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Taxation when working overseas

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singaporeflyer
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Taxation when working overseas

Postby singaporeflyer » Wed, 12 Dec 2018 7:37 pm

Hi,
What happens I am employed by a Singapore company and my salary is paid fully in Singapore. I am stationed overseas for more than 183 days. Does this mean I will pay the Non resident tax rate of 15% ?
FYI, I am Singaporean.

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PNGMK
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Re: Taxation when working overseas

Postby PNGMK » Wed, 12 Dec 2018 9:54 pm

You should discuss with a professional but if you're out for the majority of the year you are most likely non resident for tax purposes which means you DO pay tax on your Singapore derived income.

https://www.iras.gov.sg/irashome/Indivi ... o-Pay-Tax/

https://www.iras.gov.sg/irashome/Indivi ... Residents/

The way to get around this is to have you salary paid outside of Singapore so it is not derived or sourced in Singapore. That may set you up to a tax liability in another country.

Once again you need advice. This is a not an amateur area.
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Re: Taxation when working overseas

Postby Strong Eagle » Wed, 12 Dec 2018 11:04 pm

singaporeflyer wrote:Hi,
What happens I am employed by a Singapore company and my salary is paid fully in Singapore. I am stationed overseas for more than 183 days. Does this mean I will pay the Non resident tax rate of 15% ?
FYI, I am Singaporean.


This is a bit slippery and depends on where and how long you are stationed outside of Singapore.

Example 1: You spent your entire "more than 183 days" in Malaysia. You are now a taxable resident of Malaysia. Your company needs the legal entity, you need the work permit, etc. In that case you would not pay tax in Singapore because you are tax resident elsewhere.

The catch is that Malaysia is so lax in enforcing its laws that lots of companies put people into Malaysia without making them tax resident. I commuted weekly, kept an apartment at KL Sentral, and stayed an average of 3 or 4 days a week in KL for little more than a year. You can rent property and travel back and forth with no issues. So why declare and pay onerous tax Malaysian tax rates. If this is your case, then you will want to continue paying Singapore taxes as a resident because you are not resident anywhere else.

Example 2: You are out of Singapore for more than 183 days but you end up in multiple countries and don't stay in any of them long enough to be considered tax resident. In this case, and especially if you have retained a domicile in Singapore, you are still a Singapore tax resident because you are working for and being paid by a Singapore entity, even though you are out of the country.

Having said all that, IRAS will provide you with a ruling for your circumstances, which, if followed, means you will be in compliance with Singapore tax law.

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Re: Taxation when working overseas

Postby singaporeflyer » Wed, 12 Dec 2018 11:12 pm

Strong Eagle wrote:
singaporeflyer wrote:Hi,
What happens I am employed by a Singapore company and my salary is paid fully in Singapore. I am stationed overseas for more than 183 days. Does this mean I will pay the Non resident tax rate of 15% ?
FYI, I am Singaporean.


This is a bit slippery and depends on where and how long you are stationed outside of Singapore.

Example 1: You spent your entire "more than 183 days" in Malaysia. You are now a taxable resident of Malaysia. Your company needs the legal entity, you need the work permit, etc. In that case you would not pay tax in Singapore because you are tax resident elsewhere.

The catch is that Malaysia is so lax in enforcing its laws that lots of companies put people into Malaysia without making them tax resident. I commuted weekly, kept an apartment at KL Sentral, and stayed an average of 3 or 4 days a week in KL for little more than a year. You can rent property and travel back and forth with no issues. So why declare and pay onerous tax Malaysian tax rates. If this is your case, then you will want to continue paying Singapore taxes as a resident because you are not resident anywhere else.

Example 2: You are out of Singapore for more than 183 days but you end up in multiple countries and don't stay in any of them long enough to be considered tax resident. In this case, and especially if you have retained a domicile in Singapore, you are still a Singapore tax resident because you are working for and being paid by a Singapore entity, even though you are out of the country.

Having said all that, IRAS will provide you with a ruling for your circumstances, which, if followed, means you will be in compliance with Singapore tax law.




Will IRAS look into my stay period as less than 183 days in SG and charge me flat 15% on my entire salary paid in SG? Assuming I am paid in SG

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Re: Taxation when working overseas

Postby Strong Eagle » Wed, 12 Dec 2018 11:31 pm

singaporeflyer wrote:Will IRAS look into my stay period as less than 183 days in SG and charge me flat 15% on my entire salary paid in SG? Assuming I am paid in SG


The nub of the question is, "Are you tax resident elsewhere?" That's always the basis. If not, then you would pay taxes no where else and you will be tax resident in Singapore. If you pay taxes elsewhere, then that portion would not be taxable in Singapore. And you could well end up paying non-resident rates that you didn't pay taxes on elsewhere.

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Re: Taxation when working overseas

Postby PNGMK » Thu, 13 Dec 2018 6:41 am

I don't quite agree SE as the OP is a SC. I don't see what you're alluding to in the IRAS pages. I'm concerned that because OP is SC all of his Singapore sourced income is liable. IRAS are pretty clear about foreigners vs citizens / SPR on the links I provided. I agree is makes sense that if OP is tax resident somewhere else he should not pay income tax in Singapore but that's not laid out in black and white.
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Re: Taxation when working overseas

Postby Strong Eagle » Thu, 13 Dec 2018 8:44 am

PNGMK - I tend to agree with you, if OP qualifies according to this web page:

https://www.iras.gov.sg/IRASHome/Indivi ... Singapore/

With respect to taxable overseas income:

You are a regional sales manager employed by a Singapore company. You are required to travel overseas frequently to oversee operations in regional countries. Your employment income is fully taxable in Singapore since your work overseas is incidental to your Singapore employment.


So, even if OP travels and works outside Singapore for 200 days, he's tax resident and pays tax on all his income in Singapore.

But, if OP is working 200 days per year in KL, Malaysian authorities want him to hold a valid work permit that has been issued to a valid legal Malaysian entity, and they want him to pay income tax there. If his company has him setup this way, then he has foreign sourced income which is not taxable in Singapore.

My guess is that he is not tax resident outside Singapore, that is, holds no legal residence or work permit anywhere else, which means you are correct... all his income is taxable in Singapore, at resident rates, even if he is out of the country for more than 183 days. He's always pays tax resident rates because he is SC.

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Re: Taxation when working overseas

Postby luckycricket » Thu, 13 Dec 2018 9:05 am

It is very simple.. If you are Singapore citizen, your residential status does not matter.. you have to pay residential rate on all your income in Singapore. If you were non-resident in a tax year then you don't have to declare your earning in the foreign country while filing your income tax in Singapore (declare only Singapore income) and file the foreign country's income tax in that country. If you were working outside on short assignments only and were resident of Singapore then you need to declare all your income from these assignments along with your Singapore income while filing your income tax here in Singapore. Things might change if Singapore has DTA with the other country.

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Re: Taxation when working overseas

Postby Strong Eagle » Thu, 13 Dec 2018 12:18 pm

luckycricket wrote:It is very simple.. If you are Singapore citizen, your residential status does not matter.. you have to pay residential rate on all your income in Singapore. If you were non-resident in a tax year then you don't have to declare your earning in the foreign country while filing your income tax in Singapore (declare only Singapore income) and file the foreign country's income tax in that country. If you were working outside on short assignments only and were resident of Singapore then you need to declare all your income from these assignments along with your Singapore income while filing your income tax here in Singapore. Things might change if Singapore has DTA with the other country.


Except, if your work for 183 days or more in just about any country, you are tax resident in that country and pay your taxes there. OP, as Singapore citizen would be treated the same as US citizen, Thai citizen if working in another country for an extended time.

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Re: Taxation when working overseas

Postby PNGMK » Thu, 13 Dec 2018 1:37 pm

So we are back to the nub of the matter; can the OP have his employer pay him outside Singapore from a none Singapore entity? If so, no Singapore tax liability in addition to a potential overseas liability on top of his Singapore liability!
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