Opening a Subsidiary in Singapore? Must-Know Accounting Tips You Need to Master!

Setting Up a Subsidiary in Singapore? These Accounting Essentials You Must Know!

In recent years, with the global business environment constantly evolving, more and more Chinese companies are choosing to expand overseas by establishing branches or subsidiaries. Singapore, with its strategic location, stable political climate, robust legal framework, and investor-friendly policies, has become one of the top destinations for international business expansion.

According to data released by Enterprise Singapore, the number of new foreign-invested companies increased by more than 12% year-on-year in 2025, with a particularly notable rise in investments from China.

If you're planning to set up a subsidiary in Singapore, beyond conducting market research, choosing a location, and hiring staff, one of the most critical steps is understanding and mastering Singapore’s accounting and financial compliance requirements. This not only affects day-to-day operations but is also essential for avoiding legal risks and ensuring tax compliance.

1. Key Features of Singapore’s Accounting System

Singapore adopts the International Financial Reporting Standards IFRS for all listed companies and large enterprises, while small and medium-sized enterprises SMEs generally follow the Singapore Financial Reporting Standards SFRS, which are closely aligned with IFRS. This alignment makes it easier for businesses to integrate with international practices.

Companies must ensure their financial records adhere to these standards, maintaining accuracy and consistency. Singapore operates under a corporate income tax system with a flat rate of 17%. Newly established companies also enjoy certain tax incentives-for example, the first SGD 300,000 of taxable income may be fully or partially exempt from tax. However, to qualify for these benefits, businesses must ensure accurate and timely submission of financial statements and tax filings.

2. Essential Accounting Procedures You Need to Master

1. Daily Bookkeeping

After setting up a subsidiary in Singapore, daily bookkeeping includes recording income and expenses, managing accounts receivable and payable, and tracking fixed asset depreciation. Companies should establish a standardized accounting system to ensure every transaction is documented. It is recommended to use professional accounting software such as Xero or QuickBooks to improve efficiency and accuracy.

2. Monthly/Quarterly Tax Filings

Singapore operates a self-assessment tax system. Companies are required to submit audited financial statements and tax returns to the Inland Revenue Authority of Singapore IRAS after each financial year. If a company is registered for Goods and Services Tax GST, it must also file GST returns quarterly. The current GST rate is 7%, and businesses with an annual turnover exceeding SGD 1 million are required to register for GST.

3. Annual Audit and Filing Requirements

Private limited companies Pte. Ltd. in Singapore are required to conduct an annual audit and present audited financial statements at the Annual General Meeting AGM. They must also submit an Annual Return to the Accounting and Corporate Regulatory Authority ACRA.

However, small companies that meet certain criteria-such as annual revenue not exceeding SGD 5 million and fewer than 50 employees-may be exempt from audits, though they still need to complete the annual filing process.

3. Common Accounting Mistakes and How to Avoid Them

Mistake 1 No Bookkeeping or Disorganized Records

Some startups or SMEs believe that as long as they file taxes on time, bookkeeping can be handled loosely. While this may seem acceptable in the early stages, it can lead to serious problems during audits or when seeking financing. It is advisable to establish proper accounting practices from the outset, and where necessary, hire a professional accountant or outsource to a local accounting firm.

Mistake 2 Poor Invoice Management

In Singapore, invoice management is strictly regulated. All transactions must be supported by official invoices that comply with IRAS requirements. The adoption of electronic invoicing e-Invoicing is gaining momentum, and businesses should adapt to this trend to avoid penalties for non-compliance.

Mistake 3 Mixing Company and Personal Accounts

Many small business owners tend to use personal bank accounts for company-related transactions, especially during the early stages. However, this practice is not allowed in Singapore. Company and personal accounts must be strictly separated; otherwise, it may be considered a tax violation and damage the company’s reputation.

4. The Importance of Professional Services

Accounting in Singapore involves numerous regulations and complex procedures, especially for Chinese companies entering the market for the first time. Differences in language, culture, and legal systems can pose significant challenges. Therefore, it is advisable to engage local accounting firms or business service providers from the outset to ensure full compliance.

Choosing the right accounting outsourcing partner not only reduces labor costs but also enhances the professionalism of financial management. According to a 2025 industry survey, more than 70% of SMEs in Singapore outsource their accounting and tax-related tasks to improve efficiency and compliance.

Conclusion

Establishing a subsidiary in Singapore presents numerous opportunities, but it also comes with a range of compliance challenges. As a foundational aspect of business operations, proper bookkeeping directly impacts financial health, tax compliance, audit outcomes, and long-term growth.

Only by truly understanding and adhering to Singapore’s accounting standards and requirements can your company establish a strong foothold in the competitive market and achieve steady, sustainable growth.