Guide to setting up a representative office in Singapore
Singapore is considered a great country for most foreign businesses to expand or have a branch in because of its attractive tax laws, business-friendly economy, and diverse culture that acts as a good mix between the east and west.
But if for some reason you are not sure whether you should invest resources in building a branch or subsidiary in the country, then you can always opt for setting up a representative office in Singapore
What is a representative office?
A representative office is a type of office established by a company in a foreign country to conduct activities that are related to business but not revenue/profit-generating or in other words, non-transactional activities.
• Legal status - A representative office has no legal status as it is viewed as a type of liaison office when compared to a branch office. It is simply seen as an addition to foreign business.
• Validity period - After setting up a representative office in Singapore, you can run the non-commercial activities from this entity for a maximum period of 3 years. If your business wants to continue activities in the country, then you must set up a branch or subsidiary office.
• Scope of business activities & limitations - An RO is ideal for market research & business feasibility assessments. You can conduct research and collect data about a particular product’s demand, pricing, customer needs, requirements & expectations, etc.
These are activities that do not generate any profit and are not transactional in nature. You can also be involved in exhibitions or trade shows.
• Limitations - Activities or limitations that are not permitted include renting a warehouse, negotiating contracts, most forms of trading, etc.
Benefits of setting up a representative office for business
• The capital requirement to set up an RO is also very less. The registration fee after the application process is complete is $200 USD. An RO does not have any other business legal obligations and they also don’t have to pay corporate tax in Singapore.
• Since there is minimal to no business activity that takes place from a representative office, the cost of running an RO is also very low.
• If the parent company wishes to import or export sample products or materials then it can do so by acquiring a central registration number. You need to make sure that the products or materials that are imported and exported are not used for trading purposes.
Some of the disadvantages of setting up a representative office in Singapore
• The main disadvantage of a representative office is that you cannot conduct any business activities that directly earn you money, i.e. selling goods or services or trading. You also cannot produce or manufacture goods. An RO is limited to business activities such as research and assessment.
• Since the representative office is not a separate entity but rather just an extension of the parent company, any and all legal liabilities are the responsibility of the parent company to handle and fulfill.
• A foreign business can run a representative office in Singapore for a maximum of 3 years. After this period if they want to continue, they must set up either a subsidiary office or a branch office.
Related read: How to register a company in Singapore for 2024?
Setting up a representative office in Singapore
The Singapore representative office registration process involves having certain documents ready and fulfilling certain requirements. Another thing to consider is that different firms belonging to different industries will have to apply under separate authorities.
Listed below are a few examples of businesses in certain industries and the authority under which they must register their representative office:
• Monetary Authority of Singapore (MAS) - Banking, finance, financial exchanges & insurance sectors
• Ministry of Law (MinLaw) - Foreign law practices
• IE Singapore - Manufacturing, trading, trade, logistics, & services sector
Criteria
Listed below are all the criteria that a foreign business or entity must fulfill in order to register a representative:
• The first condition that a foreign entity must fulfill to register a representative office in Singapore is that they must have a sales turnover of at least US$ 250,000.
• The foreign parent organization that seeks to register an RO in Singapore must have been established for a minimum of 3 years.
• To run the operations or activities of the representative office, the number of employees must not exceed 5. A chief representative must be appointed from the head office who must relocate to Singapore in order to carry out the operations.
• The name of the representative office must be the same as the parent company. If there happens to be a local company in Singapore with the same name, then changes can be made on a case-to-case basis.
• An RO must also mention in all their communication material such as plaque cards and employee badges that they are a representative office.
Documents required
All the documents listed below must be provided in English or a translated version of the documents in English must be submitted.
• Certificate of incorporation of the parent company.
• The latest annual reports & audited accounts of the parent company.
• The completed application form for a representative office in Singapore.
• An authorized declaration by the parent company to abide by the terms and conditions of establishing a representative office.
Application process
Once you ensure that you fulfill all the conditions to establish an RO in Singapore and you have all the documents required, you can seek help from a local corporate services firm to help you out with the application process. The firm will help you:
• Complete the application form as per guidelines.
• File registration paperwork.
• Be the point of contact for authorities.
• And file the employee pass application once the RO application has been approved so that the chief representative from the head office can relocate to Singapore.
Fees
The registration fee after the submission of the application is US$200.
Compliance requirements post-registration
• Once your RO application is approved by the authorities, a Letter of Approval will be issued to confirm the registration.
• After successful registration, the RO is valid for a period of 1 year. The parent company must renew the application at least 7 days before the expiry date of the representative office.
FAQs
A representative office differs from a branch office in the sense that the type of business activities you can conduct is limited to non-transactional operations such as market research and feasibility studies. With an RO you will not be able to conduct any revenue-generating or profit-yielding business activities.
After a representative office is successfully registered, the entity is valid for a period of 1 year after which the parent company must renew the registration. The authorities will send a notice to the RO 2 months prior to the date of expiry and the foreign entity must complete the renewal process 7 days before the date of expiry.
A representative office in Singapore cannot negotiate business contracts, lease its office to other parties, send invoices, rent warehouses, engage in the selling of imported or exported goods, any promotional activities in the form of advertising or marketing, and much more.