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Should this money be taxed?

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Should this money be taxed?

Postby thrilled » Fri, 16 Mar 2018 3:51 pm

Hello all,

First of all, yes, I will seek for professional, legal advice and I am posting here just to get a feedback from others who were/are in similar situation.


I am not living/working in Singapore and just pop over there few times a year - length of my stay in total (a sum of) is less than 60 days per the calendar year.
I have a personal bank account in Singapore and I would like to transfer money to it (since I want to diversify my assets across multiple banks in different countries). The money is not earned in Singapore.

Now, two scenarios that I would like to know an answer for each:
1. The money is transferred by a locally registered company (think of it like a TransferWise, Stripe etc.). This could look like it's coming from a Singapore (?)
2. The money is transferred with an international transfer from overseas.

For each of these scenarios, should this money be declared and taxed?

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Re: Should this money be taxed?

Postby Strong Eagle » Fri, 16 Mar 2018 10:05 pm

thrilled wrote:Hello all,

First of all, yes, I will seek for professional, legal advice and I am posting here just to get a feedback from others who were/are in similar situation.


I am not living/working in Singapore and just pop over there few times a year - length of my stay in total (a sum of) is less than 60 days per the calendar year.
I have a personal bank account in Singapore and I would like to transfer money to it (since I want to diversify my assets across multiple banks in different countries). The money is not earned in Singapore.

Now, two scenarios that I would like to know an answer for each:
1. The money is transferred by a locally registered company (think of it like a TransferWise, Stripe etc.). This could look like it's coming from a Singapore (?)
2. The money is transferred with an international transfer from overseas.

For each of these scenarios, should this money be declared and taxed?


If your stay for business in Singapore was for less than 60 days you are not subject to personal income tax, but this would only be if you are working. Since you are not working, the number of days you are in Singapore is irrelevant.

I am unaware of any rule or regulation that would cause you to incur tax through the act of depositing money in a Singapore bank account. Such a rule would really piss off all the Indonesian generals and other officials who deposit their ill gotten gains into Singapore bank accounts. Ditto for the Malaysians who profit from bribery.

As for declaring money... I am aware that if you are bringing large sums of cash into the country via, airplane, car, or boat, you must declare it to customs officials but I am unaware of any regulation that requires money to be declared when wire transferred or otherwise electronically added to your account. That would create many problems for all sorts of Singapore businesses that regularly receive payment from overseas entities.

In general:

a) For the purposes of personal income taxation, Singapore, like the majority of countries, cares not a whit into what bank you salary was paid into, nor the currency, nor the location of the source of the funds. All that matters is where the work was performed, and if it was performed while you were resident in Singapore, it would be taxable. No workee, no taxee.

b) Singapore's economy is built on the foundations of the banking industry. It has been called the Switzerland of Asia. The banks will be very happy to put your money in their vaults, and the government goes out of its way to make sure that you can put your money in with minimum fuss or cost, and with a minimum of transparency.

Having said that, several banks have been shut down, and several more have incurred large fines for money laundering, especially as quite a few of them have become ensnared in the 1MDB scandal unfolding in Malaysia. As a result, your deposits will fall under increasing scrutiny under the "know your customer" regulations. They will want convincing evidence that you are not using your account(s) to turn dirty money into clean. Your deposits could be subject to a hold and unavailability until the bank has determined the legitimacy of the source, or they could be rejected entirely. It's up to the bank.

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Re: Should this money be taxed?

Postby thrilled » Fri, 16 Mar 2018 10:27 pm

Hello and appreciate your reply - you always give helpful feedback to others!

Strong Eagle wrote:If your stay for business in Singapore was for less than 60 days you are not subject to personal income tax, but this would only be if you are working. Since you are not working, the number of days you are in Singapore is irrelevant.


So you are saying, even if you are a tax resident (don't work in Singapore but staying more than 183 days per calendar day - I understand this is how you automatically getting a "tax resident" status in SG) they cannot tax any money that you put into a personal bank account in Singapore?

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Re: Should this money be taxed?

Postby Strong Eagle » Sat, 17 Mar 2018 12:28 am

thrilled wrote:Hello and appreciate your reply - you always give helpful feedback to others!

Strong Eagle wrote:If your stay for business in Singapore was for less than 60 days you are not subject to personal income tax, but this would only be if you are working. Since you are not working, the number of days you are in Singapore is irrelevant.


So you are saying, even if you are a tax resident (don't work in Singapore but staying more than 183 days per calendar day - I understand this is how you automatically getting a "tax resident" status in SG) they cannot tax any money that you put into a personal bank account in Singapore?


Yes, that is essentially correct. There are two aspects to taxation that are relatively universal and codified in tax treaty arrangements.

You pay tax on active income where you are earning the money. Active income is salaries and fees for work performed. If you were working in Singapore, it wouldn't matter whether you deposited your salary in Singapore or Timbuktu... you pay tax on your reported earnings... not on money you put in the bank... hell, you may drink your paycheck up every week and not have any money to put in any bank... you still pay taxes on income earned.

The other aspect of taxation is passive income... income earned from investments such as property, stocks and bonds, etc. In general, taxes on passive income are paid in the country where the investment resides. So, if you've got a set of 400 unit apartment buildings throwing off cash in the USA, you pay taxes in the USA on passive income. You are then free to take all your profits and deposit them in a Singapore bank with no additional taxation.

Again, your biggest problem will be the "know your customer" rules. If you have a long standing relationship with a bank, not such a problem. If not, they really can't easily tell if you are smurfing, for example, and it's easier to just reject your deposits rather than doing extensive research on you... unless you have a lot of money.

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Re: Should this money be taxed?

Postby PNGMK » Sat, 17 Mar 2018 9:21 am

How long have you had those bank accounts? Large deposits (> $30,000) will raise questions about the source of funds IME. Be prepared to explain.

Tax is not the issue, having your funds locked up. SE Singapore is moving quickly away from being the Switzerland of Asia. Every day banks are rejecting customers, shutting down accounts and posting cheques out. Every 6 months the society account I run gets a request for validation of foreign signatories residency status. Even my damn Amex card account does the same yearly now. My Saxo account the same. People who have accounts here as non residents are genuinely concerned and trying to find alternative countries to open accounts in. Funnily enough Australia is turning into a place where they can open accounts quickly. The issue for the banks here is running a compliance check on a customer costs money - it's cheaper to shut the account down. I'm sure you know it's the same in the USA. One friend there has had 6 accounts closed down in the last few years.

I suspect the OP will time out - at some point his account will be too much compliance cost to run for the bank.
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Re: Should this money be taxed?

Postby thrilled » Sun, 18 Mar 2018 3:55 pm

Strong Eagle wrote:Yes, that is essentially correct. There are two aspects to taxation that are relatively universal and codified in tax treaty arrangements.

You pay tax on active income where you are earning the money. Active income is salaries and fees for work performed. If you were working in Singapore, it wouldn't matter whether you deposited your salary in Singapore or Timbuktu... you pay tax on your reported earnings... not on money you put in the bank... hell, you may drink your paycheck up every week and not have any money to put in any bank... you still pay taxes on income earned.

The other aspect of taxation is passive income... income earned from investments such as property, stocks and bonds, etc. In general, taxes on passive income are paid in the country where the investment resides. So, if you've got a set of 400 unit apartment buildings throwing off cash in the USA, you pay taxes in the USA on passive income. You are then free to take all your profits and deposit them in a Singapore bank with no additional taxation.


I foresee to register a business in Singapore this year (still doing research on whether to do it in SG or perhaps HK or even BVI). Now, assuming I would have a business here but work remotely from another country (so not living here and not being a tax resident), will that change the situation? Will I need to pay taxes on this money?

PNGMK wrote:How long have you had those bank accounts? Large deposits (> $30,000) will raise questions about the source of funds IME. Be prepared to explain.

Tax is not the issue, having your funds locked up. SE Singapore is moving quickly away from being the Switzerland of Asia. Every day banks are rejecting customers, shutting down accounts and posting cheques out. Every 6 months the society account I run gets a request for validation of foreign signatories residency status. Even my damn Amex card account does the same yearly now. My Saxo account the same. People who have accounts here as non residents are genuinely concerned and trying to find alternative countries to open accounts in. Funnily enough Australia is turning into a place where they can open accounts quickly. The issue for the banks here is running a compliance check on a customer costs money - it's cheaper to shut the account down. I'm sure you know it's the same in the USA. One friend there has had 6 accounts closed down in the last few years.

I suspect the OP will time out - at some point his account will be too much compliance cost to run for the bank.


I had this bank account for 3 years or so.

What you are saying is pretty concerning, even tho I don't do any shady stuff, looks like I cannot safely keep my money in Singapore. What a shame as I always believed Singaporean banks are one of the best.

What compliance costs? Is not like they need to check me every time I deposit money there, isn't it? Are they concerned about the fact I am non-resident or the source of the money? Both of their concerns can be quickly addressed by asking me to come over to their branch which I will be more than happy to do.


Strong Eagle wrote:Again, your biggest problem will be the "know your customer" rules. If you have a long standing relationship with a bank, not such a problem. If not, they really can't easily tell if you are smurfing, for example, and it's easier to just reject your deposits rather than doing extensive research on you... unless you have a lot of money.


As mentioned, the account was opened around 3 years ago. Well, if one day they will message me, the first thing I will do is request to talk with their manager and fly over there immediately. It's not a problem for me to explain the source of the money and the reason I want to be it on my Singaporean bank account. Hope this will be enough for them.

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Re: Should this money be taxed?

Postby PNGMK » Mon, 19 Mar 2018 8:11 pm

Compliance costs mean costs incurred checking out the customer. By the time you get the letter it's too late anyways as the bank has decided you're too expensive to review or a review has shown that you're too risky to deal with. At the moment the banks seemed to have slowed down on cancellations but wait until another 1MDB scandal. It's not a matter of the banks being safe; it's a matter of whether your money is safe to take.

How did you open an account originally? As a resident EP holder? Eventually the bank will check with ICA and bang goes your account (if you're unlucky - doesn't happen to everyone - I guess there's some profiling).
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Re: Should this money be taxed?

Postby Strong Eagle » Mon, 19 Mar 2018 9:06 pm

thrilled wrote:I foresee to register a business in Singapore this year (still doing research on whether to do it in SG or perhaps HK or even BVI). Now, assuming I would have a business here but work remotely from another country (so not living here and not being a tax resident), will that change the situation? Will I need to pay taxes on this money?


WHAT MONEY?

You certainly are taxed focused. Companies are subject to the same rules as individuals. If a company earns a profit it pays tax on the profits (with a generous 3 year no tax for new companies). You need to read IRAS regs if you think you want to start a company.

If you put money into a company via loans or equity (paid up capital) there is no tax consequence. There are no tax consequences to pay back that loan, except for interest paid. You cannot pay dividends from paid up capital, only earnings, so the only way to get equity back out of a company is to pay salaries or do a share buyback, which is tough to do in Singapore.

If you are paid money by a company (other than dividends), then those payments are taxable as salary. If you are a non-resident director or primary manager, then those payments are subject to a 22 percent withholding tax before the money is sent offshore. Do you get the idea that Singapore wants the senior executives of a Singapore company to be resident in Singapore?

PNGMK has well summarized the banking situation. Unless you have millions to put in the bank, the bank won't make much money off you but they can get royally screwed by you, if you are indeed a money launderer. Therefore, you may be scrutinized, you may be rejected, and the bank is fully within its rights to close any existing accounts you may have.

Since you already have accounts, the only way to know if you're going to have bank trouble is to go talk to a couple of bank officers. Tell them where your money is coming from. Tell them where is goes. They'll decide if they want you as a customer.

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Re: Should this money be taxed?

Postby PNGMK » Mon, 19 Mar 2018 9:58 pm

The current low tax payment method in favour (which is attracting HUGE attention due to Trump/Manafort et al) is to pay oneself with a series of never ending or revolving loans from the company that one sets up in a low tax jurisdiction. OF course that causes all sorts of issues as we see, not the least being that if the loan is forgiven, then the money immediately becomes income. The key part is the ability to pay back the loan with income from another source... that's the part that Manafort seem to forget.
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Re: Should this money be taxed?

Postby PNGMK » Mon, 19 Mar 2018 10:05 pm

A friend (Perpetual traveller i.e. not tax resident anywhere and generally pays no income tax anywhere) told me that he has had 6 bank accounts closed in the US in the last few years (company and personal ones). He explained that one of the banks told him a compliance check runs at about $6,000 per person (internal and external costs, labour allocation etc). That's why now unless you're in the 1% the bank just shuts you down if there is a red flag.
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Re: Should this money be taxed?

Postby The Ref » Wed, 21 Mar 2018 10:04 am

Added to everything PNGMK has added, Banks do regular KYC (Know Your Client) on EVERY customer. Depending on Jurisdiction and risk this may be every year or every second year, as well as ad-hock when something triggers it.

Banks do AML (Anti Money Laundering) on EVERY transaction over a threshold, so the compliance cost of a non resident that moves a lot of money is quite high.

Added to that, the fines a Bank may receive may come from a source not expected - SCB was fined for transactions with the Middle East by the NY Dept of Financial Services, even though those transactions never went through the US. They were in USD so New York decided to fine them - and that is the problem. So they closed thousands of accounts

http://www.arabianbusiness.com/stanchar ... 68462.html

It is getting harder and harder to keep offshore accounts - the US is pushing for banks to provide lots of information (FACTA) and small offshore accounts provide little profit to the Banks.

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Re: Should this money be taxed?

Postby PNGMK » Wed, 21 Mar 2018 10:10 am

This anti bank push is why in Singapore we see ever increasing signs of money laundering. I personally think the days of pseudo anonymous offshore bank accounts except for the super wealthy are rapidly disappearing. The blogs of the PT crowd (AKA digital nomads) are full of questions about how to get around the issues of territorial taxation, bank account openings and closings and other none sense. I'm surprised we don't see more of it on this forum.
Last edited by PNGMK on Wed, 21 Mar 2018 10:19 am, edited 2 times in total.
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Re: Should this money be taxed?

Postby PNGMK » Wed, 21 Mar 2018 10:11 am

thrilled wrote:Hello all,

First of all, yes, I will seek for professional, legal advice and I am posting here just to get a feedback from others who were/are in similar situation.


I am not living/working in Singapore and just pop over there few times a year - length of my stay in total (a sum of) is less than 60 days per the calendar year.
I have a personal bank account in Singapore and I would like to transfer money to it (since I want to diversify my assets across multiple banks in different countries). The money is not earned in Singapore.

Now, two scenarios that I would like to know an answer for each:
1. The money is transferred by a locally registered company (think of it like a TransferWise, Stripe etc.). This could look like it's coming from a Singapore (?)
2. The money is transferred with an international transfer from overseas.

For each of these scenarios, should this money be declared and taxed?


QFP.

Where are you 'popping over' from?
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Re: Should this money be taxed?

Postby tanghaouser » Wed, 11 Apr 2018 11:44 am

Yes, that is essentially correct. There are two aspects to taxation that are relatively universal and codified in tax treaty arrangements.


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