Opening online store while on EP

[MariaT]

Hi guys,

I hope you will help me with my question.
I'm on EP here in Singapore and have an amazing corporate job. But during the weekend I like to bake and, thus, want to open my online store selling a few cupcakes and sweets.

Am I allowed to do so according to the MOM rules? Do I have to set up a sole proprietorship?

To be honest, I could go ahead and just open a store within a day, but just want to be clear whether it's legally ok to do so.

Your help and advice will be greatly appreciated.

[sundaymorningstaple]

The quickest and easiest answer is NO. It is illegal for work pass holders (EP, S & WP) are not allowed to engage in any other business as long as they are on a work pass sponsored by another employer in Singapore. This includes part time business as well.

[MariaT]

The quickest and easiest answer is NO. It is illegal for work pass holders (EP, S & WP) are not allowed to engage in any other business as long as they are on a work pass sponsored by another employer in Singapore. This includes part time business as well.

So what about working for business outside then? If I open a shop and start selling postcards worldwide? Or, I register business in another country and support it with some activities while being in SG?

[PNGMK]

Whatever Maria. Enjoy losing your EP.

[Myasis Dragon]

The quickest and easiest answer is NO. It is illegal for work pass holders (EP, S & WP) are not allowed to engage in any other business as long as they are on a work pass sponsored by another employer in Singapore. This includes part time business as well.

So what about working for business outside then? If I open a shop and start selling postcards worldwide? Or, I register business in another country and support it with some activities while being in SG?

There are two things you must consider. First, as SMS stated, the government prohibits secondary employment on every kind of work pass. Now, we also all know that a work pass is not required for a DP or similar if the work they are doing is for a business that has no presence and no sales in Singapore. So, the question is: While you are technically correct that you could start up and/or work for a foreign business, do you really want to find out what MoM thinks about this when you are on a work pass?

And second, most employment contracts in Singapore (and elsewhere) prohibit secondary employment without the express written consent of your employer. They want you to put your time in with them, not somewhere else.

Clearly, if you want to work for the foreign company, you probably can. But don't forget that you must file taxes for income earned for that work as a sole proprietor. So, flying under the radar may be difficult because IRAS is going to get both your IR8A and your business return. And only you know what your employer will think of the situation.

[MariaT]

I have studied every possible thread here regarding this topic since yesterday, and there is a lot of confusion since nobody seems to give an accurate information.

The cupcake idea in Singapore seems to be not very feasible while I'm on EP unless I start my own company BUT I have been also thinking to open a small digital online and see a few posters I have created once worldwide.

And here the problem comes in. Of course, I will pay taxes in my native country, but would it be okay with SG?

One guy here researched whether he can do CPS Marketing for the foreign clients, and he confirmed it with MOM. This was his response:
"MoM has confirmed that it is ok to do CPA Marketing especially if the Sales are made out of Singapore.

If you are doing CPA Marketing for Singapore market only, then it can be taxed"

My company is okay for me to have a side project, I have indicated it long time before. The question is would it be okay if I have an online store that sells an item I created long time ago? What happens to people who had this type of small business and moved to Singapore?

It seems like a grey area....

[MariaT]

The quickest and easiest answer is NO. It is illegal for work pass holders (EP, S & WP) are not allowed to engage in any other business as long as they are on a work pass sponsored by another employer in Singapore. This includes part time business as well.

So what about working for business outside then? If I open a shop and start selling postcards worldwide? Or, I register business in another country and support it with some activities while being in SG?

There are two things you must consider. First, as SMS stated, the government prohibits secondary employment on every kind of work pass. Now, we also all know that a work pass is not required for a DP or similar if the work they are doing is for a business that has no presence and no sales in Singapore. So, the question is: While you are technically correct that you could start up and/or work for a foreign business, do you really want to find out what MoM thinks about this when you are on a work pass?

And second, most employment contracts in Singapore (and elsewhere) prohibit secondary employment without the express written consent of your employer. They want you to put your time in with them, not somewhere else.

Clearly, if you want to work for the foreign company, you probably can. But don't forget that you must file taxes for income earned for that work as a sole proprietor. So, flying under the radar may be difficult because IRAS is going to get both your IR8A and your business return. And only you know what your employer will think of the situation.

On your last point regarding the taxes, why would MOM care is I fill in my taxes in my native country since the income would come to my bank account back home?

[sundaymorningstaple]

Because your income is taxable in the country the work is performed in. The fact that a server might be in another country is immaterial. Lot's of MNCs here use servers located in their home countries. So the location of the hosting server is immaterial. Where the data is input from is where the work is performed. Therefore that income regardless of where the money is banked in is still taxable to where the work is performed, not where the money is deposited.

This has been discussed repeatedly for years on this board. Complete with replies by the IRAS regarding same.

[x9200]

On your last point regarding the taxes, why would MOM care is I fill in my taxes in my native country since the income would come to my bank account back home?

MOM probably wouldn't care about this part but IRAS may. Look at it from this angle: regardless where the server is you use Singapore services and infrastructure to obtain your income. This is not only technical. For example, the police takes care of your safety, you walk on pavements, enjoy your time in parks, ride cheaper on public transport etc etc. This is what the taxes are all about.

[MariaT]

Because your income is taxable in the country the work is performed in. The fact that a server might be in another country is immaterial. Lot's of MNCs here use servers located in their home countries. So the location of the hosting server is immaterial. Where the data is input from is where the work is performed. Therefore that income regardless of where the money is banked in is still taxable to where the work is performed, not where the money is deposited.

This has been discussed repeatedly for years on this board. Complete with replies by the IRAS regarding same.

Then why MoM has confirmed to others that it is ok to do CPA Marketing especially if the Sales are made out of Singapore?

[x9200]

Because your income is taxable in the country the work is performed in. The fact that a server might be in another country is immaterial. Lot's of MNCs here use servers located in their home countries. So the location of the hosting server is immaterial. Where the data is input from is where the work is performed. Therefore that income regardless of where the money is banked in is still taxable to where the work is performed, not where the money is deposited.

This has been discussed repeatedly for years on this board. Complete with replies by the IRAS regarding same.

Then why MoM has confirmed to others that it is ok to do CPA Marketing especially if the Sales are made out of Singapore?

MoM confirmed it is ok not to pay taxes with such arrangement?
Could you please provide a reference?

[Myasis Dragon]

So what about working for business outside then? If I open a shop and start selling postcards worldwide? Or, I register business in another country and support it with some activities while being in SG?

There are two things you must consider. First, as SMS stated, the government prohibits secondary employment on every kind of work pass. Now, we also all know that a work pass is not required for a DP or similar if the work they are doing is for a business that has no presence and no sales in Singapore. So, the question is: While you are technically correct that you could start up and/or work for a foreign business, do you really want to find out what MoM thinks about this when you are on a work pass?

And second, most employment contracts in Singapore (and elsewhere) prohibit secondary employment without the express written consent of your employer. They want you to put your time in with them, not somewhere else.

Clearly, if you want to work for the foreign company, you probably can. But don't forget that you must file taxes for income earned for that work as a sole proprietor. So, flying under the radar may be difficult because IRAS is going to get both your IR8A and your business return. And only you know what your employer will think of the situation.

On your last point regarding the taxes, why would MOM care is I fill in my taxes in my native country since the income would come to my bank account back home?

Because, by international tax treaty, and with only a few exceptions, personal income taxes are paid in the country of the taxpayer's residence. If you have an EP in Singapore, you are considered to be tax resident in Singapore. Your failure to pay income tax in Singapore on money you earned while resident in Singapore, would be a criminal act.

The tax laws are clear. You can be using a server in Brazil to create content for delivery to a client in Romania. You can get paid in Thai Baht into a bank in Japan. None of this matters because you are performing the work while living in Singapore. And it doesn't matter what kind of work it is. Check with IRAS. And again, because you are collecting income from self employment you must file as an unregistered sole proprietorship. Ask IRAS.

I will repeat it again. While resident in Singapore, you can work for any company in the world that has no presence in Singapore and that provides no goods or services to Singapore and you do not need to get a work permit to work for that company. You could form your own company as well, in Malaysia for example, and work for it, so long as the no presence rule in Singapore is adhered to.

There have been lots of posts over the years by people on dependent passes that have done exactly this. A trailing spouse comes over from the USA and continues to work as a remote accountant for the company that she worked for in the USA. No problem.

And now to you. The kind of work does not matter at all. You keep bringing up CPA or CPS Marketing as though this is some kind of special work that gets special treatment. You can be a marketing specialist, an accountant, an engineer, an artist... nobody cares.

Second, I believe that you can start up and run your offshore business as described above. Maybe MoM will never catch on. Maybe IRAS will never find out because, after all, you are on the honor system to report foreign earned income. And if you do report your income maybe MoM will never look at IRAS records. And maybe, even if they do, they won't care.

But, I would never give you the advice that you should do this while on an EP. There is substantial risk. You have your EP at the pleasure of the Singapore government, and frankly, you're just one more imported round peg to slide into a Singapore round hole job to MoM. If they don't like what you are doing they will simply pull your EP and tell you to piss off. There are plenty more wanting to fill your job in Singapore. And I would never tell you to not report your income and pay your taxes. That is flat out criminal, even if they cannot easily track you down.

So... you decide. Is your part time job that important to you that you will risk your EP? If it is that important, then I have laid out the mechanics of what you need to do. And you know... if you don't like the answers you are getting here, call MoM. Tell them what you want to do. Then tell us what the answer is.

Cheers.

[Myasis Dragon]

Then why MoM has confirmed to others that it is ok to do CPA Marketing especially if the Sales are made out of Singapore?

MoM has nothing to do with taxation. And MoM absolutely will not let you work in Singapore for anything sold in Singapore.

If you email MoM and tell them what you want to do and that you are on EP, and, you get an email back saying that it is OK, then you are home free. Go for it.

But, until you get that express permission from MoM, you are at risk.

[MariaT]

Because your income is taxable in the country the work is performed in. The fact that a server might be in another country is immaterial. Lot's of MNCs here use servers located in their home countries. So the location of the hosting server is immaterial. Where the data is input from is where the work is performed. Therefore that income regardless of where the money is banked in is still taxable to where the work is performed, not where the money is deposited.

This has been discussed repeatedly for years on this board. Complete with replies by the IRAS regarding same.

Then why MoM has confirmed to others that it is ok to do CPA Marketing especially if the Sales are made out of Singapore?

MoM confirmed it is ok not to pay taxes with such arrangement?
Could you please provide a reference?

There is another thread here, and yes, one person called MOM and they confirmed. So, he was going to pay tax in his home country where he would get his money

[MariaT]

There are two things you must consider. First, as SMS stated, the government prohibits secondary employment on every kind of work pass. Now, we also all know that a work pass is not required for a DP or similar if the work they are doing is for a business that has no presence and no sales in Singapore. So, the question is: While you are technically correct that you could start up and/or work for a foreign business, do you really want to find out what MoM thinks about this when you are on a work pass?

And second, most employment contracts in Singapore (and elsewhere) prohibit secondary employment without the express written consent of your employer. They want you to put your time in with them, not somewhere else.

Clearly, if you want to work for the foreign company, you probably can. But don't forget that you must file taxes for income earned for that work as a sole proprietor. So, flying under the radar may be difficult because IRAS is going to get both your IR8A and your business return. And only you know what your employer will think of the situation.

On your last point regarding the taxes, why would MOM care is I fill in my taxes in my native country since the income would come to my bank account back home?

Because, by international tax treaty, and with only a few exceptions, personal income taxes are paid in the country of the taxpayer's residence. If you have an EP in Singapore, you are considered to be tax resident in Singapore. Your failure to pay income tax in Singapore on money you earned while resident in Singapore, would be a criminal act.

The tax laws are clear. You can be using a server in Brazil to create content for delivery to a client in Romania. You can get paid in Thai Baht into a bank in Japan. None of this matters because you are performing the work while living in Singapore. And it doesn't matter what kind of work it is. Check with IRAS. And again, because you are collecting income from self employment you must file as an unregistered sole proprietorship. Ask IRAS.

I will repeat it again. While resident in Singapore, you can work for any company in the world that has no presence in Singapore and that provides no goods or services to Singapore and you do not need to get a work permit to work for that company. You could form your own company as well, in Malaysia for example, and work for it, so long as the no presence rule in Singapore is adhered to.

There have been lots of posts over the years by people on dependent passes that have done exactly this. A trailing spouse comes over from the USA and continues to work as a remote accountant for the company that she worked for in the USA. No problem.

And now to you. The kind of work does not matter at all. You keep bringing up CPA or CPS Marketing as though this is some kind of special work that gets special treatment. You can be a marketing specialist, an accountant, an engineer, an artist... nobody cares.

Second, I believe that you can start up and run your offshore business as described above. Maybe MoM will never catch on. Maybe IRAS will never find out because, after all, you are on the honor system to report foreign earned income. And if you do report your income maybe MoM will never look at IRAS records. And maybe, even if they do, they won't care.

But, I would never give you the advice that you should do this while on an EP. There is substantial risk. You have your EP at the pleasure of the Singapore government, and frankly, you're just one more imported round peg to slide into a Singapore round hole job to MoM. If they don't like what you are doing they will simply pull your EP and tell you to piss off. There are plenty more wanting to fill your job in Singapore. And I would never tell you to not report your income and pay your taxes. That is flat out criminal, even if they cannot easily track you down.

So... you decide. Is your part time job that important to you that you will risk your EP? If it is that important, then I have laid out the mechanics of what you need to do. And you know... if you don't like the answers you are getting here, call MoM. Tell them what you want to do. Then tell us what the answer is.

Cheers.

Hey Myasis, thanks for your extensive feedback.
So, you mentioned the following:
"I will repeat it again. While resident in Singapore, you can work for any company in the world that has no presence in Singapore and that provides no goods or services to Singapore and you do not need to get a work permit to work for that company. You could form your own company as well, in Malaysia for example, and work for it, so long as the no presence rule in Singapore is adhered to.

There have been lots of posts over the years by people on dependent passes that have done exactly this. A trailing spouse comes over from the USA and continues to work as a remote accountant for the company that she worked for in the USA. No problem"

I know a few people like this as well. How are they different from me then? They are residents in Singapore and they work for the company outside. They get salaries, and I know they pay taxes in their home countries in such cases.

I just checked the IRAS website:
"BACK TO TOP
Overseas Income
Generally, overseas income received in Singapore on or after 1 Jan 2004 is not taxable. These include overseas income paid into a Singapore bank account.

You do not need to declare overseas income that is not taxable"