Setting up local offices

You can operate using a branch but most foreigners set up a company for tax reasons and to qualify for incentives.

Level of difficulty

The World Bank 2010 Doing Business report has ranked Singapore the easiest place in the world (out of 183 economies) to do business.

Specific rankings in terms of ease include:

• Starting a business (4th) 
• Dealing with construction permits (2nd) 
• Employing workers (1st) 
• Registering property (16th) 
• Protecting investors (2nd) 
• Paying taxes (5th) 
• Trading across borders (1st) 
• Enforcing contracts (13th) 
• Closing a business (2nd). 

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The options

The common business structures established by foreign investors in Singapore are:

• companies (private or public) 
• branch or subsidiary 
• representatives offices 
• joint venture.

Corporate forms and requirements follow the British and Australian pattern. 

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Companies

Subsidiaries of foreign companies that don’t want to raise money from the public usually register as private companies and may start business immediately after incorporation.

Companies are considered private if they restrict the right of share transfer, limit the number of shareholders to 50 and prohibit any invitation to the public to invest money in them.

An “exempt private” company – which is excluded from some Companies Act obligations - may have no more than 20 shareholders and no corporation may hold beneficial interest in its shares.

Private companies need just one founder and one director who can be the same person and must be either:

• a Singapore citizen 
• a Singapore permanent resident 
• an Employment Pass holder 
• an Approval-in-Principal Employment Pass holder 
• a Dependant Pass holder.

Please check www.business.gov.sg for further information. 

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Branches

Foreign corporations may operate through branches, although most foreign investors prefer to set up private companies as the tax status is simpler and provide for the ability to qualify for incentives, depending on the industry, location and office type. The Companies Act sets out the rules for buying or establishing a company, branch or subsidiary.

A foreign company or a branch is to be registered with Singapore’s Accounting and Corporate Regulatory Authority (ACRA). 

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Representative offices

Foreign companies can set up representative offices in Singapore to undertake promotional and liaison activities. A representative office is not permitted to engage in business, conclude contracts, or open or negotiate any letters of credit. 

Approval for the establishment of a representative office must be obtained from International Enterprise Singapore (IE Singapore).

Expatriate employees of representative offices must apply to the Ministry of Manpower’s Foreign Manpower Employment Division for employment passes.

Before commencing business, a branch must supply ACRA with information, such as registered Singapore office and information about directors. Branches must file regular financial statements with ACRA.

Approvals and restrictions

There are no prohibited industries and foreign investment is encouraged with few restrictions on equity, licensing, and joint ventures. 

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Useful information and contacts

• EnterpriseOne - a Singapore Government website with information on laws, regulations, assistance, licences and permits for your business
• e-Citizen.gov - a Singapore Government site on living and doing business in Singapore
• Singapore’s Accounting and Corporate Regulatory Authority (ACRA)

(Additional sources used on this page:  Deloitte Touche Tohmatsu, RSM Chio Lim)