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Tax residency help

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diamond1sg
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Tax residency help

Post by diamond1sg » Fri, 23 May 2014 6:56 pm

I have some doubts about the tax residency. It will be really great if someone with good knowledge reply here and help me.


From past two years I am running a small IT consultancy business here and the business can be 100% managed over internet. But I opted for the Employment pass way to enjoy the first 3 year tax exemption and to explore about the possibility of having a local client base. Recently I applied for the EP renewal and got approved. However I would like to move to johor bahru to reduce the housing cost and to have a car. So I am planning to have unique approach.

step 1) First register a labuan company, then apply for a Malaysian employment pass.

step 2) If I get the pass, I will move to johor.

Step 3) Since I hold the Singapore Employment pass as well, I can visit singapore to do EGM, AGM etc and visit my friends.

Step 4) The Labuan Company wil be invocing Singapore company to get funds. Since there is no client from Singapore or any job is done in Singapore, I think I won't have to pay withholding tax.

Step 5) Will be in Malayasia, 183+ days. Pay tax (resident rates) to Malaysian Govt. for the salary I draw from Labuan company.

Step 6) Will be here between 60 - 90 Days . Pay tax (resident rates) to Singapore IRAS for the salary I draw from Singapore company.



Now my questions are

1) Is that legal to hold employment pass in two countries when I act as director for both companies.

2) Read the step 5 and step 6. I want to pay tax in both countries on what I earn from that country. Is that really possible to consider as tax resident in both countries ? I am asking this becuase somewhere in this forum I found a post that I will be considered as tax
resident in Singapore if I hold an Employment pass with 1 or more years validity.

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Strong Eagle
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Post by Strong Eagle » Fri, 23 May 2014 8:54 pm

Why keep the Singapore company at all?

diamond1sg
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Post by diamond1sg » Fri, 23 May 2014 9:38 pm

@Strong Eagle, I have some contract signed in the name of Singapore company and I don't want to cancel it and resign. Also, Labuan rules are very weird. They don't allow any transaction to be done in MYR and even a outbound wire transfer requires fax to the bank and then I will have to send the hard copy of instruction to the bank.

Do you have any comment on my questions ?

ginger_bread
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Post by ginger_bread » Fri, 23 May 2014 11:02 pm

Will you need to pay Malaysian GST (not now, but within a year when they start collecting it) if the Malaysian company invoices the Singapore company?

diamond1sg
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Post by diamond1sg » Fri, 23 May 2014 11:29 pm

@ginger_bread, Labuan Company don't have to pay any GST.

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