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Whether Employment Pass holder can do work in overseas temporarily

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greenworld
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Whether Employment Pass holder can do work in overseas temporarily

Postby greenworld » Fri, 15 Jul 2016 12:51 am

I am new to this forum.

About Me:
I am an Indian national and I have been working in Singapore since 2012 in the same company holding "Employment Pass" (valid till 2019). My designation has changed along the way from Web Developer to Senior Web Developer.

Situation:
Our Company has branches in India and Malaysia. Now the company offered me a Job which I need to manage the team in India for 1-2 years, also I need to come to Singapore in every 3 months for meeting and discussions. My Designation and EP will remain as same, only the job responsibility change.

My Questions:
1. Am I able to work in overseas by holding Employment Pass? I am not interested in the situation that Govt. cancel my EP.
2. Do my designation need to change? Whether the Senior Web Developer can work abroad by holding EP?
3. Will I able to apply PR if not residing in Singapore but holding Employment Pass?

Thanks in advance.

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Re: Whether Employment Pass holder can do work in overseas temporarily

Postby BBCWatcher » Fri, 15 Jul 2016 2:51 pm

greenworld wrote:1. Am I able to work in overseas by holding Employment Pass?

Yes, provided you are working for your Singapore-based employer.

Please note that, as always, the Ministry of Manpower is under no obligation to renew your Employment Pass. The MoM has access to ICA's data (as far as we know) and could take your physical presence (or lack thereof) -- and that of your employer's other EP holders -- into account when considering whether to renew the EPs, with whatever policy objectives it wishes to accomplish at that point in time. For example, the government might not be all that excited or interested in helping a corporation plant a nominal flag in Singapore to cut its corporate tax rate (and without much income tax from its employees) when all it's doing could be done in India with Indians -- and when that company is not hiring enough Singaporeans to perform at least some of the work. (Singaporean citizens can be Senior Web Developers, too!) But only MoM will know, at that time.

2. Do my designation need to change?

No. Certainly your employer must not change. If you transfer to an offshore company (even an affiliate), your Singapore-based employer would be obliged to cancel your EP.

3. Will I able to apply PR if not residing in Singapore but holding Employment Pass?

Practically everyone with a pulse can apply for PR, so that question isn't all that interesting. I think what you're really asking is how this arrangement affects your odds of PR approval in the future. You could be at a significant disadvantage, especially if you're still operating under this arrangement when you apply (or fairly shortly before you apply). ICA Form 4A asks for your residential address in Singapore, but (I assume) you would have none. ICA will also have access to your entry and exit records and thus know how much you've been physically present in Singapore. (Not much.) ICA will also have access to your Income Tax Notices of Assessment (because you have to grant that access), and presumably ICA will understand how little tax you've paid while you're mostly away from Singapore -- as little as zero. In short, you certainly won't look like a typical foreign resident of Singapore, and ICA can certainly take that fact into account in making its decision. The second letter in PR is residence, after all.

There are certain professions and roles that firmly require extended work absences from Singapore, as I'm sure ICA understands. Cargo ship captain would be an example; Senior Web Developer, probably not. And even cargo ship captains based in Singapore nearly always have some place to call home, some residential address, in Singapore.

That said, if the plan is to spend a year or two in this arrangement, come back to Singapore for genuine residence and work in Singapore for at least a couple years, then apply for PR, that seems reasonable to me. But ICA gets to decide; I don't.

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Re: Whether Employment Pass holder can do work in overseas temporarily

Postby greenworld » Fri, 15 Jul 2016 10:43 pm

@BBCWatcher Thanks for your prompt reply.
Actually our Indian branch who has handling Indian projects has resigned. At this extend, company giving me opportunity to take responsibility to take over the charge for a time being. The projects I was handling will hand over to my Singapore Colleagues for a time being.

Let me add few more things.

Singapore Address
Every couple of months I would be back for 1-2 weeks and stay the same room. So the room currently I'm staying wont vacate.

Income Tax
I will continue pay Income Tax as my Salary will be credited to Singapore Bank.

At this point of view, Is there any issues I may face in EP?

Thanks

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Re: Whether Employment Pass holder can do work in overseas temporarily

Postby Strong Eagle » Fri, 15 Jul 2016 11:42 pm

greenworld wrote:At this point of view, Is there any issues I may face in EP?

Thanks


Your response is not clear. Are you going to be officially working for the Indian company or the Singapore company?

You must be working for the Singapore company and be on secondment to India on a temporary basis, otherwise you cannot have a Singapore EP. But, your secondment to India doesn't seem to be temporary.

If you are working for an Indian company, even a branch of the Singapore company, then you cannot have a Singapore EP. EP's are issued only to Singapore business entities.

Moreover, you must make sure you don't run afoul of tax laws.

It doesn't matter where you are paid, or by what entity, or what bank you put your salary. What matters is where the work is performed. If you are working for the Singapore company and are seconded to India on a temporary basis, your work is considered performed in Singapore, even though you are traveling for extended periods of time to India and thus, your income is taxable in Singapore.

However, you state that you are going to live in India for 1 to 2 years and visit Singapore. This almost certainly makes you a tax resident of India, not Singapore, and under this circumstance you will not qualify for an EP since you are working in another country, even if the Singapore country is paying your salary.

I offer you a reverse example to make the point. If I am working for an American company in Singapore and am paid by the American company directly, not the Singapore branch of the company, I am still liable for Singapore income tax because I live and am tax resident in Singapore. The source of my income doesn't matter, nor does it matter which bank I put it in. What matters is my tax residency status.

Just because you visit Singapore from time to time doesn't mean your tax status changes. It doesn't. And it doesn't matter if you stay in the same room or get a new hotel every time. What matters is your residency for tax purposes.

My view of your situation is that your EP cannot "remain the same" as you have stated. You are living in India, you are earning money in India (regardless of source), and your income is taxable in India. You don't qualify for an EP because you are not working in Singapore, you are working in India.

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Re: Whether Employment Pass holder can do work in overseas temporarily

Postby Strong Eagle » Fri, 15 Jul 2016 11:53 pm

BBCWatcher wrote:
greenworld wrote:1. Am I able to work in overseas by holding Employment Pass?

Yes, provided you are working for your Singapore-based employer.


This is not entirely correct. If he is on a temporary secondment, then he will pay Singapore tax and can probably keep the EP, because he is still considered living and working in Singapore.

But if any person working for a Singapore company is sent to another company long term (and I would say 1 to 2 years is long term), that person will become tax resident in the country in which he is working, and he will have to work for a local entity. There would be no reason for the Singapore company to file for an EP because the person doesn't work in Singapore.

This IS how I had to deal with long term employees in Thailand and Malaysia. I had to form a local entity. I had to get a work permit. The employee had to pay local income tax in each country but not file tax in Singapore. As to the EP's... well, I never requested they be cancelled, nor did they have to be renewed.

And so... maybe the OP can keep his EP simply by he and his company doing nothing but on an original application he wouldn't qualify... he's working in India.

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Re: Whether Employment Pass holder can do work in overseas temporarily

Postby BBCWatcher » Sat, 16 Jul 2016 5:10 pm

Strong Eagle wrote:But if any person working for a Singapore company is sent to another company long term (and I would say 1 to 2 years is long term), that person will become tax resident in the country in which he is working....

Yes, that's quite possible. I'm with you so far.

....and he will have to work for a local entity.

No, that's not a given. It's possible to be subject to Indian tax without working for a local Indian entity. Common, even. In that event Indian tax would apply first, and then a foreign tax credit would be possible (and if necessary) back on the Singapore side.

There would be no reason for the Singapore company to file for an EP because the person doesn't work in Singapore.

There is some work in Singapore (occasional visits) and employment by a Singapore entity in the situation described. I'm just reading what the original poster wrote.

And so... maybe the OP can keep his EP simply by he and his company doing nothing but on an original application he wouldn't qualify... he's working in India.

No, if he is transferred to the Indian entity the Singapore entity has to cancel his Employment Pass. That's an employer requirement. Want to keep the EP? Don't transfer to the Indian entity.

You're quite right to point out that tax liability is a separate issue. It is possible to violate tax laws, work permission/immigration laws, both, or neither. Neither would be best. Likely that means staying on the Singapore employer's payroll, keeping the EP (as long as MoM allows anyway), and paying any/all tax owed to India.

As one example of an "interesting" tax area, New York State has absolutely no time minimum. In principle if you work in New York for 5 minutes you can be liable for New York State income tax -- and it doesn't matter what your immigration status is. Tax is tax, and it's separate. The only minimum New York State has is an income minimum. So if you're a highly compensated individual, and you attend, say, one business meeting in New York State for 30 minutes (with or without a U.S. visa), then you could very well be liable to New York State income tax. Strange but true, although New York State is not the only place like that.

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Re: Whether Employment Pass holder can do work in overseas temporarily

Postby greenworld » Sat, 16 Jul 2016 11:19 pm

If you say cancel EP, there wont be a valid entry visa for me, Then how would I visit Singapore every couple of months for official meetings? Yeah need that too!!!!

Could anyone suggest me a way to keep Visa (EP) and work in overseas for a time being?

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Re: Whether Employment Pass holder can do work in overseas temporarily

Postby Strong Eagle » Sat, 16 Jul 2016 11:36 pm

BBCWatcher wrote:
Strong Eagle wrote:....and he will have to work for a local entity.

No, that's not a given. It's possible to be subject to Indian tax without working for a local Indian entity. Common, even. In that event Indian tax would apply first, and then a foreign tax credit would be possible (and if necessary) back on the Singapore side.


Since this OP is an Indian citizen you are probably correct because he does not need work authorization in India... he is a citizen.

I am unaware of any country that simply allows non-citizens in to work if they wish (let's leave the EU out of this for the moment). In all cases a sponsoring organization is required to support the work permit.

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Re: Whether Employment Pass holder can do work in overseas temporarily

Postby BBCWatcher » Mon, 18 Jul 2016 3:25 pm

Strong Eagle wrote:Since this OP is an Indian citizen you are probably correct because he does not need work authorization in India... he is a citizen.

That's right. Or, as another example, in most countries, the legal spouse co-residing with his/her citizen spouse and properly documented in that country generally has (or can obtain) work permission.

There are a few occasions when the individual and/or business entity requires licensing of some kind to practice a profession in that country.

....Anyway, to net it out, I don't see any immediate problem here. Indian citizens can enter India, stay as long as they want, and perform work in India. They can do so while working for a Singapore-based company. They must pay any Indian tax owed and obtain any professional licenses, if applicable (and/or their employers, if applicable). Singapore-based companies can apply for EPs (and apply to renew them) for foreign workers. Such foreign workers likely also have at least some tax liability to Singapore, typically with some relief for Indian tax paid. That all works. I see two perils, though (reiterating what I wrote upthread):

1. For the employer (mostly), the Ministry of Manpower is under no obligation to grant or to renew EPs. The MoM will probably be less likely to grant EPs for functionally offshore employees, especially if the Singapore-based company has many of them. That's up to the MoM, of course.

2. For the employee, ICA is most likely not going to view PR applications from such functionally offshore individuals in a favorable light, at least not without some "darn good reason" (cargo ship captain, for example). That's up to the ICA, of course, but it's a reasonable presumption. It's not hard to imagine that, if ICA handed out PRs to such individuals, lots of individuals would live and work in India (for example) and keep only "mailboxes" (literally and figuratively) in Singapore. I seriously doubt ICA is interested in approving very many of those PR applications. The government has declared repeatedly that PR is for actual residents and a pathway to citizenship. Somebody showing up for a 5 day "meeting" in Singapore once per quarter (for example) is not an actual resident of Singapore, even if the MoM is willing to grant him/her (and his/her employer) an EP.

So, to the original poster, if you want PR then this overseas stint isn't going to help your application in my view. In my view you ought to come back to Singapore, spend a couple years actually living and working in Singapore (with occasional, brief, normal business and personal trips overseas), then consider applying for PR. Applying for PR using a mailbox and a mostly empty bed in Singapore is less likely to be successful, in my view. Would you grant PR to somebody who is outside Singapore for 345 days per year (or something similar)? I'm skeptical. It seems like an arrangement ripe for abuse, and I really don't think ICA is interested.


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