Foreign Company-Branch Office

Branch Office
A Foreign Company may set up its Branch and have its presence in Singapore. Any activity which is carried for profit making purpose needs to be registered with the Company Registry in Singapore and hence be of legal entity. The Branch will be an extension of the Foreign Company and not considered to be of a separate legal entity, making the Foreign Company liable for all assets and liabilities and exposed to legal proceedings.

Requirements

It is advisable for the Foreign Company to engage the services of a professional services firm such as Sandhurst Consultancy to register its Branch here in Singapore.

The requirements for setting up a Branch Office are set out below:-

• Name – The name of the Branch Office has to correspond with the Foreign Company’s name.
• Agents – The Foreign Company is required to appoint two (2) local agents (“ordinarily resident”) to act on behalf of the Branch. Upon successful registration of the Branch, it may then hire its foreign staff by applying for the relevant passes with the authorities.
• Memorandum & Articles of Association (M&AA) – All of the Branch’s shareholders, activities and structure are governed by the M&AA of the Foreign Company, i.e. the Branch will not have its own M&AA.
• Registered Address – A local registered office is required for the Branch.

Documents

The following documents are needed for the Foreign Company to register a Branch in Singapore:-

• Incorporation Certificate of the Foreign Company
• M&AA and By Laws of the Foreign Company
• Passport Copies of Foreign Company Directors and Shareholder
• NRIC/FIN Copies of the two (2) local agents for the Branch

Timeline

The completed application (provided there are no delays in the approval of name) of the Branch registration will take approximately one (1) to two (2) working days.

Taxation

Under Section 12(1) of the Income Tax Act, a Branch will be subjected to tax on income arising from a trade or business (which includes the rendering of services) that is deemed to be derived in Singapore. What constitutes “derived in Singapore”? This depends on its activities rather than the form through which it conducts its activities. The following are some factors that need to be considered when determining “derived in Singapore”

1. whether there is a permanent establishment in Singapore.
2. the location where contracts are signed
3. the location where services are performed
4. the location where the title to the goods passes.

If one or more of the above factors exists, then it is safe to assume that the income of the branch is derived in Singapore and is taxable.

Conversely, if a foreign enterprise has a permanent establishment in Singapore but without a source of income here, it will remain insulated from taxation locally.

In the final analysis, the choice of establishing a Branch or a Subsidiary will depend largely on the taxation system of the non resident’s home country.

Annual Filing

The Foreign Company has to lodge its own as well as its Singapore Branch audited accounts with the Company Registry within two months of its Annual General Meeting or seven (7) months from its financial year end (if it is not required to hold an AGM in its country of origin).

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