Before you embark on the journey of hiring staff, it’s essential to acquaint yourself with the intricacies of setting up a subsidiary in Singapore or consider the alternative of engaging with a global Professional Employer Organization (PEO). The process of establishing a subsidiary is governed by the complex subsidiary laws of Singapore.
Steps to Set Up a Subsidiary in Singapore
The procedure for establishing a subsidiary in Singapore involves several key steps:
Company Name Approval: Initiate the process by getting your company name approved and reserved.
Registered Office Address: Secure a registered office address in Singapore, which is a mandatory requirement.
Local Representatives: Appoint at least two local agents to represent your subsidiary in Singapore.
Company Seal: While not mandatory, having a company seal can aid in the authentication of corporate documents, maintaining professionalism and orderliness.
Bank Account: Open a corporate bank account with a full-fledged banking institution in Singapore to facilitate financial transactions.
Employee Contributions: Prior to hiring, register with a Singaporean insurance provider for Central Provident Fund (CPF) contributions. As an employer, you will be responsible for making monthly CPF contributions on behalf of your employees.
Legal Framework for Singapore Subsidiaries
Legally, subsidiaries in Singapore are required to apply online for setting up their CPF contribution details. This necessitates the SingPass of your representatives and the Unique Entity Number (UEN) of the subsidiary. The approval process typically takes around two to three working days.
Upon approval, you’ll receive an email and a welcome package that includes:
CPF Submission Number (CSN)
CPF Payment Advice Form (CPF91)
Interbank GIRO application form
The CSN is crucial for any transactions with the CPF Board, including contributions and communications.
Since 2018, all local entities with a UEN must register for Singapore Corporate Access (CorpPass) to access Government-to-Business (G2B) digital services in Singapore. Subsidiaries with a UEN can continue using SingPass or the Singapore Personal Access, but new local entities will need to use CorpPass.
Advantages of Setting Up a Subsidiary in Singapore
There are numerous benefits to establishing a subsidiary in Singapore:
Liability Protection: Your parent company in the US retains control over the subsidiary in Singapore, which means any legal actions or claims are directed at the parent company, thereby minimizing liabilities for the Singapore office.
Operational Independence: Subsidiaries can operate more independently by developing their own culture and policies that align with Singapore’s business values.
However, setting up a new subsidiary in Singapore requires a significant investment of time and money, which might be a constraint when trying to expand your business successfully.
Other Considerations
Setting up a subsidiary demands a considerable investment of time and resources. It’s crucial to have a thorough understanding of Singapore’s subsidiary laws, ensure your company representatives are well-versed in local regulations and culture, and make frequent visits to Singapore. While most processes can be conducted online, finding talent, liaising with local payroll companies, completing all government forms, and establishing a designated office space in the country are essential.
Alternatively, outsourcing your Singapore subsidiary can streamline the process and alleviate some of the burdens. Collaborating with a global PEO like GONEX, which utilizes its established subsidiaries, eliminates the need for you to set up your own.
Partner with GONEX for Your Expansion
GONEX can assist in recruiting staff in Singapore, enabling you to develop a workforce without establishing a subsidiary. We can also assume some of the responsibilities typically borne by your US parent company. Partnering with a PEO can save you from costly penalties or shutdowns and address compliance issues.
Contact us to learn more about our team and how we can assist you in complying with the legal requirements for establishing a subsidiary in Singapore.
