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I have a UK company and would like to set up a Singapore company. How should I link these two companies?

This depends on your considerations. Do you require the Singapore company to consolidate its financials into the UK company? Is cost a major factor in your decision? What working relationship will these two entities have?

You could open a Singapore subsidiary of your UK entity ie the Singapore company’s shares are owned by the UK company. This allows you to consolidate your Singapore finances to your UK business, however you likely need to repatriate some Singapore income to the UK and pay tax there. You can also expect to be audited in Singapore as any entity with a corporate shareholder will need to be audited. This costs at minimum $3,000 per year for a company with minimal transactions.

You could open a Singapore entity owned by the share individuals who own the UK entity. This allows you to keep both companies separate and sign a partnership agreement between the two entities. You can avoid the audit fees but be conscious of the need to keep very clear records of any transactions you bill between the two entities as anything you pay out of Singapore on behalf of the UK, you need to invoice back, and vice versa.

Ultimately you should expect to apply transfer pricing on any intercompany transactions regardless of the setup as any expenses you bill to a related entity will need to have 5% added to expenses to demonstrate you are earning profit on transactions just as you would transact with a non-related party!