Incorporating a foreign company in Singapore is a strategic move due to Singapore's business-friendly environment. With its robust economy, favorable corporate tax, and strategic location, Singapore is one of the best countries in the world to set up your foreign company.
However, to ensure a seamless incorporation process, it’s essential to prepare thoroughly. Below are key things to prepare before incorporating a foreign company in Singapore.
Be Mindful When Choosing a Business Structure
Selecting an appropriate business structure is foundational to your company’s success in Singapore. Foreign entities typically can choose one of these three main structures:
- Subsidiary Company: A private limited company incorporated in Singapore, treated as a separate legal entity from its parent company. This structure offers flexibility in shareholding and allows the subsidiary to operate under a different name and engage in activities distinct from the parent company.
- Branch Office: An extension of the parent company and not a separate legal entity. The branch must operate under the same name and conduct similar business activities as the parent. Liabilities incurred by the branch are extended to the parent company.
- Representative Office: This type is suitable for companies that aim to explore the Singapore market before committing to substantial investments. They act as a temporary setup for market research without legal status to conduct business activities that can generate profit.
You need to assess your business objectives, liability considerations, and operational needs to determine the most suitable business structure for your foreign company.
Appoint a Local Director
Singapore law mandates that companies appoint at least one local resident director. This individual must be a Singaporean citizen, permanent resident, or Employment Pass holder.
To fulfill this requirement, you can either relocate a trusted executive to Singapore or engage in a nominee director service. The nominee director serves in a non-executive capacity, ensuring compliance with local regulations without participating in daily operations.
Register a Unique Company Name
A distinctive company name is crucial for brand identity and legal registration. The ACRA oversees name approvals, ensuring no duplication with existing entities. It’s advisable to check the availability of your desired company name and research it early in the incorporation process.
Prepare the Necessary Documents
Comprehensive documentation is essential for incorporation; thus, before the incorporation process–you need to prepare:
- Copies of passports and proof of residential addresses for all directors and shareholders.
- Details of the parent company, such as the Certificate of Incorporation and Memorandum and Articles of Association.
- A detailed business plan outlining the company's activities, financial projections, and operational strategies.
Ensuring accuracy and completeness in these documents will help you to have a smoother registration process.
Have a Registered Business Address
A local Singapore address is mandatory for official correspondence and legal purposes. This address will be used for all statutory communications and must be a physical location.
Understand Tax and Compliance Requirements
If you’re planning to open a business in Singapore, then it’s important to understand its tax and compliance requirements. This won't only help prevent potential penalties but also help you get the most of the tax benefits that Singapore offers. For example, newly incorporated companies may benefit from tax exemptions on the first S$100,000 of chargeable income for their first three years of operation.
Obtain the Necessary Licenses and Permits
Depending on your business activities, specific licenses or permits may be required. Industries such as finance, education, health, and food and beverage are subject to regulatory approvals. It's essential to identify the necessary licenses early and apply them to the relevant authorities to ensure compliance and avoid operational disruptions.
Consider Hiring Professional Services
As a foreigner, navigating the incorporation landscape can be complex, especially if you’re unfamiliar with local regulations. To ensure you don’t get lost in all the steps you need to do, it’s best to consider engaging professional service providers, such as WealthBridge. Our team can help ensure compliance with statutory requirements, maintain proper records, and provide guidance on regulatory changes, allowing you to focus on your core business activities.
Key Takeaway
Incorporating a foreign company in Singapore requires meticulous planning and adherence to regulatory requirements. By addressing the considerations above, you can establish a strong foundation for your business, ensuring compliance and positioning your company for success in Singapore!