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Question on Drop Shipping Business

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hendricks
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Question on Drop Shipping Business

Postby hendricks » Tue, 17 Apr 2018 9:08 pm

Hi,

I am planning to start a drop shipping online e-commerce store. I have no business experience whatsoever. I have only recently started reading up on the topic online, and I am hoping to get some insight.

I am a Singapore citizen. The proposed website will be hosted overseas. My products will be shipped directly from various suppliers in China to customers all over the world, except Singapore(reason to be explained below). For receiving payments, I intend to use a payment gateway like Stripe(has presence in Singapore) or a similar company, in which payment will be deposited into my Singapore bank account.

Therefore, kindly baring in mind that apart from me managing the website from Singapore, the website itself is hosted overseas, and none of my goods will be coming into or passing through Singapore, with regards to these questions:

Am I still required to register a business in Singapore to do this? I know no license is required to operate an online store, but I am not sure if registration of a business is required.

Secondly, this question may be somewhat related to the first, and I refer to https://www.guidemesingapore.com/business-guides/taxation-and-accounting/personal-tax/singapore-personal-income-tax-guide.
Tax treatment of income earned overseas
Generally, overseas income received in Singapore on or after 1 Jan 2004 is not taxable. This includes overseas income paid into a Singapore bank account. You do not need to declare overseas income that is not taxable.

Does that mean I won't be subject to any tax in Singapore, or will does that mean as I am physically working from within Singapore, and therefore will be subjected to tax? This question is related to why I may not wish to ship to Singapore in the meantime, to simply things, with no intention to evade any tax.

Thirdly, is a business/merchant account required at a Singapore bank to receive money from payment gateways like Stripe?

Thank you.

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Strong Eagle
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Re: Question on Drop Shipping Business

Postby Strong Eagle » Wed, 18 Apr 2018 10:20 am

hendricks wrote:Hi,

I am planning to start a drop shipping online e-commerce store. I have no business experience whatsoever. I have only recently started reading up on the topic online, and I am hoping to get some insight.

I am a Singapore citizen. The proposed website will be hosted overseas. My products will be shipped directly from various suppliers in China to customers all over the world, except Singapore(reason to be explained below). For receiving payments, I intend to use a payment gateway like Stripe(has presence in Singapore) or a similar company, in which payment will be deposited into my Singapore bank account.

Therefore, kindly baring in mind that apart from me managing the website from Singapore, the website itself is hosted overseas, and none of my goods will be coming into or passing through Singapore, with regards to these questions:

Am I still required to register a business in Singapore to do this? I know no license is required to operate an online store, but I am not sure if registration of a business is required.

Secondly, this question may be somewhat related to the first, and I refer to https://www.guidemesingapore.com/business-guides/taxation-and-accounting/personal-tax/singapore-personal-income-tax-guide.
Tax treatment of income earned overseas
Generally, overseas income received in Singapore on or after 1 Jan 2004 is not taxable. This includes overseas income paid into a Singapore bank account. You do not need to declare overseas income that is not taxable.

Does that mean I won't be subject to any tax in Singapore, or will does that mean as I am physically working from within Singapore, and therefore will be subjected to tax? This question is related to why I may not wish to ship to Singapore in the meantime, to simply things, with no intention to evade any tax.

Thirdly, is a business/merchant account required at a Singapore bank to receive money from payment gateways like Stripe?

Thank you.


You are a Singapore citizen. You will be earning money by running your business in Singapore. Therefore, you will pay personal income tax in Singapore.

"Income earned overseas" means income earned in another country and taxed in that country. For example, you go to Malaysia and work there for a year. You pay Malaysian income tax, no matter where you deposit your money. You pay no Singapore income tax because it was income earned overseas in Malaysia. In general, earned income is always taxed in the country in which you were resident while earning the income.

You may or may not need a _registered_ business entity but you will need a business entity. If you conduct your business solely in your name, then no registration is required and you file your personal tax return as an unregistered sole proprietorship. If you get paid by your payment processor in another name, then you will need to register a sole proprietorship or private limited in that name in order to have a bank account capable or receiving funds payable to that name.

It really isn't going to matter, in terms of your personal tax, whether you ship goods to Singapore or not. As you can see from above, it's where you are when you earn your money that counts.

If you do elect to ship to Singapore, then if your fulfillment agency is outside Singapore, the recipient of your goods will have to pay GST at the time importation and delivery of goods to the end customer in Singapore. If you take a shipment of goods into Singapore, then deliver them locally, you will then be responsible for collecting and remitting GST under the rules set by IRAS.

Hope that clears things up.

hendricks
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Re: Question on Drop Shipping Business

Postby hendricks » Wed, 18 Apr 2018 7:23 pm

Strong Eagle, thank you, I could not expect a better explained and worded answer. Most appreciated.

Redhat11
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Re: Question on Drop Shipping Business

Postby Redhat11 » Thu, 19 Apr 2018 8:48 am

woah, very detailed explaination. Concentrate on growing the business and make more profits. Make more and paying taxes will be negligible :) Tax in Singapore is also at a very reasonable rate compared to other countries.


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