What Are the Key Requirements for Setting Up a Subsidiary in Singapore? Must-Know Conditions!

What Are the Requirements for Setting Up a Subsidiary in Singapore? The Secrets You Need to Know!

In recent years, with continuous changes in the global business environment, more and more companies have been seeking opportunities for overseas expansion. As one of Asia’s most competitive economies, Singapore has become a top destination for international businesses looking to establish subsidiaries, thanks to its strategic location, political stability, efficient financial system, and business-friendly policies.

According to a 2025 report by Lianhe Zaobao, despite a slowdown in global economic growth, Singapore continues to attract strong foreign investment-particularly in sectors such as technology, fintech, and green energy, where the number of newly registered companies keeps rising. This further underscores Singapore's growing importance on the global business map.

For companies aiming to enter the Southeast Asian market or expand their international operations, what are the actual requirements for setting up a subsidiary in Singapore-and what lesser-known factors should you be aware of?

1. Basic Legal Structure and Company Types

When establishing a subsidiary in Singapore, it is important to understand that a subsidiary is a separate legal entity, fully owned or controlled by the parent company. This means it carries independent legal and financial responsibilities, while also enjoying operational autonomy.

According to the Accounting and Corporate Regulatory Authority ACRA, the most common type of company used for this purpose is the Private Limited Company Pte Ltd, which is widely adopted by foreign enterprises setting up in Singapore. Key characteristics include

Minimum of one shareholder, with a maximum of 50.

At least one local director who is ordinarily resident in Singapore e.g., a citizen, permanent resident, or holder of an Employment Pass.

A registered office address in Singapore.

Appointment of a company secretary who must be a local resident.

Minimum paid-up capital of SGD 1, with no upper limit.

While the parent company can own 100% of the subsidiary, certain industries may require the hiring of local partners or consultants to meet regulatory expectations.

2. Setup Process and Timeframe

The process of setting up a subsidiary is relatively efficient and transparent, typically taking between 7 to 14 working days. The main steps include

1. Company Name Approval Submit the proposed name via ACRA’s online portal to ensure it is available and complies with naming guidelines.

2. Filing Registration Documents These include the company constitution, shareholder and director details, and the registered address.

3. Obtaining Licenses If operating in regulated industries such as finance, education, or healthcare, additional licenses from relevant authorities are required.

4. Opening a Bank Account It is advisable to open an account with major local banks such as DBS Bank, OCBC, or UOB.

5. Tax Registration Register with the Inland Revenue Authority of Singapore IRAS for Goods and Services Tax GST and corporate income tax.

Many companies opt to use professional registration agencies to streamline the process and mitigate potential risks.

3. Tax Advantages and Incentives

Singapore is known for its low tax rates and extensive network of tax treaties. As of 2025, the corporate income tax rate stands at 17%, significantly lower than many Western countries. Additionally, new companies benefit from a tax exemption scheme profits up to SGD 200,000 for the first three years are tax-free.

Singapore has signed over 80 Double Taxation Avoidance Agreements DTAs, facilitating smoother cross-border capital flows. For example, a company based in China with a subsidiary in Singapore can optimize its global tax structure through strategic planning.

Moreover, Singapore actively supports innovation-driven enterprises by offering various grants and subsidies. Notable programs include the Enterprise Development Grant EDG and the Productivity Solutions Grant PSG, both of which provide financial support to startups.

4. Human Resources and Employment Environment

Singapore boasts a highly skilled talent pool and encourages the recruitment of international professionals. Foreign companies can hire expatriates but must apply for appropriate work passes, such as the Employment Pass EP, S Pass, or Work Permit WP.

The Ministry of Manpower MOM sets specific salary thresholds, quotas, and eligibility criteria for each pass. For instance, Employment Pass applicants must earn a minimum monthly salary of SGD 5,000 subject to industry norms, and employers are required to pay foreign worker levies.

Singapore operates a mandatory Central Provident Fund CPF system, which ensures social security benefits for employees. Employers and employees both contribute a percentage of the salary, meaning companies must factor CPF into overall labor costs when hiring.

5. Overlooked Conditions and Hidden Challenges

Despite Singapore’s generally favorable business climate, there are several critical points often overlooked during setup

High Compliance Standards Companies must strictly comply with deadlines for submitting annual returns, audited financial statements, and tax filings. Non-compliance can lead to penalties or revocation of business licenses.

Varied Industry Entry Barriers Certain sectors like finance, healthcare, and education are heavily regulated, requiring thorough preparation of qualifications and documentation.

Cultural Adaptation While English is the official language, Singapore’s multicultural environment demands sensitivity and adaptability in communication and management practices.

Intense Market Competition Despite its small size, Singapore hosts numerous multinational headquarters, making competition fierce across industries.

6. Conclusion

Amid increasing global economic uncertainty, Singapore remains an attractive hub for foreign investment. Whether serving as a gateway to ASEAN markets or part of a broader global strategy, establishing a subsidiary in Singapore is a strategic move worth considering.

However, success depends on a deep understanding of local laws, tax policies, and market dynamics, along with careful long-term planning. With the right approach, your company can thrive in this vibrant city-state and unlock significant growth opportunities.