Comparison: Branch Office vs Subsidiary Company vs Representative Office
Foreign investors have a wealth of options when it comes to structuring their business presence in Singapore. They should carefully evaluate their specific business goals and requirements to determine the most suitable corporate structure for their operations.
Representative Office
A representative office in Singapore represents the most basic form of business presence in a foreign country, though it comes with significant limitations. Essentially serving as an initial foothold, ROs typically require registration with the local authorities but are usually restricted from conducting revenue-generating activities.
Branch Office
A branch office (BO) functions as a direct continuation of an established legal entity within the company group, expanding into a new jurisdiction. This is usually accomplished through the registration or qualification of a foreign entity in the target country. BOs are established with the intention of generating revenue and operating production facilities within the host country.
Subsidiary Office
A subsidiary entity is inherently more intricate compared to a representative office (RO) or branch office (BO). It constitutes a distinct legal entity established within the target country. A subsidiary is defined as an entity in which the parent company possesses a majority ownership stake of 50% or more. Conversely, if the parent’s ownership stake is less than 50%, the entity is considered an affiliate, with the parent company acting as a minority shareholder.
Tax and compliance with regulatory requirements varies depending on the type of entity you choose. As company incorporation specialists, we aim to help owners choose the best option for their Singapore business.
Types | Subsidiary Company | Representative Office | Branch Office |
---|---|---|---|
Package Details | with Relocation without Relocation |
Learn more | with Relocation without Relocation |
Entity Name | Need not be the same as the parent company | Must be the same as the parent company | Must be the same as the parent company |
Allowed Activities | Can conduct all business activities | Can only conduct market research or coordinate coordinating activities | Must be the same as the parent company |
Suitable For | For local or Foreign Companies that wish to expand their operations in Singapore | For Foreign Companies that wish to set up temporary vehicles in Singapore to conduct research and act as liaison office | For Foreign Companies that wish to expand their operations in Singapore |
Disadvantages | Continuing Compliance Obligations e.g. Financial Reports, Audit, AGMS, etc. | It is a temporary vehicle and cannot generate revenue | Continuing Compliance Obligations, e.g. Financial Reports, Audit etc. |
Ownership | Can be 100% foreign or locally owned | No Ownership | Owned 100% by the head office |
Separate Legal Entity | Yes | No | No |
Cap on Number of Members | Yes, max 50 | Not Applicable | Not Applicable |
Minimum Setting up Requirement | Min One shareholder, that can be an Individual or corporate (100% local or foreign shareholding allowed. Must have at least one resident director | Must appoint a Chief Representative who will relocate from headquarters | Must have one Singapore Resident Agent |
Limited Liability | Yes | No | No |
Need for Audited Accounts | Yes | No | Yes |
Filing of Accounts with ACRA and IRAS | Yes | No | Yes |
Annual Filing | Must file audit report of subsidiary | Not Applicable | Must file branch office’s as well as parent company’s audit reports |
Tax Treatment | Taxed as Singapore resident entity, local tax benefits available | Not Applicable | Taxed as non-resident entity, local tax benefits not available |
Tax Benefits | A subsidiary company, with at least one individual shareholder with minimum of 10 percent shareholding, is entitled to local tax incentives and rebates | No Corporate tax. Employees have to pay personal tax | Partial tax exemption |
Cessation of Business upon Death of a Member/Partner | No. Equity shares go on in perpetuity | Not Applicable | No |
Validity Period | Perpetually until deregistered | This is a temporary Setup. It is intended not to last more than 3 years | Perpetually until deregistered |
Normal Registration Time | 3 hours | 3-5 days | 3 hours |
Appointment of Officers | Must appoint at least one local resident director | Must appoint a Chief Representative who will relocate from headquarters | Must appoint one resident agent |
Governing Body | ACRA & IRAS | Enterprise Singapore | ACRA & IRAS |
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