Setting up a Branch Office in Singapore can be daunting, but with the right knowledge and resources, it can also be a highly rewarding experience.
In this guide, we will provide you with a comprehensive overview of the steps and considerations involved in setting up a branch office in Singapore, as well as tips for navigating the local business landscape.
WHY SET UP A BRANCH OFFICE IN SINGAPORE?
There are several compelling reasons why companies choose to set up branch offices in Singapore. Here are some of the key benefits of expanding your business operations in Singapore –
Strategic Location
Singapore is strategically located at the crossroads of major shipping lanes, making it a hub for international trade and commerce. Its location in the heart of Southeast Asia also provides easy access to other growing markets in the region.
Pro-Business Environment
Singapore has consistently ranked as one of the most pro-business environments in the world, with a highly developed infrastructure, efficient government, and transparent legal system. The country is also home to a skilled and diverse workforce, making it an ideal location for businesses looking to expand their operations.
Supportive Government Policies
The Singaporean government offers several incentives to encourage foreign businesses to set up shops in the country. These include tax breaks, grants, and other forms of financial assistance. In addition, the government has streamlined the process of setting up a branch office, making it a relatively easy process.
Strong IP Protection
Singapore has a strong legal framework for protecting intellectual property, making it an attractive destination for companies in knowledge-based industries such as technology, pharmaceuticals, and biotech.
Multicultural Environment
Singapore is a highly multicultural society with a diverse population that includes Chinese, Malay, Indian, and other ethnic groups. This diversity provides a unique and dynamic environment for businesses, with opportunities to tap into different markets and gain new insights and perspectives.
HOW TO SET UP A BRANCH OFFICE IN SINGAPORE?
Setting up a branch office in Singapore is a relatively straightforward process. Here are the steps you need to follow.
Register Your Company
To set up a branch office in Singapore, you will need to first register your company with the Accounting and Corporate Regulatory Authority (ACRA). This involves filling out an application form and providing information about your company’s directors, shareholders, and business activities.
Relin Consultants helps you to register your new company in Singapore.
Obtain Approvals and Licences
Depending on the nature of your business, you may need to obtain additional approvals and licenses from government agencies such as the Monetary Authority of Singapore (MAS). These requirements can vary depending on the industry and type of business you are engaged in.
Set Up Your Office
Once you have obtained the necessary approvals and licenses, you can set up your office in Singapore. This involves finding a suitable location, renting office space, and setting up your IT and other infrastructure.
Hire Staff
To operate your branch office in Singapore, you will need to hire staff. The country has a highly skilled and diverse workforce, and there are several online job portals where you can post job listings and find qualified candidates.
Open a Bank Account
To conduct business in Singapore, you will need to open a bank account. This involves providing the bank with the necessary documentation, such as your company registration documents and identification documents for your directors and shareholders.
Comply with Tax and Reporting Requirements
Finally, you will need to comply with Singapore’s tax and reporting requirements. This includes registering for the Goods and Services Tax (GST), filing annual tax returns, and submitting financial statements to ACRA.
SPECIAL LICENSES AND PERMITS FOR BRANCH OFFICES IN SINGAPORE
There are several special licenses and permits that branch offices in Singapore may need to obtain to operate legally. Here are some of the key ones to be aware of:
Employment Pass
If you plan to hire foreign staff to work in your branch office, you will need to obtain an Employment Pass (EP) from the Ministry of Manpower (MOM). This pass allows foreigners to work in Singapore and is granted based on factors such as the applicant’s qualifications, work experience, and salary.
Licenses for Regulated Industries
Certain industries in Singapore are regulated and require special licences or permits to operate. For example, financial services companies must obtain licences from the Monetary Authority of Singapore (MAS), while healthcare companies must obtain licences from the Ministry of Health (MOH).
Goods and Services Tax (GST) Registration
If your branch office’s annual taxable turnover exceeds S$1 million, you will need to register for GST, which is Singapore’s version of value-added tax (VAT). GST registration allows your company to charge and collect GST on goods and services sold in Singapore.
Permits for Specific Activities
Depending on the nature of your business, you may need to obtain additional permits for specific activities. For example, companies that engage in outdoor advertising must obtain permits from the Land Transport Authority (LTA), while companies that operate cranes and other lifting equipment must obtain permits from the Ministry of Manpower (MOM).
Environmental Permits
If your branch office is involved in activities that may have an impact on the environment, you may need to obtain environmental permits from the National Environment Agency (NEA). Examples of activities that require environmental permits include handling hazardous waste and emitting pollutants into the air or water.
Note: It is important to research the specific requirements for your industry and business activities to ensure that you comply with all applicable regulations.
TAXATION OF BRANCH OFFICES IN SINGAPORE
Branch offices operating in Singapore are subject to tax on their income generated within Singapore. In terms of taxation, there are several aspects that branch offices need to consider.
- Corporate income tax is levied on the income generated within Singapore, with the current rate being 17%, which is one of the lowest in the world. Branch offices must submit an annual tax return to the Inland Revenue Authority of Singapore (IRAS) and pay taxes on their taxable income.
- Withholding tax is another factor that needs to be considered by branch offices, as payments made by them to non-resident companies may attract withholding tax at a rate of 17%.
- The GST is applicable if the branch office sells goods and services in Singapore, and the GST registration is compulsory if the annual taxable turnover exceeds S$1 million.
- Singapore has entered into Double Taxation Agreements (DTAs) with over 100 countries to avoid double taxation of income. Under a DTA, the branch office may be eligible for tax relief or exemption on their income derived from Singapore, based on the provisions of the DTA and the country of residence of the parent company.
- Branch offices need to comply with transfer pricing rules if they engage in transactions with their parent company or other related parties, and the IRAS may require them to provide documentation and evidence to support the pricing of such transactions.
Note: Branch offices must adhere to all applicable tax regulations and seek expert guidance to optimise their tax efficiency and reduce their tax liability.
POST INCORPORATION – WHAT YOU NEED TO KNOW
- Compliance: As a foreign company operating a branch office in Singapore, you must comply with all the relevant laws and regulations in the country. This includes filing annual tax returns, maintaining proper accounting records, and adhering to employment laws.
- Reporting Requirements: Your branch office must submit an annual return to the Accounting and Corporate Regulatory Authority (ACRA). The annual return must include information about the company’s directors, shareholders, and business activities.
- Employment: You will need to comply with Singapore’s employment laws, which include providing mandatory benefits such as CPF contributions and medical insurance for your employees.
- Business Operations: Running a branch office in Singapore will require a thorough understanding of the local business culture, as well as the legal and regulatory framework. It is recommended to engage the services of a professional corporate services provider to help you navigate these challenges.
- Expansion: If you plan to expand your business operations in Singapore, you may need to consider registering a subsidiary company, which will provide you with greater flexibility in terms of ownership and management.
In conclusion, setting up a branch office in Singapore can be an excellent choice for companies looking to expand their reach and tap into new markets.
