Singapore Company: 3 Business Models for Foreign Entrepreneurs
Singapore, being one of the most viable business centers in the world
, provides three business models for foreign entrepreneurs and investors who want to setup a Singapore company or expand their already existing business in the country.
These are the three business models for foreign businessmen in Singapore:
Representative office
This entity is prohibited to engage in any revenue-generating and commercial activities since this is not a legal business entity per se. But despite this limitation, most corporate lawyers believe that a representative office is ideal for foreign investors and entrepreneurs who want to conduct market research before relocating their business in the country.
Aside from conducting market research, a Singapore representative office is also allowed to provide customer service (as long as it does not involve answering technical and repair questions), supervise the activities of local distributors and agents of its parent company, and act as a representative on a negotiation deal (but is prohibited to enter into a contract).
Subsidiary company
This business model is usually the most recommended for foreign entrepreneurs and investors because it is eligible for local tax benefits and limited liability protection.
Being incorporated in Singapore, a subsidiary company is treated as a separate entity from its parent company abroad. And with such arrangement brings countless of benefits: it is considered as a local resident business and enjoys several tax benefits; its parent company is not legally liable for its losses and debts; and it is only required to submit its own audited accounts excluding the parent company's.
These are the other advantages of being a subsidiary company: has no restrictions on the number of local or foreign staff; may be 100 percent foreign owned; may engage in any business activity even if it is not performed by its parent company; and may have a different name from its parent company.
Branch office
A branch office is a business model that is only allowed to engage in business activities performed by its parent company.
Since it is a legal extension of a foreign company, a branch office should have the same name as its main headquarter unless if the Accounting and Corporate Regulatory Authority (ACRA) deems it as vulgar and indecent or if there is already an existing name in the country.
Unlike a subsidiary company, this business model does not enjoy local tax benefits since it is considered as an extension of its parent company.
Another disadvantage is that a branch office is legally required to disclose even the audited accounts of its parent company.
Singapore Company: 3 Business Models for Foreign Entrepreneurs