Singapore is an ideal location for many companies worldwide to set up business operations in. Given its attractive business legislation for foreigners and its 100% foreign shareholding benefit, it is little wonder why these companies choose Singapore.
One recommended option for foreign firms to venture into Singapore is to set up a subsidiary company. We delve into this company type and share why it is a strategic solution for these companies.
What is a Singapore Subsidiary Company?
A Singapore subsidiary company is a company incorporated in Singapore that is wholly or partially owned by another company, often known as the parent company or the holding company.
The subsidiary company is a separate legal entity from its parent company, which means it has its own rights, liabilities, and obligations.
In Singapore, the subsidiary company is a popular business structure for foreign companies looking to establish a presence in the country. It allows the parent company to maintain control over the subsidiary’s operations while enjoying the benefits of limited liability.
Subsidiary companies in Singapore must ensure compliance with the relevant laws and regulations, including the Companies Act and the requirements of ACRA.
It is advisable to consult with legal and business professionals to ensure proper setup and compliance with all necessary procedures.
Related Read: How to Register a Company in Singapore: A Local’s Guide »
Benefits of Setting Up a Subsidiary in Singapore
When it comes to setting up a business in Singapore, foreign investors always look for the subsidiary company business structure as it provides advantages like strategic location, robust legal framework, tax incentives and a business-friendly environment. The dynamic corporate landscape of Singapore along with its efficient regulatory system makes it an attractive avenue for foreign companies looking to get a foothold in the Asian market.
Tax Incentives and Exemptions
Subsidiary companies in Singapore get tax benefits under the following tax exemptions and incentives
- The corporate income tax rate is capped at 17%
- The Productivity and Innovation Credit (PIC) Scheme provides tax relief for investments in productivity and innovation
- The Start-Up Tax Exemption (SUTE) Scheme provides tax relief for newly incorporated companies
These tax incentives help businesses to grow by lowering their tax burden and increasing their profitability. In addition to the incentives, Singapore’s network of bilateral tax treaties and tax exemptions for foreign-sourced income, make it a lucrative avenue for international investors. The bilateral tax treaties especially help foreign companies to avoid double taxation on income earned in multiple countries.
Strategic Location and Business Environment
Singapore’s central location within Asia makes it easier for businesses to connect with major regional markets. Hence, Singapore with its ports and airports serves as an ideal base for companies looking to do trade in Asia and expand their business to different Asian markets, tapping into their growth potential. Singapore also has a robust legal framework supported by business-friendly policies which provides a conducive environment for business operations.
The country’s transparent regulatory system, efficient infrastructure and stable political climate together make it an appealing business hub in Asia where foreign companies can easily set up a subsidiary to leverage the economic opportunities of the region.
What Are the Requirements to Register a Singapore Subsidiary Company?
Here are the key registration requirements you need to fulfil to register a Singapore subsidiary company:
| List | Details |
|---|---|
| Company Name |
Choose a unique name for your subsidiary company and submit it to the Accounting and Corporate Regulatory Authority (ACRA) for approval. The name should not infringe on any existing trademarks and should comply with ACRA’s naming guidelines. |
| Company Director |
The subsidiary company must appoint at least one director who is ordinarily resident in Singapore. A director must be at least 18 years old, of sound mind, and not disqualified from serving as a director. |
| Company Secretary |
Appoint a qualified company secretary within 6 months of incorporation. The company secretary must be a resident of Singapore and have the necessary qualifications and knowledge to fulfill the role. |
| Shareholders |
A Singapore subsidiary company must have at least one shareholder. The shareholder can either be a corporate entity or an individual. There are no constraints on the shareholder’s nationality or residency. |
| Registered Office Address |
Provide a local Singapore address as the registered address for the subsidiary company. This address will be used for official correspondence, and it must be a physical address and not a P.O. Box. You may also choose a virtual office address to use as your local registered address. |
| Paid-up Capital |
There is no minimum capital requirement for a Singapore subsidiary company. You can decide on the amount of paid-up capital during the incorporation process. The capital can be in any currency and can be increased or decreased after incorporation. |
| Documents Required |
Prepare and submit the necessary documents to ACRA:
Note that all the documents must be in English. Any non-English documents must be translated into the language. Should you engage a corporate services provider such as InCorp, our professionals may require additional documents that are applicable. |
How to Register a Singapore Subsidiary Company
There are a few key steps to be taken to complete the registration process of your Singapore subsidiary company.
Engage a Professional Corporate Services Provider
It is recommended to engage the services of a professional firm or a corporate services provider that specialises in company registration in Singapore such as InCorp.
We can guide you through the process, ensure compliance with all requirements, and handle the necessary paperwork on your behalf. This is especially so if you are a foreigner or a foreign company setting up a subsidiary company.
Submit Your Application
Your registered filing agent will help you prepare the necessary application forms, including the incorporation application and other supporting documents. These documents will be submitted to ACRA for review and approval.
Pay the Registration Fees
Along with the application, you will need to pay the registration fees to ACRA. The fees vary depending on factors such as the company’s share capital and the number of shareholders and directors.
Await Approval and Incorporation
ACRA will review your application and, if everything is in order, approve the registration. The process typically takes one to three days. Once approved, you will receive a Certificate of Incorporation and a Unique Entity Number (UEN) for your subsidiary company.
What to Do After Incorporating Your Subsidiary Company in Singapore
After successfully incorporating your subsidiary company, there are a few remaining steps to settle to complete the incorporation process.
Open a Corporate Bank Account
With the Certificate of Incorporation and UEN, you can proceed to open a corporate bank account for your subsidiary company. Choose a reputable bank that suits your business needs.
Fulfil Post-incorporation Personnel Requirements
After registration, ensure compliance with post-incorporation requirements such as appointing an auditor (if necessary) within 3 months of incorporation.
Fulfiling Statutory Obligations
There are several filing requirements that subsidiary companies must adhere to, such as filing the Annual Returns (AR) and holding an Annual General Meeting (AGM).
Understand Your Tax Obligations
Singapore subsidiary companies are considered tax residents. Hence, they can obtain tax benefits that are usually provided. Subsidiary firms are taxed at the prevailing corporate tax rate of 17%.
You can determine the corporate tax your subsidiary company must pay with our complimentary tax calculator.
Related Read:How to File Corporate Tax in Singapore »
Common Challenges and How to Overcome Them
Although establishing a subsidiary in Singapore has many benefits, it also comes with a fair share of challenges which include:
- Navigating legal and compliance issues
- Managing cultural and operational differences
- Aligning the subsidiary’s goals with the objectives of the parent company
However, thorough and diligent planning supported by effective management along with a strategic approach to handling operations can easily overcome these challenges.
Navigating Legal and Compliance Issues
To navigate the complexities of the legal and regulatory landscape of Singapore, you need to ensure that there is a proper governance structure in place in the subsidiary. This includes
- Setting up a governance team to monitor regulatory changes
- Conducting regular compliance audits to mitigate risks
- Engage legal experts in international business law to address the complexities of legal and regulatory requirements
By proactively handling legal and compliance, you can evade unnecessary legal battles and ensure the company is in the good books of the corporate regulatory authorities which is essential for the long-term stability and success of the subsidiary.
Managing Cultural and Operational Differences
If you want your Singapore subsidiary company to effectively integrate into the local market, you must ensure that cultural and operational differences are being efficiently managed. Subsidiaries in Singapore can achieve this in the following ways:
- Adapt business strategies to accommodate local cultural nuances and consumer behaviours
- Enhance market entry and operational efficiency by understanding the local market dynamics
- Incorporate local market dynamics into the subsidiary’s operations
- Once you adopt these strategies, it becomes easy for the new company to blend into the business environment and enhance its performance in the local market. A culturally aware and adaptable business approach goes a long way in increasing the business output in a diverse market like Asia.
Set Up Your Subsidiary Company in Singapore With InCorp
As Singapore’s trusted company incorporation experts, we are experienced in the establishment of various company types, such as:
- Subsidiary company
- Private limited company
- Offshore company
Engage our reliable experts to guide you through the entire process for your successful setup today!
FAQs on Setting up a Singapore Subsidiary Company
Can a subsidiary in Singapore be 100% foreign-owned?
- Yes, it can be wholly foreign-owned in Singapore.
What is a subsidiary under the Singapore Companies Act?
- It can be completely owned by the parent company and is seen as a separate legal entity from the parent corporation.
How can I set up my Singapore subsidiary company?
- You can engage a corporate services provider such as InCorp to manage the set up process for you.
What are the tax benefits of setting up a subsidiary in Singapore?
- A Singapore subsidiary company is entitled to tax benefits like tax exemptions, incentives and low corporate tax rates capped at 17% which helps in significant cost savings.
What documents are required to set up a subsidiary in Singapore?
- To set up a subsidiary in Singapore, you will need essential documents like the registered office address, the incorporation certificate of the parent company and details of the shareholders and directors. When these documents are properly drafted and submitted the incorporation process of the subsidiary company can begin.
What are the key compliance requirements for a subsidiary in Singapore?
- Subsidiary companies in Singapore need to fulfil certain compliance requirements like annual tax filing, tax and hiring a qualified company secretary to ensure that they are legally and regulatorily compliant.
Take the first step towards establishing your subsidiary company in Singapore. Our expert guidance will ensure you a smooth registration and incorporation process.
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