How to Set Up a Subsidiary or Branch Office in Singapore

Singapore’s reputation as a global financial center and strategic gateway to Asia makes it a prime destination for business expansion. Its stable economy, transparent regulations, and access to Southeast Asian markets attract companies worldwide. When entering Singapore, businesses must decide between setting up a subsidiary or a branch office. Each structure has distinct implications for liability, taxation, and operations, requiring careful consideration to align with your strategic goals.

Subsidiary vs Branch Office

A subsidiary is a standalone entity, typically incorporated as a private limited company under Singapore law. It operates independently, with its own legal identity, enabling it to sign contracts, hold assets, and manage taxes separately from the parent company. This separation shields the parent from the subsidiary’s liabilities, making it a preferred choice for businesses prioritizing risk protection.

A branch office, in contrast, is an extension of the parent company, sharing its legal identity. The parent is fully responsible for the branch’s obligations, including debts or legal disputes. This structure suits companies seeking streamlined management but increases exposure to risks.

Your choice depends on your priorities. A subsidiary offers liability protection and local credibility, while a branch simplifies oversight but ties the parent to local obligations.

Legal and Regulatory Requirements

Both structures require registration with the Accounting and Corporate Regulatory Authority (ACRA), Singapore’s business oversight body. For a subsidiary, you need:

• At least one director who is a Singapore resident (citizen, permanent resident, or valid work pass holder).
• A local registered office address.
• A company secretary, appointed within six months, to handle compliance and administrative duties.

For a branch office, requirements include:

• At least one authorised representative residing in Singapore.
• A registered office address in Singapore.
• Administrative support, often through secretarial services, to meet ACRA’s compliance standards.

Both require submitting a constitution, parent company details, and director or representative information via ACRA’s BizFile portal. The process is efficient but demands precision to ensure smooth approval.

Why Secretarial Services Matter

Singapore’s regulatory framework is strict, with ongoing obligations like annual filings, statutory registers, and board resolutions. Non-compliance can lead to fines or deregistration. Company secretarial services are essential for managing these tasks. For subsidiaries, a company secretary is a legal requirement, handling filings, record-keeping, and regulatory updates. For branch offices, secretarial services simplify compliance, ensuring authorised representatives meet ACRA’s standards.

These services act as a backbone, allowing businesses to focus on growth while professionals manage regulatory complexities. For foreign companies navigating Singapore’s rules, this support is invaluable for maintaining compliance.

Tax and Accounting

Tax treatment is a critical factor. A subsidiary, as a Singapore tax resident, is taxed at up to 17% on local income but can access tax incentives, such as startup exemptions or benefits from Singapore’s double taxation agreements. This makes it attractive for businesses planning long-term operations.

A branch office, as a non-resident entity, is taxed only on Singapore-sourced income but cannot claim most local tax benefits. This may suit smaller operations but limits financial advantages. Additionally, branches must file both their own and the parent company’s accounts, increasing administrative demands compared to a subsidiary’s independent filings.

Banking, Employment, and Operations

Opening a corporate bank account is typically easier for a subsidiary, as banks view it as a local entity, reducing due diligence requirements. A branch, tied to a foreign parent, may face stricter scrutiny, delaying banking access.

Both structures can hire local and foreign staff, but subsidiaries often have an edge in securing work passes for expatriates due to their local status. Additionally, a subsidiary’s “Private Limited” designation enhances credibility with local clients, particularly in sectors like finance or consulting where trust is critical. A branch is functional but may be perceived as less committed to the market.

Common Mistakes to Avoid

Foreign businesses entering Singapore often encounter pitfalls:

• Choosing a branch for cost savings without assessing the parent’s liability exposure.
• Delaying the appointment of a company secretary for a subsidiary, violating ACRA’s six-month deadline.
• Using a non-compliant registered office address, such as a residential property, which breaches ACRA rules.
• Neglecting annual filings, even for dormant entities, leading to penalties.

Partnering with reliable company secretarial services early can prevent these errors, ensuring compliance and operational stability.

Practical Steps to Get Started

To establish your Singapore presence:

• Decide on a subsidiary or branch based on your risk and operational needs.
• Gather parent company documents, including incorporation certificates and financial records.
• Appoint a local director or representative and secure a registered office.
• Engage secretarial services to support compliance.
• File your application through ACRA’s BizFile portal.

With complete documentation, approval can take just days. Ongoing compliance, backed by secretarial services, ensures your entity remains in good standing.

Final Thoughts

Singapore’s pro-business environment and streamlined processes make it an ideal expansion destination. The choice between a subsidiary and a branch office shapes your liability, tax strategy, and market presence. A subsidiary offers protection, tax benefits, and local credibility, while a branch provides simplicity but with greater risk exposure.

Compliance is critical in either case. Corporate secretarial services are indispensable, ensuring your business meets Singapore’s regulatory standards while you focus on growth. With the right structure and support, your company can thrive in one of Asia’s most dynamic markets.