Many foreign companies looking to enter the Asia Pacific market find that establishing a Singapore representative office can be an effective way of breaking into the region.
Setting up a representative office (RO) in Singapore means that a foreign business entity can maintain a physical presence here without the need to register a separate company straight away.
RO is purely an administrative arrangement with no legal status and designed for assessing the business environment in Singapore before opening a permanent establishment. The main function of a representative office in Singapore is to conduct market research and feasibility studies in Singapore. Therefore, an approved representative office is prohibited from performing business activities such as the following:
Engaging in any revenue-generating activities such as trading (including import or export);
Engaging in promotional activities such as advertising and marketing;
Providing consultancy services / systems implementation i.e. providing services for a fee;
Providing administrative support to related subsidiaries/branches in Singapore and the region;
Signing business contracts on behalf of the foreign corporation.
The representative office’s name must copy its parent company’s name and be unique in Singapore at the same time; it is recommended that the parent company check the name availability before registering the representative office. All printed materials of the representative office must mention its local address in Singapore where it has been officially registered.
All foreign commercial entity looking to apply for a representative office must fulfil the following criteria:
Annual sales turnover of the foreign entity must be more than US$ 250,000;
Number of years of establishment of the foreign entity must be at least 3 years;
Proposed number of staff for the representative office should be not more than 5 people;
Documents to prepare
Completed application form;
Copy of the parent company’s latest annual report and audited accounts;
Copy of the parent company’s Certificate of Incorporation;
Complete documents promising to abide by the Terms and Conditions under Singapore law.
Processing time for registering a representative office
Once you have prepared all the necessary documents for your application, you may then submit these to IE Singapore. Company secretarial firms such as Futurebooks can handle your Representative Office registration efficiently. The application process for RO registration usually takes 2 to 3 weeks. Once approved, the RO will initially be given a validity of one year and is renewable every year for a maximum of 3 years. After the completion of successful registration, the authorities will issue a letter of approval confirming the registration and the Unique Entity Number (UEN).
Representative office vs Branch office vs Subsidiary
Hiring employees and work visa for foreign employees
Once the representative office has been registered, the company can now hire employees. The foreign company must appoint its own Chief Representative. The Chief Representative must be a staff from the parent company. The parent company can also apply for a valid work visa for its Chief Representative if he or she is a foreign staff.
Since the company is not involved in any commercial activities, the local company is not required to file annual tax returns. The income of all the staff working in the representative office, however, is subject to Singapore personal income tax.
It is the responsibility of the Representative Office to provide all local & foreign employees with monthly itemised payslips, an Annual Form IR8A, which lists their total employment earnings from your organisation and Form IR21 for tax clearance of foreign employees ceasing employment. A payroll agent such as Futurebooks can help meet these requirements.
The Singapore authorities will be sending a renewal notice to the RO two months before its expiry date. It is mandatory that the representative office must be renewed seven (7) days before the stated expiry date.
For the renewal, the RO must provide the following:
Latest revenue and profit / loss statement;
Duly endorsed undertaking to abide by the Terms and Conditions governing the representative offices in Singapore
Changes to the representative office
If there are any changes made to the representative office such as a change in the representatives, official address or registered activities, IE Singapore must be notified. In the case of any changes in details of the parent company, the notification must be accompanied by the Certificate of Change in Name or other supporting documents.
In the case where the Parent Company becomes dormant, its representative office in Singapore must be de-registered from IE Singapore.
After the 3-year validity period
Since the representative office is not permitted to operate beyond the three-year limit, the parent company can choose to delist the company anytime and register it as a branch office or a subsidiary company.
Representative office for non-profit groups or foreign trade association
If you are a foreign trade association or a non-profit, the same Terms and Conditions apply as mentioned above.
For foreign entities looking to set up an RO in Singapore, it is best to consult with a local partner to guide you through the process.
Posted: September 22, 2016