Singapore Ltd and Employment Pass

[viking2merlion]

Hi,

I am aware what the question regarding setting up local SG Ltd and use it to sponsor Employment pass (EP) for yourself have been discussed and touched before in this forum. However I just like to run my scenario through you and see if anyone have had similar situation and can share your view, thoughts and recommendation with us.

I am a few years from 40 and from Scandinavia and currently still living in Scandinavia. I am married since more than 3 years to a Singaporean woman
(SG Citizenship) no kids yet. Our plan is to move to Singapore in the coming 1-5 years.

I have been an independent IT consultant (subject matters expert) for the past 18 years. So after 18 years you get quite used to be a one-man-band and having the 'freedom' of being independent and being able choosing my clients, contracts, assignment and challenges myself. Of course you still have to work as part of larger project groups with your clients. Already today I am doing most part of my work remotely and travel from time to time to visit my clients in their offices. I have been living in a smaller town (ulu kampung) so none of my clients are directly next-door. Communications with my clients are usually done using videoconference, phone conference or email. My clients are some MNC (or at least major player in Europe) but I also have some smaller or mid-sized companies that have presence around the globe but they usually just have sales office outside Scandinavia.

As I mention above we plan to move to Singapore in the next 1-5 years, preferably as soon as possible. So I basically have two options either suck it up and try to find a normal job and get a normal employment in the IT field in Singapore or to relocate my company to Singapore and continue to work with clients from Singapore instead.

I already have an OK from some of my largest clients that I can keep them even if I decide to move to Singapore. It just a question on how many trips I have to make to Europe ever year. They already have similar deal with other independent consultant that moved from Europe back to Canada and have been working remotely from Canada for the past 2-3 years.

So the scenario I thought about was something like this:

1) Create a new Singaporean Ltd. Either with me as the direct shareholder or as subsidiary Ltd of my existing Ltd in Scandinavia.
2) Increased paid-up capital to 50kSGD
3) Move in around 250kSGD to a SG bank account in the company name.
4) Give myself a salary of at least 12.5kSGD/month. The different budget scenarios I have made so far will probably allow me even higher salary as well.
5) Track record of running a Ltd company for 12 years and additional 6 years before that as sole proprietorship.
6) Clients contracts transferred over to SG company. Income from one of my existing clients will be more than enough to pay salary and all running cost in the company.
6.1) I have the potential for some new clients (European/Canadian based companies) who have some presence in Asia-region (mostly HK and TW). It is just question for me if I think I will have time for them as well.
6.2) Of course having a company and EP will let me take in new clients in Singapore but it will still require hard work and the right contact to sell myself in so it isn't anything I count on at least not for the first years. Also the market for independent consultant /subject matter experts are not as developed in Singapore/Asia compared with Europe and America to my understanding.

However the things that might pulls me down are:

- I don't have any university degrees. I have study at university on and off but never taken out a degree. Working and setting up my companies and solving real life problem for my clients have been more fun and more of a challenge for me unfortunately.
- 10-12 years ago I run a failed start-up business for 2 years. We didn't burn other people money. We got admitted to a science park under one of the local university in my hometown. But after two years we shut it down because we failed to get any external funding.
- For the time being I don't see that I will hire any local staff at all. Probably not even have any Singaporean based clients to start with. In the long run it might change if any opportunity arises.

So basically my questions are

Q1) Would I have any chance to get a employment pass in my own company if scenario is as described above? I know you can't give me the exact answer but it is more question of if it will be worth a chance to try or if I should stop dreaming?

Q2) If I have fair chance should I try to do the whole process myself with help of local director or should I hire a professional service company like janus, rekvin or similar? Reading SE (Strong Eagle) posts in this forum he usually recommend not to use service companies but instead do it ourselves. Is this the best approach in our case?

3) Would it be a better idea to instead of setting up a new Ltd in Singapore with myself as the direct shareholder to instead create the Singapore Ltd as a subsidiary to my existing Scandinavian Ltd that have longer 'track record'? Of course from tax point of view it is better to not own it through your Scandinavian company at least if you plan to do large dividends pay outs later on but if that will smooth MOM it might be worth considering.

Reading through the different threads here in the forum I saw that SE recommend to consider LTVP for someone in similar situation but the risk with that track is that I might have to still pay my taxes in Scandinavia.

Btw, I have already run through the above scenario with some tax experts in
Scandinavia and they have green lighted it from tax point of view as long as I am not overstaying in my home country in Scandinavia.

Thanks for your comments.

Kind regards

Tommy

[Strong Eagle]

Whether or not you have any chance in your venture depends a great deal upon what your IT specialty is. IT is migrating out of Singapore to cheaper countries, especially Malaysia.

You might comment upon what your specialty is... then we might be better able to advise you.

Edit... I reread and see that you will keep existing clients... not try to get new clients in Singapore. That is different.

See my next post.

[Strong Eagle]

Hi,

I am aware what the question regarding setting up local SG Ltd and use it to sponsor Employment pass (EP) for yourself have been discussed and touched before in this forum. However I just like to run my scenario through you and see if anyone have had similar situation and can share your view, thoughts and recommendation with us.

I am a few years from 40 and from Scandinavia and currently still living in Scandinavia. I am married since more than 3 years to a Singaporean woman
(SG Citizenship) no kids yet. Our plan is to move to Singapore in the coming 1-5 years.

I have been an independent IT consultant (subject matters expert) for the past 18 years. So after 18 years you get quite used to be a one-man-band and having the 'freedom' of being independent and being able choosing my clients, contracts, assignment and challenges myself. Of course you still have to work as part of larger project groups with your clients. Already today I am doing most part of my work remotely and travel from time to time to visit my clients in their offices. I have been living in a smaller town (ulu kampung) so none of my clients are directly next-door. Communications with my clients are usually done using videoconference, phone conference or email. My clients are some MNC (or at least major player in Europe) but I also have some smaller or mid-sized companies that have presence around the globe but they usually just have sales office outside Scandinavia.

As I mention above we plan to move to Singapore in the next 1-5 years, preferably as soon as possible. So I basically have two options either suck it up and try to find a normal job and get a normal employment in the IT field in Singapore or to relocate my company to Singapore and continue to work with clients from Singapore instead.

I already have an OK from some of my largest clients that I can keep them even if I decide to move to Singapore. It just a question on how many trips I have to make to Europe ever year. They already have similar deal with other independent consultant that moved from Europe back to Canada and have been working remotely from Canada for the past 2-3 years.

It becomes expensive and time consuming to make very many trips. Consolidate client visits with one trip per quarter.

So the scenario I thought about was something like this:

1) Create a new Singaporean Ltd. Either with me as the direct shareholder or as subsidiary Ltd of my existing Ltd in Scandinavia.

Since neither you nor your wife are in Singapore, neither of you qualifies as a 'normally resident director'. Therefore, it will be necessary for you to have a nominee director or Singapore resident manager in the case of a subsidiary in order to start up the company.

Your wife can initiate the company through ACRA since she has a NRIC. She can also be a director, managing director, shareholder, etc. You can be shareholder but since you hold no pass, you can only be a foreign director, and until and when you are living in Singapore, any money paid to you by the Singapore company is subject to an automatic 20% withholding tax as a foreign director.

I can't see any reason why you would want a wholly owned subsidiary. It complicates your tax reporting on both ends, is more difficult to set up (you will need a CPA or attorney in Singapore - cannot be done online at ACRA), and while I know nothing of Scandinavian tax law, I can't see how having an income producing foreign company reporting to the Scandinavian company can be of any help.

2) Increased paid-up capital to 50kSGD
3) Move in around 250kSGD to a SG bank account in the company name.

If you have read my other posts on similar topics you know that I am of the belief that having sufficient cash to cover start up expenses plus pay your own salary to break even, goes a long way to improving your chances of being approved for an EP. So, having money in the bank under a corporate account is a very good thing.

While it probably won't matter much with only you and your wife as shareholders, paid up capital does make things more complicated when winding up a company. Most of the time, people put in additional paid up capital to look more 'hefty' in front of clients.

What matters is your pro forma financials of income and expenses, that you have cash in the bank, and that you can support yourself to break even. Now maybe the government might think you are more serious if you issue yourself $50,000 worth of stock instead of issuing $2 of stock and putting in a $49,998 loan... but I doubt it. Either way, without income, at your proposed salary level, your company is still worth zero after 4 months.

If you are actually going to move $300K into a company bank account, one way or another, I can't help but think that will open some eyes, and that you will be taken very seriously. This gives you gravitas.

4) Give myself a salary of at least 12.5kSGD/month. The different budget scenarios I have made so far will probably allow me even higher salary as well.

With a salary this high, and a proper CV, your lack of a degree won't matter. Just be sure that you have a good CV as part of the business plan and that your pro forma financials support the wage. Sounds like it does.

5) Track record of running a Ltd company for 12 years and additional 6 years before that as sole proprietorship.
6) Clients contracts transferred over to SG company. Income from one of my existing clients will be more than enough to pay salary and all running cost in the company.

In my view, these two items, plus your salary and experience will give you quite a high probability of being approved. Transferred client contracts give you an immediate income stream and demonstrates that you are not just starting a new venture.

6.1) I have the potential for some new clients (European/Canadian based companies) who have some presence in Asia-region (mostly HK and TW). It is just question for me if I think I will have time for them as well.
6.2) Of course having a company and EP will let me take in new clients in Singapore but it will still require hard work and the right contact to sell myself in so it isn't anything I count on at least not for the first years. Also the market for independent consultant /subject matter experts are not as developed in Singapore/Asia compared with Europe and America to my understanding.

You should certainly include such plans as part of your business plan when applying for EP but I don't think it will make much difference one way or the other in terms of you being approved.

Getting a foot in the door in Asia will be tough... a lot of good talent willing to work a lot cheaper than you, the tendency of local firms wanting to deal with local networks... it's a tight knit community, and the fact that most MNC's do their serious consulting out of global HQ's, which are rarely in Singapore.

However the things that might pulls me down are:

- I don't have any university degrees. I have study at university on and off but never taken out a degree. Working and setting up my companies and solving real life problem for my clients have been more fun and more of a challenge for me unfortunately.

Won't matter at your salary and experience level, particularly as you are bringing working contracts with you. Just make sure it is all documented.

- 10-12 years ago I run a failed start-up business for 2 years. We didn't burn other people money. We got admitted to a science park under one of the local university in my hometown. But after two years we shut it down because we failed to get any external funding.

Irrelevant under the circumstances. If you were coming to Singapore with another untested start up, then maybe it would matter. Not now, with a successful track record.

- For the time being I don't see that I will hire any local staff at all. Probably not even have any Singaporean based clients to start with. In the long run it might change if any opportunity arises.

It won't matter since you are a professional. But, you actually are providing employment for Singaporeans by banking here, by hiring accountants, purchasing and maintaining phones and IT equipment, printing and graphics, websites, etc. You're not going after an Entrepass so you don't have mandated hiring minimums or total spend. Just emphasize the positive contribution you make by transferring your successful company to Singapore.

So basically my questions are

Q1) Would I have any chance to get a employment pass in my own company if scenario is as described above? I know you can't give me the exact answer but it is more question of if it will be worth a chance to try or if I should stop dreaming?

Of the many questions I have read and answered on this topic, I'd say you have a better chance of forming a Singapore Pte Ltd and getting an EP than just about anyone else who has ever asked. I'd bet money that unless you totally screw up the application process, you'll get your EP... and it's probably enhanced by the fact you have a SG wife.

Q2) If I have fair chance should I try to do the whole process myself with help of local director or should I hire a professional service company like janus, rekvin or similar? Reading SE (Strong Eagle) posts in this forum he usually recommend not to use service companies but instead do it ourselves. Is this the best approach in our case?

You can't do it all yourself. Your wife can set up the company because she has a NRIC but you need to resident director. I mostly recommend against the service companies because they charge a large amount of overhead compared to a local CPA for setting up and for annual fees for a resident nominee director.

However, the fact is that it is getting harder and harder to find local CPA firms who are storing someone on the closet who is willing to be a nominee director, and unless you know someone in Singapore via your wife, then a services company is your best bet.

3) Would it be a better idea to instead of setting up a new Ltd in Singapore with myself as the direct shareholder to instead create the Singapore Ltd as a subsidiary to my existing Scandinavian Ltd that have longer 'track record'? Of course from tax point of view it is better to not own it through your Scandinavian company at least if you plan to do large dividends pay outs later on but if that will smooth MOM it might be worth considering.

I've already said it... I can't see anything but complications and headaches setting yourself up as a wholly owned subsidiary. Besides, it does nothing extra to demonstrate your track record than simply clearly stating in your business plan that you are transferring clients from a 17 year company to a local one. It would be unusual for SG government to go actually research your current company. Finally, if incorporated locally you can take advantage of several benefits not available to a subsidiary.

Reading through the different threads here in the forum I saw that SE recommend to consider LTVP for someone in similar situation but the risk with that track is that I might have to still pay my taxes in Scandinavia.

Btw, I have already run through the above scenario with some tax experts in
Scandinavia and they have green lighted it from tax point of view as long as I am not overstaying in my home country in Scandinavia.

Thanks for your comments.

Kind regards

Tommy

I don't think I said anything about working on a LTVP because you can't. Someone on a LTVP+, granted to spouses of Singaporeans can work but you'd be tax resident in Singapore under that scenario. But, I think you have a strong application and would go that route first.

[singapore eagle]

I've been in a very similar position to the OP - albeit not in the field of IT - and this is what I did.

1) I entered Singapore on a standard tourist visa at the point where my wife and I had decided to move here
2) I applied for a personalised employment pass
3) My wife set up a Singapore private limited company, with her as sole shareholder and director
4) I informed the MoM that I was employed by the company

Admittedly, this was in the 'good only days' of 2009 but I was never asked any questions of any kind. Since then, I've paid my income tax, the company has filed annual profits and paid corporation tax, and I have moved on to be a PR. Everyone wins.

[Maxman]

Hi,

This thread has been a bit inactive lately... but matches most closely to my need for advice.

Some details:
1. I hold a DP, based on my wife's EP
2. With the DP, I've successfully set up a SP and got a LOC a couple of months ago (thanks to the advice on this forum and Strong Eagle in particular by the way)
3. Now, business has been far better than expected with 3 contracts worth over 150 k SGD for the next 3 months
4. As a result, I need to hire a person who happens to need an EP
5. Also, I want to apply for an EP in that company
6. I've successfully 'converted' the SP to a Pte Ltd (by terminating the SP and opening a Pte Ltd)
7. I'm the shareholder and director of the newly formed Pte Ltd
8. Salary is > 8000 SGD/month, and I have app. 18 years of relevant (industry & entrepreneurial) experience
9. I have a solid budget, business plan etc. according to the guidelines in place. Also a place of work, company stamp, bank account the whole thing

My question is... what do I need to do to (enhance my chances of) get(ting) an EP and one for the person I want to hire.

Specifically:
Can I make my wife the director or shareholder (based on her EP?)
Do I need to take the resident director route via an agency or can I sort this myself?

Any and all help is, as always, much appreciated!

Cheers,
Max.

[Strong Eagle]

Please see my comments, inline, below.

Hi,

This thread has been a bit inactive lately... but matches most closely to my need for advice.

Some details:
1. I hold a DP, based on my wife's EP
2. With the DP, I've successfully set up a SP and got a LOC a couple of months ago (thanks to the advice on this forum and Strong Eagle in particular by the way)

Thank you.

3. Now, business has been far better than expected with 3 contracts worth over 150 k SGD for the next 3 months
4. As a result, I need to hire a person who happens to need an EP

Is this a person who is not related to you in any way?

5. Also, I want to apply for an EP in that company
6. I've successfully 'converted' the SP to a Pte Ltd (by terminating the SP and opening a Pte Ltd)
7. I'm the shareholder and director of the newly formed Pte Ltd

If I understand correctly, you have NO business entity with which you are associated other than being a shareholder in your new Pte Ltd, correct? In other words, at this moment in time you have no business vehicle to service the contracts you have obtained.

I am not a lawyer or work permit expert... and... you cannot be the director of your company because you are working for the company and you must have an EP in order to work. This is why Pte Ltd's are normally formed with a resident nominee director rented from one of the local companies.

8. Salary is > 8000 SGD/month, and I have app. 18 years of relevant (industry & entrepreneurial) experience
9. I have a solid budget, business plan etc. according to the guidelines in place. Also a place of work, company stamp, bank account the whole thing

My question is... what do I need to do to (enhance my chances of) get(ting) an EP and one for the person I want to hire.

If you've read other threads, you know that MoM will want to see revenues that support salaries and expenses and evidence that you will successfully run the business. You'll need to be able to demonstrate that you can support both EP salaries.

The other thing I would work on is: What happens after your 3 month contracts expire? I judge it will be necessary to discuss business continuity... were these contracts easy to get... are there more out there, and if so where and how.

Specifically:
Can I make my wife the director or shareholder (based on her EP?)
Do I need to take the resident director route via an agency or can I sort this myself?

Your wife cannot be a director for the reasons mentioned above... a director is a job, and someone on an EP cannot hold two jobs.

She can be a shareholder by owning shares. If she doesn't already have shares then you will need to have an approved transfer of shares at an AGM/EGM.

You need to sort out how you managed to register yourself as a director without an EP. This shouldn't be possible. First thing to do is go to Bizfile and look up your company to see if you are actually listed as a director or only as a shareholder. Then you may wish to engage a resident director to apply for you EP.

These are not fully focused thoughts at this point.

Any and all help is, as always, much appreciated!

Cheers,
Max.