Singapore Branch Office: A Business Entity for Foreign Entrepreneurs
A foreign company that wants to have a business presence in Singapore can register
a branch office which is an entity that is allowed to engage in business and activities performed by its parent company.According to corporate lawyers, a branch office is treated as a legal extension of its parent company which means that the main headquarter can be held liable for its activities and financial losses and debts.
It is also important to note that a branch office, being an extension of a foreign company, is not considered as a "local business" which means that it is not eligible for tax benefits and exemptions typically enjoyed by local companies in Singapore.
Meanwhile, a branch office is required to submit the audited accounts of its parent company to the Accounting and Corporate Regulatory Authority (ACRA) which is a requirement that most foreign entrepreneurs and investors are not comfortable with.
These are the main characteristics of a Singapore branch office:
A branch office is only allowed to engage in the activities performed by its parent company.
It should use the name of its parent company unless if it already exists in Singapore or the authorities deem it as vulgar and indecent.
A parent company has a direct control to the business activities of its Singapore branch office.
A foreign company must appoint two agents who will accept the notices from other entities such as the government and other business organizations. Meanwhile, the agents may be a local resident or holder of Employment Pass, EntrePass, or Permanent Residence Status.
Foreign employees who must be relocated to Singapore in order to manage and run a branch office are legally required to obtain a work visa such as the Employment Pass.
A branch office must have a registered office address in the country. In legal terms, a registered office is where entrepreneurs secure and store all the statutory documents related to their business.
Experts believe that setting up a Singapore branch office allows foreign companies to explore the market and expand their businesses in the country. In addition, this legal setup also allows foreign entrepreneurs to communicate with local distributors and agents.
But despite some of the advantages of a Singapore branch office, this business setup has also two downsides which include:
As a non-resident business, a branch office is not eligible for tax benefits unlike a local company or a subsidiary company of a foreign business.
The parent company is also required to submit its audited accounts which means more disclosure to the government.
Singapore Branch Office: A Business Entity for Foreign Entrepreneurs
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