There are several business arrangements a foreign company can adopt if it wants to conduct its operation in Singapore which is one of the fastest growing economies in the world. However, most experts believe that a subsidiary office is the most favorable setup for companies abroad that want to enjoy countless of benefits especially in terms of taxation, limited liability, and bankruptcy protection.
The tax benefits and exemptions are the most notable feature of a subsidiary company which makes this the most preferred business structure among small- to medium-sized foreign companies.
Being locally incorporated in Singapore, this business model is eligible for all the local tax benefits, even if 100 percent of its shares are owned by its foreign parent company.
(Note: A subsidiary company may be solely owned by its parent company, however, it is also allowed to have a maximum of 50 shareholders who may be local residents or foreign individuals. )
In addition, this business structure is also qualified for the tax exemptions given to newly incorporated companies in Singapore: 100 percent and 50 percent tax exemptions for its first S$100,000 and S$200,000 chargeable income, respectively, within three years of its incorporation.
Another notable feature of a subsidiary company is the greater freedom to conduct activities even if these are not part of its parent company’s nature of business. This is possible since this setup stands as a legal entity separate from its main headquarter, which means that it can also operate under a different name if it wants to.
And because a subsidiary is a separate entity, its parent company cannot be held liable for the acts, losses, liabilities, and debts of the former—a very important feature that attracts foreign companies operating in a speculative market.
With a limited liability protection, foreign businessmen will have a security that the only money they may lose is the one they invested on their subsidiary company.
There are several requirements to legally operate a subsidiary company but the most important of these is the appointment of at least one resident director who must have a registered residential address in Singapore, at least 18 years of age, and has not been convicted with malpractice.
In case that a foreign company wants to relocate its own employee to the country to serve as a resident director, it can be possible as long as the individual will apply for EntrePass, Employment Pass, or Dependant Pass.
is the leading Singapore business solutions provider that provides Singapore Subsidiary Company Setup, Incorporation and registration services. Rikvin has successfully helped thousands of foreign entrepreneurs who wish to form a Singapore company by securing their work visas using employment pass route once they have incorporated a Singapore Company.