Working for a foreign service provider in Singapore?

[Kalinka77]

Not sure if this has been covered by another topic, but I couldn't find anything recent.

A service provider in the publishing industry, headquartered in China, is interested to have me working for them. Ideally, they want me to relocate to Bejing, but they are happy to let me work remotely with intermittent visits to their HQ. In that case they would just pay me as a consultant.
Since I only moved to Singapore to live here with my partner, I prefer the remote option, of course. Because I am common law spouse to a localized foreign employee at a MNC, I got a LTVP pass.

I understand from other postings that I'll need to set up a company, if I want to be self-employed in Singapore. However, I am not sure if a sole proprietorship company is the right way to do. I certainly have demonstrable skills, experience - I did this some years ago in a similar manner for a US company in Europe - and a consultancy contract by then, but the whole business relationship won't have anything to do with Singapore. It is just me, a foreigner, residing in Singapore, working for a foreign company that has no office in Singapore, for customers and vendors in Asia and Europe/US. Would the authorities still regard this is a legitimate endeavor?

Also, the tax implications are not quite clear. If I understood it correctly, I would need to pay income tax here in Singapore based on the salary that I pay myself as the owner of my sole-proprietary-ship company to myself as employee of this sole-proprietorship company. Does this sound right?

Any insight based on your experiences would be great.

[PNGMK]

Not sure if this has been covered by another topic, but I couldn't find anything recent.

A service provider in the publishing industry, headquartered in China, is interested to have me working for them. Ideally, they want me to relocate to Bejing, but they are happy to let me work remotely with intermittent visits to their HQ. In that case they would just pay me as a consultant.
Since I only moved to Singapore to live here with my partner, I prefer the remote option, of course. Because I am common law spouse to a localized foreign employee at a MNC, I got a LTVP pass.

I understand from other postings that I'll need to set up a company, if I want to be self-employed in Singapore. However, I am not sure if a sole proprietorship company is the right way to do. I certainly have demonstrable skills, experience - I did this some years ago in a similar manner for a US company in Europe - and a consultancy contract by then, but the whole business relationship won't have anything to do with Singapore. It is just me, a foreigner, residing in Singapore, working for a foreign company that has no office in Singapore, for customers and vendors in Asia and Europe/US. Would the authorities still regard this is a legitimate endeavor?

Also, the tax implications are not quite clear. If I understood it correctly, I would need to pay income tax here in Singapore based on the salary that I pay myself as the owner of my sole-proprietary-ship company to myself as employee of this sole-proprietorship company. Does this sound right?

Any insight based on your experiences would be great.

I would register an offshore company, set up a bank account in an offshore country (HK, Seychelles) and bill them for the work in that companies name. But that's me.

[zzm9980]

I'd do the same.

[Strong Eagle]

Not sure if this has been covered by another topic, but I couldn't find anything recent.

A service provider in the publishing industry, headquartered in China, is interested to have me working for them. Ideally, they want me to relocate to Bejing, but they are happy to let me work remotely with intermittent visits to their HQ. In that case they would just pay me as a consultant.
Since I only moved to Singapore to live here with my partner, I prefer the remote option, of course. Because I am common law spouse to a localized foreign employee at a MNC, I got a LTVP pass.

I understand from other postings that I'll need to set up a company, if I want to be self-employed in Singapore. However, I am not sure if a sole proprietorship company is the right way to do. I certainly have demonstrable skills, experience - I did this some years ago in a similar manner for a US company in Europe - and a consultancy contract by then, but the whole business relationship won't have anything to do with Singapore. It is just me, a foreigner, residing in Singapore, working for a foreign company that has no office in Singapore, for customers and vendors in Asia and Europe/US. Would the authorities still regard this is a legitimate endeavor?

Also, the tax implications are not quite clear. If I understood it correctly, I would need to pay income tax here in Singapore based on the salary that I pay myself as the owner of my sole-proprietary-ship company to myself as employee of this sole-proprietorship company. Does this sound right?

Any insight based on your experiences would be great.

This is a very gray area, and not at all well defined in Singapore tax code.

a) You are not performing any work in Singapore per se, but you are residing in Singapore and thus, you would be subject to Singapore income tax, maybe.

b) I remember seeing information that DP's and LTVP's had to pay income tax on certain kinds of income but I can no longer find the article.

c) There is nothing on the IRAS site that suggests you need to have a business/company presence in order to pay, or be required to pay, income tax.

d) Since you have no job in Singapore, and are working for a company with no presence in Singapore I don't see how MOM would issue you any work permit.

e) Creating a company in Singapore so that you become tax resident for income tax purposes could potentially backfire. It might be that the activities for the Chinese company make you resident for tax purposes there, and then you would need a tax treaty to avoid double taxation.

As to the advice given here... setting up offshore companies and bank accounts is essentially a tacit admission that you don't intend to pay tax anywhere... and if there is anything that sets off red flags it is actions that preclude tax being paid at least in one place. You may want to consider all the negative aspects... although it is doubtful that Singapore would ever catch wind of this, the Chinese company may have to file reports that would expose your activities.

I'm doing some additional research and will be back with more later.

[Kalinka77]

I would register an offshore company, set up a bank account in an offshore country (HK, Seychelles) and bill them for the work in that companies name. But that's me.

That sounds like a good workaround. I certainly will consider it. On the other hand, to do it properly as a Singaporean company would make it more flexible for the future. I could subsume other publishing consultancy activities within Singapore under this legal framework, too.

[Kalinka77]

This is a very gray area, and not at all well defined in Singapore tax code.

KALINKA: Tax codes have by nature grey areas. I assume that one can request and obtain a legally binding advice from the tax authorities for which they will collect a fee. The request would need to describe the scenario (similar to as discussed here), and the tax authorities would tell you how they would assess the situation regarding whether or not they would tax such revenues. Or is this procedure not implemented in Singapore's tax administration?

a) You are not performing any work in Singapore per se, but you are residing in Singapore and thus, you would be subject to Singapore income tax, maybe.

KALINKA: That's what I think, too, because the work is performed here. For legal and tax reasons any work done online is somehow attributed to a locality.

b) I remember seeing information that DP's and LTVP's had to pay income tax on certain kinds of income but I can no longer find the article.

KALINKA: I would pay income tax as employee of the company that I own, yes. The company would probably need to pay sales tax and corporate tax on the top of it.

c) There is nothing on the IRAS site that suggests you need to have a business/company presence in order to pay, or be required to pay, income tax.

KALINKA: The trouble is that I can't act as a business consultant or freelancer without the construction of a sole proprietorship, whether my client(s) are in Singapore or international. I thought that in both cases the income is generated here.

d) Since you have no job in Singapore, and are working for a company with no presence in Singapore I don't see how MOM would issue you any work permit.

KALINKA: The sole-proprietorship company bills the company in China. The work is done by an employee (myself) of this SP company (which would be me,too). Once my SP company is registered, I can ask for a work permit for myself. That's how The Chinese company pays only the SP company as service provider and doesn't employ

e) Creating a company in Singapore so that you become tax resident for income tax purposes could potentially backfire. It might be that the activities for the Chinese company make you resident for tax purposes there, and then you would need a tax treaty to avoid double taxation.

KALINKA: Actually it's a very good point, because I might end up paying taxes double. Basically I thought that anyone performing services from overseas for a company in China is not regarded as tax residents, whether there are freelancers, consultants or big firms.

As to the advice given here... setting up offshore companies and bank accounts is essentially a tacit admission that you don't intend to pay tax anywhere... and if there is anything that sets off red flags it is actions that preclude tax being paid at least in one place. You may want to consider all the negative aspects... although it is doubtful that Singapore would ever catch wind of this, the Chinese company may have to file reports that would expose your activities.

KALINKA: I agree, I intend to pay taxes here. That's the main reason why I want to set up this SP company. Apart from that, I am under the impression that I don't have a choice anyway. As LTSV pass holder I can't work or make money while residing in Singapore. If I wanted to, I couldn't even sell stuff on Ebay or give kids piano lessons to make a living, because that's income, generated here and therefore taxable (income tax, sales tax) . I suppose that in practice people (Expats, PR's as well as Singaporeans) just don't declare these revenues, hoping the the IRAS would not be interested in it, as long as such activities are on a low scale, but, as far as I know, it circumvents tax and immigration laws.

I'm doing some additional research and will be back with more later.

KALINKA: Very much appreciated. Actually, my initial question was only, if people here think that an application for approval of such activities in form of a sole proprietorship company would go through.

[Strong Eagle]

KALINKA: Very much appreciated. Actually, my initial question was only, if people here think that an application for approval of such activities in form of a sole proprietorship company would go through.

I know that people have created a SP and used that vehicle to apply for a LOC. I think the bar is higher if you intend to apply for an EP. As I've noted in other posts, approval for an EP is done on a case by case basis but since you're in the country already as LTVP, and not taking a job away from a Singaporean, perhaps the issue of skills, experience, contracts, etc may not be as important.

As I have also noted previously, my view is that a private limited provides you with more 'gravitas' in the eyes of the government authorities but nobody at MOM has ever called me up to tell me that.

[Kalinka77]

I know that people have created a SP and used that vehicle to apply for a LOC. I think the bar is higher if you intend to apply for an EP. As I've noted in other posts, approval for an EP is done on a case by case basis but since you're in the country already as LTVP, and not taking a job away from a Singaporean, perhaps the issue of skills, experience, contracts, etc may not be as important.

As I have also noted previously, my view is that a private limited provides you with more 'gravitas' in the eyes of the government authorities but nobody at MOM has ever called me up to tell me that.

As far as I know, I can't apply for LOC as LTVP. Isn't that possible only for LTVP+ ? Also, would you agree that technically all activities outside employment that generate income ( and therefore income tax ) need an SP or Ltd as framework for LTVPs ?

[taxico]

i believe some recent policy change saw LTVP holders being allowed to work with an LOC.

[sundaymorningstaple]

i believe some recent policy change saw LTVP holders being allowed to work with an LOC.

Yep, that's the LTVP+ which is currently only given to the spouse of a SC (not PR) although there is a lot of stink currently being raised over that, because it further penalizes the PR for taking up PR while if they had the requisite salary level and were on a EP they could get a Dependent's Pass and the LoC (although it's not as easy to the LoCs as they were in the pass.

Starting on 1 Feb 2015, however, spouses of PRs will also be elibigle to obtain the LTVP+ and subsequently an LoC.

[ecureilx]

Starting on 1 Feb 2015, however, spouses of PRs will also be elibigle to obtain the LTVP+ and subsequently an LoC.

Nice to know that ....

[Strong Eagle]

After some research, I conclude that:

a) By law, you must create a business/company in Singapore with the ACRA in order to do business, whether or not that business is in Singapore.

b) You must pay Singapore personal income tax.

As to the best way? I have no idea what goes on in the minds of government officials, and sometimes they seem completely irrational. It's the luck of the draw... you get a dummy who doesn't understand the situation and doesn't ask a superior, you get f*cked and must go through all sorts of appeal processes. Or, you get lucky and get assigned to someone with more than a cupful of brain cells and you succeed.

So, imagine this scenario... Singapore is filled with individuals running sole proprietorship mom and pop shops of the simplest variety... where do you think the heavy thinkers in MOM will be placed? In the SP approval department? Or in the private limited department where things are more complex? Or, maybe the people in the SP department get promoted into pte ltd operations after a while... I dunno.

Point is, you need a proper business plan as I have previously stated, and then, you need someone competent enough to deal with your business plan. My personal view is that your chances are a lot better with personnel that review companies as they will have seen more than one business plan, more than one expat. At the SP level, they will have seen little, if anything, more complex than the SP business filing.

[Brah]

Point is, you need a proper business plan as I have previously stated, and then, you need someone competent enough to deal with your business plan.

The OP may want to consider SE as a paid consultant on this one.....

[Kalinka77]

Yep, that's the LTVP+ which is currently only given to the spouse of a Singapore Citizenship (not PR) although there is a lot of stink currently being raised over that, because it further penalizes the PR for taking up PR while if they had the requisite salary level and were on a EP they could get a Dependent's Pass and the LoC (although it's not as easy to the LoCs as they were in the pass.

Starting on 1 Feb 2015, however, spouses of PRs will also be elibigle to obtain the LTVP+ and subsequently an LoC.

That's interesting to know, but not relevant for me, since my employed partner is not citizen or PR and we are not married. Also, for the requirement to create an SP (if I want to work as a consultant, trader or freelancer) it is probably not crucial whether you got sanctioned your self-employment through an SP by either a LOC or a regular work permit.

[Kalinka77]

Point is, you need a proper business plan as I have previously stated, and then, you need someone competent enough to deal with your business plan.

The OP may want to consider SE as a paid consultant on this one.....

Sorry, can you help me understand what SE stands for?