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Taxability of MDB payments in Singapore

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GSM8
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Taxability of MDB payments in Singapore

Postby GSM8 » Fri, 30 Jun 2017 2:02 am

This is a rather specific Singapore tax issue, but hoping someone on this forum might know.

I recently bid on a few consulting opportunities at World Bank, ADB, UNEP, and am hopeful of soon securing a contract from at least one of them. My question pertains to the Singapore tax treatment of income received for work performed as a consultant to such multi-lateral international organizations.

Section 13(7A) of the Income Tax Act says that in general personal service income will not be taxable in Singapore if the fixed base of service is outside Singapore, otherwise it will be taxed as if accrued in Singapore. In this case I'm a PR and fixed base will be Singapore, but notwithstanding this, I have seen anecdotally that payments received from such organizations are typically exempt from income tax in member countries (of which Singapore is one). However, I could not find this tax exempt aspect of multi-lateral organization payments specifically documented anywhere on the IRAS website.

I submitted the question to IRAS but their response time is 5 business days. So, meanwhile seeing if anyone on this forum might know. Thanks.

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Re: Taxability of MDB payments in Singapore

Postby PNGMK » Fri, 30 Jun 2017 8:04 am

GSM8 wrote:This is a rather specific Singapore tax issue, but hoping someone on this forum might know.

I recently bid on a few consulting opportunities at World Bank, ADB, UNEP, and am hopeful of soon securing a contract from at least one of them. My question pertains to the Singapore tax treatment of income received for work performed as a consultant to such multi-lateral international organizations.

Section 13(7A) of the Income Tax Act says that in general personal service income will not be taxable in Singapore if the fixed base of service is outside Singapore, otherwise it will be taxed as if accrued in Singapore. In this case I'm a PR and fixed base will be Singapore, but notwithstanding this, I have seen anecdotally that payments received from such organizations are typically exempt from income tax in member countries (of which Singapore is one). However, I could not find this tax exempt aspect of multi-lateral organization payments specifically documented anywhere on the IRAS website.

I submitted the question to IRAS but their response time is 5 business days. So, meanwhile seeing if anyone on this forum might know. Thanks.


I think the only way you can get past this is if you are classified as being based in Singapore but you travel outside to perform the service. This is called "Area Rep" and there is a specific IRAS clause that covers this. You can pro-rata your tax for the time you're outside Singapore. I did this a few years ago in a very similar circumstance.
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Re: Taxability of MDB payments in Singapore

Postby Strong Eagle » Fri, 30 Jun 2017 9:30 am

^^^^^^^^^^^^
The catch, however, is that all the tax treaties I have seen expect that your income will be taxed somewhere... if not Singapore, then by the other taxing jurisdiction.

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Re: Taxability of MDB payments in Singapore

Postby GSM8 » Fri, 30 Jun 2017 10:37 am

Thanks for your feedback PNGMK and SE. That is seems mostly true but the exception I am trying to clarify may be multi-lateral organization payments:

1. An acquaintance at World Bank in Singapore (EU national) says they have 2 categories, "international employees" who are fully tax exempt in all jurisdictions (including "home country") but "national employees" who are taxed if they are in their "home country"
2. UNEP employees in Bangkok and ADB employees in Manila (except US citizens) are fully tax free (and that benefit is reflected in remuneration that is generally lower than the private sector norm for similar levels)
3. ADB act states that: "No tax shall be levied on or in respect of salaries and emoluments paid by the Bank to Directors, alternates, officers or employees of the Bank, including experts performing missions for the Bank, except where a member deposits with its instrument of ratification or acceptance a declaration that such member retains for itself and its political subdivisions the right to tax salaries and emoluments paid by the Bank to citizens or nationals of such member", with the caveats for several countries, the one for Singapore saying that "Singapore retains for itself the right to tax salaries and emoluments paid by the Asian Development Bank to citizens and nationals of Singapore". Whereas I am a US citizen (who will obviously be taxed by US regardless, on global income with eligible exclusion.)
4. There is precedent of ADB payments being taxable in the hands of non-citizen individuals/companies in India with the court ruling that "citizens and nationals" included in intent "political divisions and sub-divisions".

So the issue of multi-lateral organizations appears to be a narrow grey area subject to precedents and interpretation. I'll continue to update this thread if I hear back from IRAS

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Re: Taxability of MDB payments in Singapore

Postby PNGMK » Sat, 01 Jul 2017 7:59 pm

I think the above groups rely on their employees having some form of consular or diplomatic status if they are being paid tax free salaries. Would you have that? For example an Aussie working in the visa section of the AHC here locally hired definitely would pay Singapore tax but not the ambassador or consular staff.
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Re: Taxability of MDB payments in Singapore

Postby GSM8 » Thu, 06 Jul 2017 8:44 pm

PNGMK, your opinion was similar to the response I just got from IRAS. They said normally I'd be liable for Singapore tax on the income earned for services performed in Singapore, and exempt for the duration it was performed at a fixed location outside of Singapore. They suggested though that I send over the services contract for them to make a determination if it was eligible for preferential tax treatment due to any other government agreements. But as mentioned in the initial post I haven't secured any contract yet, only hoping to soon.

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Re: Taxability of MDB payments in Singapore

Postby PNGMK » Fri, 07 Jul 2017 11:05 am

GSM8 wrote:PNGMK, your opinion was similar to the response I just got from IRAS. They said normally I'd be liable for Singapore tax on the income earned for services performed in Singapore, and exempt for the duration it was performed at a fixed location outside of Singapore. They suggested though that I send over the services contract for them to make a determination if it was eligible for preferential tax treatment due to any other government agreements. But as mentioned in the initial post I haven't secured any contract yet, only hoping to soon.


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Re: Taxability of MDB payments in Singapore

Postby GSM8 » Fri, 07 Jul 2017 2:59 pm

PNGMK wrote:I'm not just a pretty face.

Thanks mate. Although closer to reality without the "just" :lol:


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