A subsidiary or daughter company is owned and controlled by another company, called the holding or parent company. Subsidiary companies are very common in the business environment and most multinational corporations operate via these structures. In comparison to creating divisions of a single company, incorporation of subsidiaries as separate legal entities has various benefits. For example, a subsidiary company is required to conform to the tax, liability and other regulations of its home country, not the country of the holding company. For example, a subsidiary company can sue and be sued separately from the holding company and its obligations will not normally be transferred to its parent.
Singapore has managed to position itself as the preferred jurisdiction for businesses of any size seeking to operate in Asia. Singapore’s business environment is favourable to foreign investors due to rather liberal requirements and various benefits, such as a strategic location, the availability of a skilled, multilingual workforce, smart immigration policies, excellent intellectual property protection and an efficient legal system. Among other advantages, Singapore’s taxation policies and tax treaties are certainly worth pointing out and will be discussed further below. More specific benefits of subsidiary incorporation in Singapore include:
Paid-up capital can be in the same currency as that used by the holding company (easier accounting procedure)
Freedom to determine the company’s fiscal year, making it possible to match the accounting dates of the holding company (easier accounting procedure)
The subsidiary’s name can be different from that of the holding company
Freedom to repatriate all profits away from Singapore
Main basic requirements
During the formation of a subsidiary company, at least one local director needs to be appointed who is a Singaporean citizen or permanent resident or who holds an employment pass. Upon incorporation, a company secretary must be appointed who is also resident in Singapore. The minimum paid-up capital for a subsidiary company is 1 SGD, and this can be 100% owned by the parent company. A subsidiary in Singapore must have an office — either commercial premises or a home office — and statutory records need to be kept there.
To form a subsidiary, the following documents are required:
The holding company’s certificate of incorporation
Proof of the holding company’s directors and current registered address
Authorisation of signature on behalf of the holding company
Copies of the subsidiary directors’ passports
Signed consent to act as directors
Registered address for the subsidiary
Articles of association and memorandum for the subsidiary
Possible applications
In addition to the various benefits of having a subsidiary company in Singapore, there are circumstances when it is crucial to opt for a subsidiary rather than a branch office or simply a new division. The main purpose of a subsidiary is to allow local or foreign companies to expand their operations. But what if you want to expand your business in a completely different direction to that of your current business? While a branch office is an extension of the parent company and is therefore only allowed to carry out activities which are in line with the purpose of that company, a subsidiary is allowed to perform any activities as long as these are stated at the time of its incorporation.
Taxation for subsidiary companies in Singapore
Singapore’s tax system is considered simple and investor-friendly. The corporate tax rate does not exceed 17% and there is no tax on capital gains or dividends. All foreign-sourced income is exempt from tax as long as it has been subject to tax in another country. In addition, Singapore has an extensive list of double tax agreements (DTAs) with over 70 countries around the world, which allows investors to avoid double taxation. This extensive DTA network, together with 0% tax on capital gains and dividends, makes Singapore a smart and financially friendly choice for the incorporation of a subsidiary company.
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Intellectual property holding solution
Cyprus offers a very useful IP tax regime. The law provides for a certain tax exemption for income derived from intellectual property. More specifically, 80% of the worldwide royalty income generated from IP owned by a Cyprus tax-resident company (net of direct expenses) is exempt from income tax. In addition, 80% of profits generated from the disposal of IP owned by Cyprus-resident companies (net of direct expenses) is also exempt from income tax, and any expenditure of a capital nature for the acquisition or development of IP is tax-deductible in the year in which it was incurred and the four subsequent consecutive years.
Companies registered in Cyprus, if managed and controlled from Cyprus, will receive a tax clearance certificate. In order for the company to maintain its management and control in Cyprus, the majority of the company's board of directors must be Cyprus residents, the company's secretary and registered office must be located in Cyprus, the board of directors must hold its meetings in Cyprus and, if possible, the company's shareholders should hold some of their meetings in Cyprus. The tax authorities have also increased their requirements and are now looking into the issuing of powers of attorney by companies. If a general power of attorney is issued by the company allowing someone who is not resident in Cyprus for tax purposes to act on its behalf, this might render the company non-tax resident.
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An audit is an independent and systematic examination of accounts, books, documents, statutory records and vouchers of a company to ascertain that the financial statements and non-financial disclosures present a fair and true view as well as maintained as required by law. Audits provide an assurance by the third party that the subject matter does not contain a material misstatement. While the term is most frequently used to evaluate the financial information of a legal entity, there are various other areas that are commonly audited: internal controls, secretarial and compliance audit, quality management, water and energy management and conservation as well as project management. As a result, various stakeholders can effectively evaluate and, if necessary, improve the effectiveness of risk management, governance and control processes of the legal entity.
Organization of an audit
Most companies receive an audit once a year, while some, usually large corporations, can receive audits even on a monthly basis. Often, audit is a legal requirement in order to eliminate the intentional misstatements of financial information in an attempt to commit fraud. For some companies, especially publicly traded ones, audits are used to evaluate the effectiveness of internal control measurements. During the process of auditing, auditors are required to follow auditing standards set by the government body. The process is usually organized in six steps:
Requesting documents – auditor requests certain documents listed on the preliminary checklist. These documents may include a previous audit report, bank statements, receipts and ledgers as well as organizational charts, bylaws and standing rules and copies of the board and committee minutes.
Preparing an audit plan – after the auditor has received all required documents, an audit plan is drafted. During this stage, a risk workshop might be conducted in order to identify possible problems.
Scheduling an open meeting – senior management together with key administrative staff are invited to a meeting during which a scope of the audit is explained. Other details, such as time frames, scheduled vacations and interviews with the auditors are discussed.
Conducting fieldwork – auditors are speaking with staff members, reviewing processes and procedures, testing compliance with laws and policies, evaluating internal controls as well as discussing possible problems with the organization.
Drafting a report – auditor prepares a report with detailed findings of the audit. Such details as posting problems, mathematical errors, payments that are authorized and not paid along with other discrepancies and concerns are listed. Finally, the auditor writes a commentary about the findings of the audit and possible solutions for the found problems.
Setting up a closing meeting – management of the audited company discusses the highlighted problems and describes the action plan to address them along with projected completion date. Finally, the management indicates whether it agrees with the problems pointed out by the auditors. It is important to point out that auditors seek to provide only a reasonable assurance that the audited information is free from material error. Which means that they do not check every figure in the financial statements; they also do not look at every transaction that is carried out by the organization. Auditors do not judge the appropriateness of the business activities, strategies or decisions made by the company’s management.
Types of auditors
There are generally three types of auditors:
Internal auditors – employed by the company for whom they are performing the audit. They provide information to the management of the company about the accuracy of their books and the efficiency of their internal control system.
Consultant auditors – performing the same function as internal auditors, but are not employed by the company.
External auditors – follow a set of generally accepted set of standards to evaluate the financial reporting and possible misstatements of the company. Legally required audits need to be performed by external auditors.
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After the state weathered the tax crisis of the 1980s, it gradually began expanding the corporate tax base. Between 1982 and 1986 there were some restrictions on tax-based funding. Then, in the late 1980s and early 1990s, there was a general change in industrial policy that broadened the corporate tax base. Generally, Irish corporation tax is levied on worldwide profits. It is made up of taxable profits and income from companies resident in the country. Foreign companies, on the other hand, are subject to corporation tax on their creditable profits.
Ireland has a specific corporate tax code which includes four basic tax credits aimed at achieving specific policy objectives: the Knowledge Development Box (KDB), the Development (R&D) Tax Credit aimed at reducing business expenditure on research and development (BERD ) to increase. However, partnerships, such as self-employed persons or sole proprietorships, cannot be subject to corporate income tax. This means that profits and profits from trading by companies are considered income subject to income tax.
Statistics
Ireland's tax system is progressive, meaning that the higher the income, the higher the tax rate applicable to that income. Data collected last year (2016) shows (Publicpolicy.ie) that the tax a person pays on half the average income is the second lowest in the OECD (34 countries in total), which is 1/10th the Danish tax rate, for example .
Types of taxes in Ireland
Ireland has several types of taxes: an income tax, a value added tax (VAT), corporation tax and also Universal Social Charge (USC) on your earned income and Pay Related Social Insurance (PRSI).
Corporate taxes
Since the creation of the Irish Free State in 1922, a tax on corporate income levied by the Irish authorities has been authorised. There is also an Article 74 of the Irish Free State Constitution which contains provisions for transitional provisions in relation to the levying and collection of taxes previously imposed under British administration in Ireland.
The common corporate tax rate for qualifying dividends from EU and tax treaty jurisdictions is set at 12.5%. However, a 25% corporation tax is levied on all passive income. However, companies may be subject to other taxes. For example, stamp duty on the transfer of property - the rate is 1-2%, local property taxes with the rate - 0.18-0.25%. There are also industry-specific taxes set in the country. This can be a ship tonnage tax or a construction tax, for example.
In addition, there is a special tax that applies to certain petroleum activities depending on the profit yield of a location. Therefore, the applicable tax rate can vary between 25% and 40%. Another example is a carbon tax levied on mineral oils such as kerosene or car fuel that can be bought in Ireland. The rates of these taxes are EUR 20 per tonne of CO2 emitted.
VAT tax
VAT in Ireland can be referred to as a consumption based tax assessed on the value added to available goods and services which can be applied to almost everything that country offers and sells for use or consumption. VAT tax rate applicable in the country is 23%. However, there can other tax rates depending on the type of goods or services provided.
Income taxes
Every person living in Ireland must pay his or her worldwide income taxes. The basic condition is living in Ireland for 183 days or more during one tax year or for 280 days or more during the tax year and the previous tax year. If less than that, then a person is not considered tax resident and shall only pay taxes on income earned in Ireland. Tax rates for incomes are: up to 33 800 EUR – 20% and over 33 800 EUR – 40%. There is a special Pay As You Earn (PAYE) system established in the country governed by Irish Tax and Customs office.
Pay Related Social Insurance (PRSI)
PRSI payments can be considered as a part of the Social Insurance Fund (SIF). This fund provides help by paying for Social Welfare benefits and pensions. It shall be paid by all employed residents except those who are earning 38 EUR or more per week by doing full-time or part-time job, workers who are self-employed and their annual income is 5,000 EUR a year or more and persons who are 16 years old or over or are under pensionable age.
Universal Social Charge (USC)
USC is referred to as a tax which must be paid on person’s total income. However, there are some types of income that are exempt. For example, an individual can pay USC at the standard rate or the reduced rate, depending on the circumstances. Reduced rates of Universal Social Charge apply to those individuals who are aged 70 or older or hold a Medical Card which is full, if a person reaches the age of 70 or holds a full medical card at any time during the year, having total income of 60,000 EUR or less otherwise the standard rates of UCS shall be applied to incomes.
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The modern business world requires specialized, professional staff with high levels of responsibility and particular expertise in specific areas. It requires access to ongoing professional development that deepens employees' knowledge, as most people today live in a very rapidly changing environment. In order to find the right people for the right job, it is therefore crucial to go through every single phase of the hiring process such as planning, recruiting and selecting employees.
The recruitment phase consists of the implementation of certain methods and strategies that a company uses to find applicants for a position. This means searching for potential employees using internal and external sources, screening and pre-selecting the applications received based on the suitability and suitability of candidates, and evaluating potential employees by professional recruiters.
The methods and strategies to be used must be valid and appropriate to ensure an effective recruitment process. Consequently, there are certain resources that are necessary to complete this process. The most important thing is to delegate the task to competent human resources and recruitment professionals who can assess whether a candidate has the right skills and credentials to be successful in the position. They also need to know where to look for the right candidates for open positions and understand how to attract both suitable and unsuitable candidates.
This means recruiters should be able to understand the market and therefore know what a suitable candidate looks like. For this reason, the best choice for an international company is to hire local professionals who are familiar with the market and can easily identify the right candidates for the positions on offer.
Local recruitment companies usually have background knowledge about the supply of local employees. Because they operate as separate business entities, third-party companies relieve the client company's managers, directors and other employees of having to perform additional work at the expense of their regular duties and day-to-day responsibilities. Because the best results come from focusing on one thing at full capacity, a professional third-party company is likely to be more successful in attracting the best talent than the company's senior executives.
Now that outsourcing has become an option on a wider range of hiring strategies, some companies are using it to buy time and ensure they can better serve customer needs. Local external service providers can be of great help to internal employees, mainly due to the time savings in managing and conducting the recruitment process.
Local recruitment companies can provide more engaging and convenient recruitment processes by tracking candidates, understanding the position sought and expediting hiring processes. Due to the existing background knowledge, there is no need for targeted training and further education of the employees in order to prepare them for this responsible task - with long-term consequences for the company. Local recruiters are also likely to avoid the usual pitfalls of the recruitment process.
Local recruiters can easily find a common language with potential candidates in the local job market, find an easy way to reach and connect with them, and help the company connect and stay in touch with them by they keep you updated throughout the recruitment process. This makes the recruitment process more effective, methodical and organized – in other words, smoother and more personalized in terms of the approaches used – leading to the selection of employees who will make the best of their jobs in the future.
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Some business people find that virtual offices are an easy and inexpensive way to go global. Others think it offers an opportunity to maintain the most important thing required for successful e-commerce and marketing today - a business presence that can be established in any market.
According to Wikipedia and Investopedia, the virtual office offers address and communication services for a fee without the provision of dedicated office space, as it is a business location that only exists in cyberspace and allows employees and business owners to work from anywhere using technological means to work – personal computer, laptop, notebook or tablet.
Benefits of using a virtual office
A full application of a virtual office term can include live professional communication. This means that all business appointments can be conducted online via telephone and video conference. Business documents can be shared, signed and sent electronically. There are some significant benefits of doing business in cyberspace.
Most important might be the fact that if the company has several or more employees, each of them can do their work from the place that is most convenient for him or her, having the right to his or her own lifestyle, sleeping and resting is maintained habits and other requirements that can be customized. This means the company is not limited to hiring by expanding employee employment opportunities and corporate hiring opportunities.
This way of transacting and arranging business is creating new professional fields as professional as remote receptionists who can use high tech computer phone integration software to communicate with customers, virtual assistants who don't have to meet their customers in person and assist them instead virtual and other members of the virtual team.
Virtual teams can offer services such as answering machines and call centers operating from a central location to receive and transmit large numbers of inquiries over the phone, voicemail, which is basically a low-cost technology service that stores voice messages electronically , Voicemail messages can also be converted to e-mail letters to ensure high virtual mobility, virtual office space, ensuring a chance to have a high-profile, respected address in a city of the employee's own choice, telephone answering service, the bridges the gap between the employee and his or her customers.
In general, the creation of virtual offices aims to increase and increase efficiency while combining home and work together. It saves money, increases mobility and allows for cost-effective expansion without long-term commitments, keeping office costs to a minimum.
Disadvantages of using a virtual office
The other side of a virtual office is that it lacks centralization, which creates difficulties when daily work meetings and appointments are reduced. Employees have to be very proactive here in order to maintain the existing structure. The lack of interaction can also increase when there is no planned everyday communication. These are the interactions that come with a traditional work environment, like lunch breaks and conversations with coworkers about work, life, and relationships. When working remotely, communication in general can also be difficult.
The lack of a face-to-face meeting increases the likelihood of misunderstandings and misinterpretations, since in this case words sent via email or written may lack the non-verbal cues and tone of voice that could make it easier to understand what the person said and how he said it or she feels.
There is also a lack of opportunities to plan and schedule meetings, for example to meet a client at short notice, as it is not possible to arrange meetings in a specific location called an office space or office building.
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