

Yes

No

No

Staff hiring

Can hire local and foreign workers.

Can hire local and foreign workers.

• The RO can only hire more than five employees; and
• A Singapore citizen must fulfil the role of Chief Representative.

Annual filing

Required to file the annual returns and tax returns.

The accounts of the parent company as well as the branch office must be filed

Not required.

Entity validity period

Perpetual succession until ceased.

Perpetual succession until struck off, or the parent company is wound up or liquidated.

The RO can be established for three years. Furthermore, during the three years, the RO must be renewed each year.

Overview of advantages

• Separate legal entity from its members and directors.

• Can undertake business activities that are different to the parent company; and
• Eligible for local business incentives.

No capital requirement to set up.

• No corporate income tax;
• Fewer compliance requirements; and
• Enables the parent company to establish a presence in Singapore with minimal costs.

Overview of disadvantages

Numerous statutory requirements.

Activities must be in line with that of the parent company; and

Unable to benefit from local business incentives.

Unable to benefit from local business incentives.