A corporation typically sets up a subsidiary firm for a specific purpose. Often, most subsidiary firms are set up to either manufacture or market their parent company’s product. While a subsidiary company is treated as an independent firm, it is essentially still an extension and a part of the parent company.
This structure of business has become an ideal solution for many Singapore companies for various reasons. One is that choosing this method of conducting business limits the company’s legal and liability obligations.
Another reason is that starting a local subsidiary company allows global companies to benefit from the current taxation system in Singapore. This will enable them to ensure they keep to the different countries’ regulations, hence diversifying their risks. Additionally, it also helps reduces the cost involving localisation and hiring of international staff.
What do I need to be aware of in order to set up a local subsidiary company?
Setting up a local subsidiary company is an ideal method to encourage business growth. Here are some essential requirements you need to ensure before starting anything:
- A paid-up capital of at least SGD$1 is necessary to start a local subsidiary.
- A minimum of one director who holds either permanent residency or citizenship and has no criminal records must be present in the subsidiary.
- The subsidiary must be ACRA-registered (Accounting and Corporate Regulatory Authority).
- The subsidiary must have a registered office address (a residential address is accepted).
- The subsidiary must, within the initial three months, register their tax accounts with IRAS (Inland Revenue Authority of Singapore) as well as nominate and register an auditor with ACRA.
What are some compliances the subsidiary needs to adhere to after registration?
Corporation compliances are a vital factor in any business’s success. Not only is it legally necessary, but it also enables the protection and enhancement of your business’s reputation.
- Licenses and permits: There are two essential Singapore business licenses: A permit license and a company license. The permit license is necessary for pawnbrokers, money changers, estate agents, and commercial agents. In contrast, the company license is required for any locally incorporated firm or international company with a Singapore branch office.
- Customs registration: Any local company has the option to register as either a specialist or general importer. Since the beginning of 2009, all import and export numbers have been registered under Unique Entity Number (UEN).
- GST Registration: The GST, or Goods and Services Tax, is a consumption tax applied to most goods and services offered in Singapore. If your subsidiary does not supply goods or services in Singapore, it is not subjected to GST registration.
- CPF registration: Every Singaporean employee needs to have a CPF account to receive the employer’s contribution and benefits. Employees who are living with and married to a Singaporean are also entitled to CPF contribution.
- Annual filing: Every locally registered business is required to file its annual returns. This process consists of submitting relevant documents and reports to ACRA.
Conclusion
Setting up a local subsidiary can often be time-consuming and stressful if you do not have the necessary resources and fundamentals. However, with this brief but thorough guideline, you can start the procedure seamlessly. Still, should you require professional advice on setting up a local subsidiary correctly, AG Singapore can help you with that.
We are an award-winning accounting firm that provides not only affordable accounting services in Singapore but also a variety of solutions such as auditing services, company incorporation services, corporate financing services, GST services, and tax services, among others. To know more about our all-in-one corporation solutions, you may reach us at johnwoo@ag-singapore.com or at +65 9383 2464.
