October 8, 2010 - Singapore is one of the most ideal business centers for foreign companies planning to expand their operation in one of the worlds strongest economies. And with its strategic location, most business professionals also believe that the city-state is ideal for international companies wanting to tap the Asia Pacific region.
There are three business structures a foreign company can adopt if it wants to setup a Singapore company: a representative office, branch office, and subsidiary company, all of which have a specific purpose in business.
According to business registration specialist Rikvin, foreign companies that want to explore the business potential in Singapore before investing huge sums of money are generally advised to register a representative office which is designed for conducting feasible studies and market research.
In addition, this office is also allowed to oversee the activities of its parent companys local agents and distributors; engage in customer assistance as long as it is not related to repair and technical services; and engage in negotiation process on behalf of its main headquarter.
Meanwhile, Rikvin said that foreign companies with a representative office is not allowed to conduct any activities that will generate revenue.
In the truest sense of the word, a representative office is not a legal business entity since it is not allowed to give service for fees, enter a business contract, store and ship products, and lease warehouse facilities, Rikvin said.
The business registration specialist added that foreign companies should treat this office as a temporary setup since the government does not allow anyone to operate this for more than three years.
After the three-year limit, foreign companies are required to form a Singapore company such as a branch office or subsidiary if they want to stay in the country or engage in a full business operation, it added.
A branch office and subsidiary company are both allowed to conduct commercial and revenue-generating activities. But when it comes to greater freedom, Rikvin recommends the subsidiary company which is allowed to conduct any business even if this is not part of the activities of its parent company.
When it comes to tax advantages, Rikvin also believes that a subsidiary is better than a branch office since it is treated as a local resident business.
As a local resident business, a subsidiary company enjoys the local tax rate. In addition, it is also eligible for the Zero Tax and 50 percent tax exemption on its first S$100,000 and S$200,000 chargeable income, respectively, within three years of its registration, the firm added.
Rikvin is the leading Singapore Company Registrar and work pass specialists. It has successfully assisted thousands of foreign entrepreneurs process their Singapore Employment Pass Application and their Singapore Subsidiary Registration.
Our office is located at Raffles Place, in the heart of the Singapore business district. ("CBD") If youre in our neighborhood and want to discuss any aspect of our service then feel free to come in to our offices during business hours. Appointments are welcome but definitely not necessary.
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