A Representative Office (RO) allows a foreign company to test out Singapore's business environment before committing to long term investments. It is subject to a 3-year tenure and a limited scope of activities. The following explores some common questions posed by ROs upon the expiry of tenure.

Q: What are my options upon the expiry of my RO?

You may consider converting the RO to a Singapore company or a Singapore branch of your head office. If you find that there is no business case for you to continue in Singapore, you may choose to let it expire and close the RO.

Q: Which is better – a Singapore company or a branch?

We will recommend a Singapore company as it accords you more independence and flexibility (including that of scaling up and fund-raising) versus the limitations/challenges of a branch, like:

  • Financial statements of the head office in addition to those of the branch need to be filed with the authorities yearly by a stipulated time. From our experience, getting the head office accounts in time can prove a challenge for the branch, which may then be subject to late filing penalties.
  • A branch does not enjoy certain tax benefits e.g. those provided under the Double Taxation Agreements and tax sparing credits.
  • Inability of the branch to admit additional equity or joint venture partners.
  • Legal action against the branch is tantamount to an action against the head office.

Some differences between the two types:


Q: I am happy with what my RO is doing now, and will like to continue status quo except that my RO tenure is up. What options do I have? Will I incur more tax if I convert?

You may register your operations with the authorities as a Singapore company and continue status quo. A 'service company' is taxed at low effective tax rates (after exemptions), compared to the corporate tax of 17% (which is still amongst the most competitive in the world).

A service company refers to a company which renders services to its related companies and is reimbursed for the operating expenses incurred in connection with the services rendered. Generally the service arrangement between a service company and the related company falls under one of the following categories:

  • Free or at cost to related companies
  • At cost plus mark up
  • At arm's length prices

Taking the first scenario as a case, the chargeable income of the service company is assessed at 5% of the total expenditure which is deemed as the 'profit'. Assuming your current RO's expenditure is S$500,000, the tax payable (after you convert and assuming your activities are the same) works out to only 0.34% of the total expenditure (see calculation below).


Q: Are there other implications in conversion we should note?

There will be certain compliance requirements and costs for a Singapore company compared to an RO. The major compliance needs are listed below. The compliance process for a branch is more complicated as it depends on the head office operations. It is hence better addressed on a case-to-case basis.

Corporate Secretarial

  • Corporate secretarial compliance, statutory compliance and annual filings with the Accounting and Corporate Regulatory
    Authority ("ACRA").
  • Appoint a company secretary.
  • A Singapore company must have a local registered office address. P.O. Box is not allowed.

Routine Accounting (can be performed in-house or outsourced)

  • All companies in Singapore must prepare a set of Financial Statements that comply with the Financial Reporting Standards/provisions of the Companies Act, Cap. 50.

Statutory Audit

  • Financial Statements of a Singapore company will be audited for filing with the local authorities such as ACRA, Inland Revenue Authority of Singapore ("IRAS"). Audits may be exempted under certain conditions.

Corporate Tax

  • Company is required to file its Estimated Chargeable Income to IRAS within 3 months after the financial year end.
  • Corporate Income Tax computation and submission to IRAS by 30 November of the year following the financial year end

Q: What will be the estimated costs to convert?

As a general guide, one time registration fee is S$315 and S$1,215 for a branch whose head office has no share capital. Professional fees for first time conversion and subsequent yearly compliance vary depending on the professionalism of service providers, and the extent of hand holding required.

Converted ROs whose activities are largely status quo may find value in a competitive and hassle-free package we have, called ValueAccounting, which takes care of all the basic compliance needs for you - corporate secretarial duties, compilation (of financial statements), corporate tax and yearly reporting.