Payroll for employees abroad

[Da_Ku]

Hi everyone, recently found this forum and what great content !

I dug through some posts on payroll already but couldn't find anything that applies to my case so wondering if anyone has any advice. I have a SG registered Ltd. but since we just starting out all employees (incl. me) currently live elsewhere in Asia (cheaper ). I'm wondering how to best pay us, specifically:

- I'm leaning towards using a payroll vendor to make sure we don't miss any required documentation such as payslip generation and make sure we pay any SG required tax? Any recommendations?
- Do payroll vendors need an employee ID or tax ID? Obv none of us have a SG one of either.
- Alternatively, are there folks here not using a vendor and how hard is it to satisfy the documentation requirements?
- Since all my employees (incl. me) are abroad, which taxes will need to be paid in Singapore?

Want to obviously make sure we fully operate per the law but I'm having problems finding information relating to the case where none of the employees life in SG

Thanks a lot in advance

[Strong Eagle]

Where is "abroad"? It makes a difference. Employees living in another country must have residency permission (citizenship, work pass, or some other setup), and personal income tax must be paid in the country in which they reside. There are some exceptions. Therefore:

a) what countries?
b) how long?
c) how much time is spent in Singapore?
d) are any of these people directors of the company?
e) are any of these people the primary managers of the company?

[Da_Ku]

Basically bumming around Asia at the moment. I'm not a tax resident anywhere but I still want to make sure my Singapore obligations are covered correctly. Any potential tax claims I can deal with but mostly interested in the Singapore side atm.

[Strong Eagle]

Still don't have enough information. You say "I have a SG registered Ltd". Does this mean you are the shareholder? If you are not resident in Singapore, you must have a locally resident director, correct?

Are you a non-resident director? Are you making the management decisions from the company or doing all the major heavy lifting? If yes, then in both cases anything you pay yourself will be subject to a 22 percent non-resident tax which must be paid to IRAS prior to remitting the funds overseas. Example: You earn $1000 as a director or senior manager. You send $220 to IRAS and send $780 to yourself.

Now, if you have a resident director, you may be able to fly under the radar and just get paid as a contractor in another country. But, if you are listed as shareholder as well, pretty soon IRAS will sort things out. The basic idea here is that if you are a principal in the company... a director or major decision maker, then IRAS wants to collect. If you're a big standard employee, then IRAS does not collect taxes, operating under the expectation that the bog standard contractor or employee pays taxes in their home country.

[PNGMK]

I would probably lean towards a contracting model. Have your 'employees' submit invoices and let them deal with their local tax and social security issues. Failing that you have a complex situation in some countries where compulsory insurance, SS contributions and other employer obligations are required.

[Da_Ku]

Thanks for the responses, a little more info as requested.

Yes I am a non-resident director/CEO and majority shareholder. I understand the 22% which is fine. However, my accounting firm in Singapore got back to me saying I need to apply for a work pass in order for me to be able to draw a salary from my company. Is this information correct?

I don't plan on moving to Singapore (yet) so not sure why I would need a work pass when I'm not working/living in Singapore.

Thanks a lot

[Strong Eagle]

Thanks for the responses, a little more info as requested.

Yes I am a non-resident director/CEO and majority shareholder. I understand the 22% which is fine. However, my accounting firm in Singapore got back to me saying I need to apply for a work pass in order for me to be able to draw a salary from my company. Is this information correct?

I don't plan on moving to Singapore (yet) so not sure why I would need a work pass when I'm not working/living in Singapore.

Thanks a lot

Your accounting firm is misinformed. If you had a work pass, you wouldn't be non-resident and you wouldn't be subject to the non-resident director withholding.

I am assuming that you are paying for a rented director from some firm, then? Because you must have a "normally resident" director in Singapore according to the Companies Act. If you search for "director" in the business and career forums, you'll find a lot of posts by me and others about rented directors, otherwise known as nominee directors.

[PNGMK]

Thanks for the responses, a little more info as requested.

Yes I am a non-resident director/CEO and majority shareholder. I understand the 22% which is fine. However, my accounting firm in Singapore got back to me saying I need to apply for a work pass in order for me to be able to draw a salary from my company. Is this information correct?

I don't plan on moving to Singapore (yet) so not sure why I would need a work pass when I'm not working/living in Singapore.

Thanks a lot

You're not drawing a salary. You're drawing director's fees. Use the correct terminology and it will be much easier for people to help you. You don't need a Workpass for director's fees AFAIK.

[Strong Eagle]

Thanks for the responses, a little more info as requested.

Yes I am a non-resident director/CEO and majority shareholder. I understand the 22% which is fine. However, my accounting firm in Singapore got back to me saying I need to apply for a work pass in order for me to be able to draw a salary from my company. Is this information correct?

I don't plan on moving to Singapore (yet) so not sure why I would need a work pass when I'm not working/living in Singapore.

Thanks a lot

You're not drawing a salary. You're drawing director's fees. Use the correct terminology and it will be much easier for people to help you. You don't need a Workpass for director's fees AFAIK.

It doesn't matter if he draws directors fees or a salary. If he is listed as a non-resident director at ACRA, any and all sums paid to him are taxable at non-resident rates. Even if he weren't listed as a non-resident director, IRAS would assume that because he is a principal shareholder, any money paid to him would be as a senior manager and also subject to non-resident tax. This is because non-resident directors and certain professionals performing services for a company are considered rendered in Singapore since you are an officer/manager of a Singapore company. There are a number of webpages on the IRAS website delineating the difference between and employee and a professional.

However, if you are an "executive director" you may not be subject to withholding tax, and I would highly recommend that you discuss the tax situation with a qualified CPA... not the one who told you that you need a work permit, obviously.