UK subsidiaries for Singapore companies

UK and Singapore company law are recognisable to each other and much of the vocabulary carries across. Three differences carry a cost.

• The rate. UK corporation tax is 25% over £250,000 against Singapore's 17%, and the reduced UK rate is mostly unavailable to groups because the thresholds are divided by the number of associated companies worldwide.
• Employment costs. Employer National Insurance at 15% above £5,000 of salary, a compulsory workplace pension with a minimum 3% employer contribution, 5.6 weeks of paid holiday including bank holidays, and statutory sick pay. The UK on-cost above salary is materially higher than Singapore's.
• Audit. The UK exemption depends on the size of the whole worldwide group, not the UK company, so a small UK subsidiary of a substantial Singapore group will usually need a statutory audit.

Company secretary

Singapore requires a resident company secretary. The UK does not require one at all for a private company, but the work still has to be done: the register of members, the annual confirmation statement, every change filed at Companies House within its deadline, and board decisions minuted. We do that as part of the ongoing service.

Money and people

Dividends to the Singapore parent leave the UK with no withholding tax. Interest and royalties carry 20% UK tax at source unless the UK–Singapore treaty reduces the rate and the claim is made in advance; that treaty reduces rather than removes it. Executives moving between the two are covered on the overseas directors page.

Three things we set up differently for a Singapore parent

1. The rate expectation. UK corporation tax is 25% over £250,000 against Singapore's 17%, and the reduced UK band is mostly unavailable because both thresholds are divided by the number of companies under common control worldwide. A UK forecast built on the Singapore rate will be materially wrong.
2. No resident company secretary. Singapore requires one; the UK requires none at all for a private company. The work still has to be done, and outsourcing it is what our ongoing service covers, but there is no appointment to make and no residency requirement to satisfy.
3. Employment on-costs. Employer National Insurance at 15% above £5,000 with no upper limit, a compulsory workplace pension, 5.6 weeks of paid holiday including bank holidays, and statutory sick pay. The UK on-cost above salary is materially higher than Singapore's, and it needs to be in the hiring budget rather than discovered.

Where the two systems diverge

Both are common-law systems and much of the corporate vocabulary matches, which makes the differences easy to miss. Audit is the sharpest: the UK exemption is decided by the size of the whole worldwide group, so a small UK subsidiary of a substantial Singapore group will usually need a statutory audit. Your Singapore auditors can carry it out only if they are registered to audit in the UK or have a UK member firm; otherwise a UK registered firm audits the subsidiary and reports to them as component auditor.

Money and people

Dividends to the Singapore parent leave the UK with no withholding tax. Interest and royalties carry 20% at source unless the UK–Singapore treaty reduces the rate and the claim is made to HMRC in advance; that treaty reduces rather than removes it. Executives joining the UK board are taxable here on the pay attributable to UK duties from the first board meeting.