Corporate Advisory

Top 5 Things You Need To Know About The Statutory Compliances For A Branch In Singapore

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Regarding the annual compliances for a Singapore Branch in Singapore, please allow us to do a brief introduction as follow :-

 

1. Local Branch Representative

Singapore Companies Act requires a foreign company to appoint at least one local agent from Singapore to act on behalf of the company. The agent must be an “ordinarily resident” (the usual place of stay of a person) in Singapore.

For ACRA’s purposes, if a person can provide a local residential address and prove that he is staying in Singapore on a long-term arrangement (i.e. legally remain in Singapore for a long period), ACRA may accept that he is ordinarily resident here.

 

2. Preparation of Financial Accounts

Financial accounts of the branch must be prepared in accordance with the Singapore Financial Report Standards to give a true and fair view of their Singapore operations and must consist of an audited statement of its assets and liabilities and its profit and loss accounts of its operations in Singapore.

 

3. Annual Filing Requirements of Branch office in Singapore

Subject to Section 373 of Companies Act, a foreign company which has a Singapore branch shall, within 2 months of its annual general meeting, lodge the followings with the Registrar:-

A copy of the financial statements the foreign company for the financial year concerned

Documents accompanying the financial accounts filed overseas in the foreign company’s jurisdiction

A copy of the audited financial accounts of the Singapore branch office

When the parent company is not required by the law of the place of its incorporation or origin to hold an AGM and prepare a balance sheet, the parent company shall prepare and lodge with the Registrar a balance sheet within such period, in such form and containing such particulars and annex such documents as the directors of the company would have been required to prepare or obtain if the company were a public incorporated under the Singapore Companies Act.

 

4.Income Tax Filing Requirement of Foreign Company’s Singapore Branch

For taxation purposes, a company includes:

* A business entity incorporated or registered under the Companies Act or any law in force in Singapore. It usually has the words “Pte Ltd” or “Ltd” as part of its name; or

* A foreign company registered in Singapore such as a branch of a foreign company; or

* A foreign company incorporated or registered outside Singapore.

With effect from YA 2010, a company is taxed at a flat rate of 17% on its chargeable income regardless of whether it is a local or foreign company.

Non-Singapore incorporated companies and Singapore branches of foreign companies are controlled and managed by their foreign parent and are, therefore, regarded as non-residents.

As the result, certain incentives and treaties which are only available to Singapore Tax Resident Companies do not apply to the branch.

However, they may still be treated as Singapore tax residents if they are able to satisfy IRAS that certain conditions have been met.

The statutory deadline for filing corporate income tax return is 30 November of the Year following the year in which the company’s financial year ends (e.g., if the financial period of the branch is 1 July 20X5 – 30 June 20X6, the income tax return filing deadline for the company will be 30 November 20X7.

On top of the statutory deadline for filing corporate income tax return, the branch is required to file Estimated Chargeable Income (“ECI”) to Inland Revenue Authority of Singapore within 3 months from the parent’s company’s financial year end (e.g., if the financial year end of the parent company is 31 Dec 20X7, ECI filing is due on 31 March 20X8).

 

5. Audit Exemption

With regards to your request for application to ACRA for audit exemption for annual filing, you may be pleased to know of the following :

A foreign company shall lodge with the Registrar with such balance-sheet and other documents a duly audited statement showing its assets used in and liabilities arising out of its operations in Singapore as at the date to which its balance-sheet was made up and a duly audited profit and loss account which, in so far as is practicable, complies with the requirements of the Accounting Standards prescribed under the Act and which gives a true and fair view of the profit or loss arising out of the company’s operation in Singapore for the last preceding financial year of the company.

However, the Registrar may waive compliance with this requirement if he is satisfied that:

it is impractical to comply with this subsection having regard to the nature of the foreign company’s operations in Singapore

– it would be of no real value having regard to the amount involved

– it would involve expense unduly out of proportion to its value; or

– it would be misleading or harmful to the business of the foreign company or to any company which is deemed related to the company under the Act.

In addition to the waiver referred to in paragraph above, a foreign company may apply to the Registrar in writing for an order relieving the foreign company from any requirement to lodge balance sheets and audited statements under the Act and the Registrar may make such an order either unconditionally or on condition that the foreign company complies with such other requirements relating to the form and content of the accounts or reports as the Registrar thinks fit to impose.

However, the Registrar shall not make such an order under unless he is of the opinion that compliance with the requirements of this section would render the accounts or reports misleading or inappropriate to the circumstances of the foreign company or would impose unreasonable burdens on the foreign company.

If you need help, feel free to contact us at :

(O) +65 63851011

(M) +65 90880669

(E) [email protected]

www.corporatebackoffice.com.sg

Written by Kelvin Loh