You've made some incorrect and confusing statements.
malcontent wrote: ↑Sun, 22 Nov 2020 8:20 pm
It’s an interesting question. I think there are multiple ways to approach this with varying sets of risks. I assume you are asking about the lowest risk approach, which is everything in black & white, completely above board.
Let me start off with three assertions which I believe to be correct —
First, a DP does not give you the right to work while you are in Singapore, no matter what the capacity or the employer. Permission to work under a DP must be requested either by the employer sponsoring the EP or the company/agency employing you.
No. Not true. What this really means: You cannot work for a Singapore registered company without a work permit... employment pass, S-Pass, or work pass. You cannot run your own business supplying goods or services in Singapore without a company and a work permit.
Do you see that the whole point of the work pass process is to ensure that foreigners don't take jobs from Singaporeans in Singapore?
Reality: As a legal resident in Singapore (DP, LTVP), you can work for any company in the world, without any type of Singapore work permit, so long two conditions are met.
First, the company must have no legal presence in Singapore, otherwise you would need a work permit to work for that legal presence in Singapore. And second, the company must not offer goods or services in Singapore, otherwise, it would be required to form a legal entity, then obtain a work permit for you.
Do you see why this is allowed? Because you are not impacting any local jobs when you work for a foreign company with no presence in Singapore; hence, no need for a work permit.
Second, company presence here has no bearing on your income tax liability in Singapore. The income will almost certainly be taxable in Singapore, but that is not necessarily a bad thing since income tax rates are lower here than in the US.
As a legal Singapore resident, you are also resident for tax purposes. It doesn't matter where your source of income is located, nor the currency you are paid in, nor the bank into which you are paid, nor where the bank is located.
You will file a tax return as a sole proprietor, and pay Singapore taxes based upon your earnings. Singapore will have no way of verifying your foreign earnings; since you are being issued a W2, you can use it as proof (but are not required to do so). You'll generally apply a single conversion factor for the entire year when expressing your US dollar earnings in Singapore dollars.
Third, as a US citizen, your worldwide income is subject to US income tax no matter where you live. However, between the foreign earned income exclusion, foreign housing exclusion and the foreign tax credit, you will probably owe no US taxes, and even if you do, your combined SG+US taxes won’t more than you pay today in the US.
The foreign earned income exclusion for 2021 is $108,700. Earned income up to this amount is excluded from tax so long as you are out of the USA for 330 days per year. You will still pay income tax on your dividends, rents, and other unearned income at a tax rate as though your income were not excluded.
If you do earn more than the earned income exclusion, then you will pay income tax to both Singapore and the USA on the overage amount. However, you are allowed to deduct the Singapore portion of the taxes on the overage as a credit against your USA taxes, so you are not really being double taxed, rather, being taxed at the US rate as opposed to the Singapore rate.
Since you are a US citizen and working for a US company, you will get a W2, and you must also pay social security and medicare taxes on everything you earn. You can fill out a W4 with 99 deductions to reduce your income tax withholding.
