Legal obligations of branches of foreign companies operating in Singapore
This guideline provides a general outline of the legal requirements that branch office in Singapore must comply with
It is mandated that all financial transactions of branches operating in Singapore to be properly recorded and kept. Such records must contain the profit and loss statements, balance sheets, cash flow and all other relevant information related to the branch operations. Such record must be preserved for at least five years and must be open for inspection by the company’s agents at any given period.
Appointment of Auditors
Auditing is compulsory for every branch of a foreign company. Auditor must be appointed within 3 months of the registration.
Company Registration Number Disclosure
All companies are mandated by the Singapore Companies Act to include their registration numbers along with their company names in the following:
- Business letters;
- Statements of Account;
- Official notices;
- Any relevant documents that need the company’s name and registration number
This requirement applies to branches of foreign companies also
Yearly Account Filing
Within two months after the parent company’s AGM or Annual General Meeting, the Singapore branch must submit the following documents to the Registrar:
- Copy of the parent company’s financial account covering the operation’s financial year;
- Relevant documents filed by the parent company in its country of operation;
- Copy of the branch’s audited financial account.
When mandated, a branch must secure a license for any or all of the activities it is engaged in. Many businesses in Singapore can be done without a license. However it is still important to check if your business is subjected to licensing requirements.
Financial Year End
Financial year-end of the branch has to be same as that of parent company.
Local Resident agents
Every branch of a foreign company must have 2 resident agents. The duties, roles and authorities must be clarified by a memorandum
Goods and Services Tax (GST) Registration
GST, also known as Value Added Tax, is a form of levy on goods, services, and imports in Singapore. It is an indirect tax equivalent to 7% of a company’s price on their goods and services. A quarterly GST return must be submitted by all GST- registered companies. There are two criteria that require GST registration, namely:
- Prospective basis – a company expects a one-year turnover exceeding $1 million;
- Retrospective basis – a company’s one-year turnover exceeded $1 million
All companies must have a local Singapore addresses that can be accessed by the public during normal operating hours. This requirement applies to branches of foreign companies also
Estimated Chargeable Income (ECI)
It is mandatory that every company must report its ECI and revenue amount with the Tax Authority by completing the ECI Form. This must be done three months from the end of accounting year
Filing of Income Tax Return
Deadline for submission of income tax return is every 30th of November and non-compliance to this legal requirement may result to penalties or prosecution. Income generated in previous year must be reported by this period
Notification of Changes
Any changes affecting a branch operation, including changes to parent company structure and hierarchy, must be properly filed to the Registrar of Companies. Non-compliance to this procedure will merit appropriate penalties
In case you plan to hire any Singapore Citizen or Singapore permanent resident then the branch will have to register for CPF (Central provident Fund – Similar to Super, superannuation, pensions). Moreover you are liable to deduct relevant part of employee contribution, add to it employer contribution and the total sum must be paid to government account within 14 days
Payroll records consisting of monthly salary, bonus, variable compensation, any CPF, employer’s contribution to CPF and other deductions must be kept properly as mandated by Law. Moreover employers are liable to issue IR8A form to every employee within 3 months from the calendar year end. This form is similar to salary certificate which lists down the salary received by the employee during the year. Any business which employees more than 14 employees must submit IR8A for all of its employees to IRAS in electronic format