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Working for a non resident Employer in Singapore

Discuss about getting a well paid job or career advancement. Ask about salaries, expat packages, CPF & taxes for expatriate.

financepil
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Working for a non resident Employer in Singapore

Postby financepil » Fri, 02 Mar 2018 2:23 pm

I'm sure this has been asked many times but I'm trying to figure out my case because I'm a Singapore Citizen.

I have been offered a overseas job and would like to know on the ways how CPF should be paid and what are some of the mojor factors when negotiating the salary.

Your advises are apprciated
Thanks.

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PNGMK
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Re: Working for a non resident Employer in Singapore

Postby PNGMK » Fri, 02 Mar 2018 3:04 pm

Is your employer a Singapore legal entity or overseas entity?

If a Singapore entity you can possibly have CPF paid (but on a voluntary basis - it's not mandatory and you need to negotiate this with your Singapore employer). If by a foreign entity they will not pay; you can make voluntary cash top ups yourself.

The rationale behind this is that forcing Singapore companies to pay for overseas based employees reduces the competitiveness of both the employer and the attraction to hire a SC/SPR for the position.

Regardless of the above 'losing your CPF contributions' should form part of your negotiation for your total overseas package.
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Re: Working for a non resident Employer in Singapore

Postby financepil » Fri, 02 Mar 2018 3:42 pm

Thanks for your reply. New job im negotiating is with an oversea employer who dont have any entity or business registration here in Singapore.

I'm wondering in this case I have to be liable for CPF/IRAS tax payments myslf or should I inform them for the payouts?

I'm sure they dont have nay experience paying out CPF in Singapore

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Re: Working for a non resident Employer in Singapore

Postby PNGMK » Sat, 03 Mar 2018 8:44 am

financepil wrote:Thanks for your reply. New job im negotiating is with an oversea employer who dont have any entity or business registration here in Singapore.

I'm wondering in this case I have to be liable for CPF/IRAS tax payments myslf or should I inform them for the payouts?

I'm sure they dont have nay experience paying out CPF in Singapore

CPF no. You have no liability. You can chose to pay and many people do especially if they have a HDB mortgage.

IRAS is your responsibility. However you will be non tax resident for Singapore so only your Singapore derived income (interest, dividends, rental income less deductions, business income if any) will need to be declared but be aware you'll be assessed at the higher non resident tax rate.
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Re: Working for a non resident Employer in Singapore

Postby Strong Eagle » Sat, 03 Mar 2018 10:08 pm

financepil wrote:I'm sure this has been asked many times but I'm trying to figure out my case because I'm a Singapore Citizen.

I have been offered a overseas job and would like to know on the ways how CPF should be paid and what are some of the mojor factors when negotiating the salary.

Your advises are apprciated
Thanks.


My views. You should always follow up with the relevant authorities for confirmation.

Since you will be working overseas, and for a company that has no presence in Singapore:

a) You will be subject to personal income taxation in the country of residence under their rules. This is generally true for all countries: You pay income tax where you live. You should also check the status of a reciprocal tax treaty with the country in which you will be living as that will provide details. Summary: You will not pay Singapore taxes for active (ie, earned) income, you will continue to pay Singapore taxes for real estate and other investment (ie, passive) income.

b) Because you are working for a non-Singaporean entity, you will be considered self-employed. Therefore, as a self employed person, you are not required to pay CPF. You are required to pay into your MediSave account and your CPF contributions can be made voluntarily.

Bottom line: You would be self-employed and pay no CPF regardless of whether you live in or out of Singapore if you are working for an entity with no Singaporean presence. You pay Singapore income taxes if you live in Singapore, otherwise, you pay income taxes in the country in which you live.

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Re: Working for a non resident Employer in Singapore

Postby financepil » Mon, 05 Mar 2018 10:41 am

Strong Eagle, Thank you for the response.

Even thou I'm going to be employed by a foreign entity who does not have a presence in the region, I will be based in Singapore to do my job responsibilities.

1. given that I will be executing all the job task based in Singapore, Aint I liable for my own CPF?

2. I do understand , My job contract may be under the law where my HQ is located. Will it be a norm to do it that way? which does not give any gurentee of the job where i'll be based at (Singapore) ?

3. Any suggestions from your end if I have to sign a foreign based job contract?

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Re: Working for a non resident Employer in Singapore

Postby Strong Eagle » Mon, 05 Mar 2018 2:02 pm

financepil wrote:Strong Eagle, Thank you for the response.

Even thou I'm going to be employed by a foreign entity who does not have a presence in the region, I will be based in Singapore to do my job responsibilities.

1. given that I will be executing all the job task based in Singapore, Aint I liable for my own CPF?

2. I do understand , My job contract may be under the law where my HQ is located. Will it be a norm to do it that way? which does not give any gurentee of the job where i'll be based at (Singapore) ?

3. Any suggestions from your end if I have to sign a foreign based job contract?


If you are going to be working in Singapore, then the following applies.

You are not working for any legal Singapore entity, therefore you can only structure your working relationship with the foreign entity in one of two ways.

a) You can be self employed, just as any sole proprietor would be. You will contract with your foreign employer in your name only. Because you will be working for a foreign firm in your name only, you don't even need to register as a sole proprietor, you can simply use your own name on all contracts and documents. For details, see

https://www.acra.gov.sg/components/wire ... =1755#1756

Of course, you can also register as a SP, if you wish... I'm not sure I see the benefit in it, though.

If you choose this route, and because you are performing your work in Singapore, then you will pay personal income tax on your earnings as any sole proprietor would, filing your earnings on your personal income tax form. As a SP you are not required to make CPF payments, you are required to make MediSave payments. You can voluntarily make CPF payments to your account.

I also note, for further discussion below, that your personal finances and your business finances are one and the same under a SP... you have no shield and can be sued individually for everything you have.

b) You can form your own private limited company, become its sole shareholder and director. Now, you are working for a Singapore legal entity, and it is this legal entity that would contract with the foreign company, assigning you to work for them on behalf of your company. This is a more complicated way of doing things, and, it results in the following:

1) Your company, not you, will invoice the foreign firm, and will deposit money paid into a company bank account.
2) You will be paid by the company. You can pay yourself a combination of directors fees for managing the company and a salary for the work you perform for the foreign employer.
3) Both your directors fees and your salary are subject to personal income tax and your company will have to file an IR8A with IRAS, stating your earnings.
4) All salaries paid are subject to both employer and employee CPF, and you can elect to have your company pay the employee portion of CPF as well (there is a specific calculation on the IRAS website for this).
5) Unless you specifically relinquish it by signing a document to be personally liable, you are protected by the corporate shield which prevents your personal assets from being attached should your company be sued and lose.

I mention this last aspect because of your second question: where the contract is enforced... which country's law.

If the contract is enforced under the laws of Australia, or the UK, or the US, or Japan, or Hong Kong, or something similar, then you generally know that corruption is minimal, that corporate and civil law is roughly the same, and that your biggest problem would be the expense of having to litigate in a different country.

But, if the contract is to be interpreted under the laws of a country you might consider dodgy, then you have more of a problem. Nothing against our Indonesian or Chinese brethren, for example, and, I judge that a foreigner might have a tough time in the courts if push came to shove.

So, if I were dealing with a contract out of the UK, US, AU, etc, I'd probably be OK with entering into it as a SP. But, if I didn't totally trust the company I was about to work for, I might want the protection of a private limited so that even if I got screwed in a foreign court, all they could take would be the assets of the company.

You have to decide the nature of the foreign employer you are working for, and whether they are trustworthy. Lawsuits over a contract are about the very last thing anyone ever gets into.

What's more important is to have a clear understanding of your liabilities and risks that they have written into the contract. Could they refuse to pay you if you f*ck up your project? That's not a unreasonable clause. Could they demand direct damages from you for the costs they incurred as a result of your f*ckup? Some companies try to do that; that's where having a corporate shield comes in handy. Could they demand consequential damages because they claim you f*cked up an additional $300 million worth of business? Virtually nobody would be willing to accept such a clause in a contract.

Be very clear on your deliverables. Be very clear about what is in scope. Be very specific about what is out of scope. Be sure your contract contains elements for managing additions and deletions to the work product... they will want to and this and that without paying you more. Be sure that their responsibilities under the contract are clearly defined. Example: They are supposed to supply you with $50,000 of equipment to do your job. This needs to be clearly stated in the contract. Otherwise, they don't supply, you can't do your job, they accuse you of breach of contract, even though they caused it.

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Re: Working for a non resident Employer in Singapore

Postby financepil » Sun, 11 Mar 2018 3:38 pm

Strong Eagle, Once again thanks for your comprehensive reply!

My contract is going to be under a US based company who don't have any presence in the region. I'm very leaned towards this opportunity and at the same time I'm factoring all the risk and disadvantages working remotely.

Based on your experience, What are some of the facts I need to consider in terms of Salary or benefit package ?

My current employer pays my CPF ( 20%+17%) but my foreigh employer would not know about the 17% they need to commit.

this is my first time as a remote employee. any must negotiate benefits?

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Re: Working for a non resident Employer in Singapore

Postby PNGMK » Sun, 11 Mar 2018 5:51 pm

You must negotiate all benefits as anything omitted will not be provided. Basic points to cover are:

Salary and expected working hours and paid leave entitlement
Payment date
Overtime if any
Travel expenses policy
Worker compensation or insurance
Medical insurance
Bonus. Most foreign companies will not pay AWS.
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Re: Working for a non resident Employer in Singapore

Postby Strong Eagle » Mon, 12 Mar 2018 3:40 am

PNGMK has hit all the essential points... you only get what you negotiate. If going to work for a US company, you could be hired under one of two potential employment scenarios.

a) You are hired as an EMPLOYEE. Your expenses come out of the payroll account for the company that hired you. The benefits that you would receive would be the same as everyone else... some kind of medical insurance, paid time off, a retirement plan, etc. There is nothing to negotiate except maybe a salary.

But, I doubt they will hire you as an employee, primarily because of the difficulty of dealing with medical plans and retirement plans when you are not US resident.

b) Therefore, you will be hired as an independent contractor. Now, everything is negotiable. To amplify on the items that PNGMK mentioned.

1) Pay rate and work hours - You're not going to get paid time off, or holidays, or a retirement plan or even a place to work. A rule of thumb is that all the benefits are roughly equivalent to a third of the salary. So, if you were working at a company where you got benefits at $1000 per month, you'd want to ask for a contract amount somewhere between $1000 and $1300... more if you think you can get away with it. Note: Your US employer doesn't give a crap about CPF... anymore than they'd give a crap about a housing allowance or school allowance. It's all income to you, it's all expense to them... so negotiate a salary on that point.

Be clear on payment schedule... you file your hours and expenses within 5 days of end of month, ask for payment no later than end of month following. Specify direct deposit, company picks up all wire expenses. Company required to pick up local taxes if you travel for them and incur the same. I try to add 10 percent to actual expenses to cover my admin costs. I bill half my mobile expense and all long distance charges that are company related.

2) PNGMK mentioned overtime pay. I've never seen overtime paid in my line of work. I've have clients who wanted me to fill out timesheets in 15 minute increments and then have me bill by the hour. That's BS. I've always billed in mostly half day increments... if I work 1 to 4 hours, it's a half day, more than that, a full day.

Make it attractive to them to pay you in larger increments. Offer to work for $20 per hour, or $150 per day (8 hours - about 6 percent discount, or $720 per week (10 percent off) or take another 5 percent off if you can bill monthly for a guaranteed number of hours, with reasonable time sheets and diary, of course.

3) Two points to travel expense: First, do you get paid for flying on your time for their business? If I flew to KL on a weekday, I billed, on a Sunday, usually not. Second, what's covered? I got a deal to fly business class on any flights over four hours. My hotel and meal bills included alcohol, and the class of hotel and my meal allowance were based upon what executives in the company at my level would get. If I get stuck in an airport on their business and it costs me $12 to drink a beer while waiting, I want them to pay for it.

4) Insurance - You've got SC benefits. They will probably balk at anything else but you can ask for supplemental policies that put you into a private room. You should ask for travel insurance with emergency repatriation if your own local SG policy doesn't cover this.

Note also my first point: Everything is an expense to them. If they balk at paying insurance, ask them for a higher contract rate and pay it yourself. Same with travel, really... don't want to pay for my beer? No problem... my rate just went up $3 per hour.

PNGMK wrote:You must negotiate all benefits as anything omitted will not be provided. Basic points to cover are:

Salary and expected working hours and paid leave entitlement
Payment date
Overtime if any
Travel expenses policy
Worker compensation or insurance
Medical insurance
Bonus. Most foreign companies will not pay AWS.

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Re: Working for a non resident Employer in Singapore

Postby financepil » Sat, 07 Apr 2018 1:02 pm

It's been a pretty intensive week thus far. Few updates from my end

Scenario now:

1) I just flew to my HQ for a introduction tour and contract negotiation. HR manager mentioned that their company has been liasing with a law firm and they have prepared a contract with a help of a law firm based in Singapore.
HR manager mentioned they will bear the CPF contributions, Which I really doubt. Perhaps they are unaware of the formalities when it comes to CPF?

2) My contract did not look anything that would look like a Singapore contract. No travel allowances, no detailed job scope, no reimbursements, No laptops or phones stated, Working hours was mentioned and I was given a holiday based on my previous contract. which is almost 25 days.

3. No payment date specified. And I was asked if I should be paid in USD or SGD. Whats recommended?

4.What are some of the travel expenses policy to be included? ( I suppose to travel for 2 weeks a month)

5. Which medical insurence plan / Month, I should request for? Any estimated figure? I believe they are willing to pay this amount to me so that I can buy it on my own.

6. What other benefits, I should ask for given I'll be spending 2 weeks working from home a month? Internet ? Electricity bill etc?

Any other comments?

Thanks.
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