Hiring in Singapore without a local entity

When a valued employee needs to move to Singapore either for personal or business reasons, the first question is often how the company can keep employing them. Often, setting up an entity solely for employment purposes isn’t viable, so what other options does a company have? Broadly, five routes are available, but the candidate’s immigration status will determine which ones apply.

For a Singapore citizen or permanent resident doing market development, support, or internal work, an Employer of Record (EOR) can provide an employment route without local incorporation. For a foreign national who needs to be based in Singapore while working for an overseas company, the options narrow to a private limited company or, for genuinely non-commercial work, a representative office. A Singapore branch and direct contracting can also fit more specific operating needs.

Let’s unpack this a bit. The reason the employment options for a foreign worker working for a foreign company are limited is clearly stated in the Ministry of Manpower’s work-pass FAQ:

• Work passes are for foreigners working for Singapore-based companies
• An EOR cannot apply for a foreigner to be based in Singapore while working for an overseas company without local presence.
• An EOR doing so would be committing an offence.

This is as clear guidance on the use of EORs, and for candidates who need a work pass, that an EOR is not an option. The choice, therefore, is between setting up an entity that can sponsor the worker and a representative office, which, however, has a very clearly defined scope of when it is permissible.

Importantly, even if a company can sponsor, sponsorship success is not certain. A non-exempt Employment Pass application must score at least 40 COMPASS points across salary, qualifications, nationality diversity, and support for local employment.

Companies with fewer than 25 professional, managerial, executive and technical employees receive 10 default points on each of the diversity and local-employment criteria, which helps a new Singapore operation. The S Pass comes with a clearly defined quota: 10% of total workforce in services, 15% in construction, manufacturing, marine shipyard and process (the process sector is one of the industry categories the Ministry of Manpower uses to set quotas). A company whose only Singapore employee would be the S Pass candidate will struggle to fulfill these quotas and therefore may still be unable to sponsor a foreign worker.

There are five different ways to employ people in Singapore and the difference between them is what is legally permitted within them.

What each Singapore route can lawfully do:

• Employer of Record: A Singapore EOR employs the individual; the foreign company receives services under a client agreement. Lawful scope: employ citizens and permanent residents, process payroll, administer statutory obligations. Hard limit: no work pass for a foreigner based in Singapore working for an overseas company without local presence.
• Private limited company: A Singapore-incorporated subsidiary. Lawful scope: employ staff, apply for passes, contract, invoice, hold assets, trade. Hard limit: resident director and secretary, registered office, accounting, tax and annual-return filings required.
• Singapore branch: The foreign parent, through its registered branch. Lawful scope: trade within the parent’s authorised scope, contract as the parent, employ staff. Hard limit: not a separate legal person, so liabilities reach the parent directly.
• Representative office: Usually the foreign parent itself, because the office is not a separate legal entity. Lawful scope: market research, feasibility studies, trade contacts, product enquiries, exhibitions. Hard limit: no revenue generation, trading, invoicing, services or commercial contracting.
• Direct contractor: The foreign company contracts with an independent individual or business. Lawful scope: discrete, genuinely autonomous services, no Singapore employer established. Hard limit: no employer-led pass sponsorship; misclassification exposure if it operates as employment.

The EOR signs the contract of service and is the formal Singapore employer. A worker engaged through it remains an employee entitled to protections under the Employment Act, Singapore’s main employment law, even though the EOR’s client benefits from the day-to-day work.

The services agreement, not the employment contract, sets out control: scope of authority, intellectual property (IP) ownership, confidentiality, data access, expense approval, and any prohibition on signing or negotiating contracts. The legal employer pays statutory employer costs, whichever route is chosen. These include contributions to the Central Provident Fund (CPF), Singapore’s mandatory retirement savings scheme, the Skills Development Levy, a small levy on each employee’s pay, and levies for work pass holders. Under an EOR, the EOR pays these Singapore employer taxes; under a company or branch, that entity pays them.

Choose it if: the hire is a citizen or permanent resident, the work is market development, support, or an internal function, and the person holds no authority to bind the foreign company.

Rule it out if: the candidate needs a pass, the role requires local invoicing, or the presence must hold assets or a licence.

Because a private company limited by shares is legally separate from the foreign parent and can contract, invoice, and employ in its own name, it is seen as the most scalable route.

There are, however, governance overheads that should be considered:

• The Accounting and Corporate Regulatory Authority (ACRA), which registers Singapore companies, requires at least one director ordinarily resident in Singapore.
• Every company secretary must be a natural person principally or solely resident in Singapore and must be appointed within six months. A sole director cannot act as secretary.
• A registered office must be accessible at least three hours during ordinary business hours on each business day.
• Companies incorporated from 16 June 2025 must file controller and nominee information during registration.

ACRA’s own fees are small: SGD 15 to apply for a company name and SGD 300 to register the company, according to its fee schedule as at January 2026. Most setup costs come from professional services in addition to those fees: a resident director, a company secretary, a registered address, and accounting and banking.

There are several recurring compliance obligations that non-listed companies must fulfil:

• Annual general meeting: within six months after the financial year-end, unless validly dispensed with or exempt.
• Annual return to ACRA: within seven months after the financial year-end.
• Corporate income tax return: by 30 November for the relevant year of assessment.
• Financial statements filed with ACRA: where the company is not exempt from filing them.

Audit is the one cost a small subsidiary can often avoid. A Singapore private company qualifies for the small-company audit exemption if it meets at least two of these three thresholds in the preceding two financial years:

• Annual revenue of SGD 10 million or less.
• Total assets of SGD 10 million or less.
• 50 employees or fewer.

If the company belongs to a group, both the company and the group must qualify, with group thresholds tested on a consolidated basis and foreign entities counted.

Choose it if: a foreign hire needs a pass, Singapore customers need a local contracting party, or the operation is meant to become a durable base or regional hub.

Rule it out if: the commitment is one citizen hire on a six-month market test, where legal entity overheads outweigh what the hire is proving.

A branch is an extension of the foreign company, not a separate subsidiary. It can trade and employ staff, but it has the same rights, obligations, and liabilities as the parent.

This option comes with a heavier compliance load than assumed:

• A branch must have at least one authorised representative ordinarily resident in Singapore, responsible for Companies Act compliance and potentially personally liable for penalties.
• Every registered foreign company must lodge its financial statements alongside statements for the Singapore branch.
• An operating branch generally prepares audited branch profit-and-loss and asset-and-liability statements unless dormant or granted specific ACRA relief.
• The small-company audit exemption applies only to Singapore-incorporated companies.

Choose it if: the parent company wants to trade in Singapore under its own name, accepts direct liability, and needs the contracting party to remain the overseas entity.

Rule it out if: the point of the structure was liability separation, or lodging the parent’s own financial statements in Singapore is unattractive.

Enterprise Singapore, the government agency that approves representative offices, describes a commercial representative office as a temporary facility for studying the Singapore business environment. Permitted work covers:

• Market research and feasibility studies
• Regulatory research and trade contacts
• Product enquiries and exhibitions

The office must not conduct direct or indirect revenue-generating activity and must not provide services.

A representative office is unsuitable for a salesperson who negotiates terms, accepts orders, performs billable implementation, or manages revenue-generating accounts. Those activities fall outside the approved scope even when described as market research.

Choose it if: the Singapore work genuinely is research, feasibility, and relationship groundwork, and the person doing it needs to be based locally.

Rule it out if: anyone in the plan is expected to sell, deliver, or bill.

Direct contracting is the lightest structure but also the easiest one to get wrong. A genuine contractor controls how and when the work is performed, bears meaningful commercial risk, and is not integrated as an ordinary employee. Contract labels matter less than how the relationship operates. An agent-of-record (AOR) service, in which a provider handles contractor contracts and payments, lets companies keep genuine contractors on contractor terms, with the engagement properly documented and paid, instead of converting them into employees.

A contractor cannot sponsor their own Employment Pass or S Pass merely because a foreign company holds a services contract with them. All foreigners working in Singapore need an appropriate valid pass, and the ordinary pass routes are employer-led.

Choose it if: the work is a discrete specialist project with genuine autonomy and the individual already holds the right to work in Singapore.

Rule it out if: the role is continuous, directed and exclusive, or the engagement stands in for pass sponsorship.

A permanent establishment (PE) is a business presence that makes a foreign company taxable in a country. If a foreign company has a PE in Singapore, Singapore may tax the profits the company earns through it.

Section 2 of Singapore’s Income Tax Act 1947 defines a PE as a fixed place where a business is wholly or partly carried on. Examples include a place of management, a branch, an office, a factory, a warehouse, and a construction or installation site.

A foreign company is also treated as having a PE in Singapore when an individual acting for it in Singapore:

• Habitually exercises authority to conclude contracts
• Maintains goods for delivery on its behalf
• Habitually secures orders wholly or almost wholly for the company or the businesses it controls

What counts is the activity and authority of the individuals based in Singapore. One employee who can negotiate or sign contracts can weigh more heavily than several administrative staff. Fixed day counts, such as the 183 days often quoted in assignment planning, come from individual tax treaties and differ between them.

If the foreign company is based in a country that has a double taxation agreement (DTA) with Singapore, that treaty can limit Singapore’s right to tax. Because treaties differ, the company needs to check the PE article (Article 5) of the applicable treaty. Guidance from the Inland Revenue Authority of Singapore (IRAS) notes that an employee’s home can count as a fixed place of business if the employee uses it continuously for the company’s business and it is effectively at the company’s disposal.

Where a PE exists, Singapore may tax the profits linked to the work done there, at the corporate income tax rate of 17%. To calculate those profits, IRAS treats the PE as a separate business operating at arm’s length and looks at the work performed, the assets used, and the risks taken in Singapore.

An EOR changes who employs the individual and who processes payroll, but it does not affect PE risk. Whether a PE exists depends on what the foreign company itself does in Singapore through its people or premises. It is essential that companies seek tax and legal advice for a permanent establishment risk assessment.

No law sets a number of employees or a length of time at which an EOR arrangement would need to be transferred to direct employment. Figures such as “five employees” or “twelve months”, which are sometimes quoted online, have no legal basis. The answer depends on changes to the work itself. Reassessment should happen before the role is about to change, not after. Situations that may prompt a move to direct employment include:

• A bank, landlord or regulator asks for a Singapore company to sign as the contracting party.
• Equity, IP, or data-security arrangements require the company to employ the Singapore staff directly rather than through an EOR.