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!! Working for overseas company as DP in SG!

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Sana1988
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!! Working for overseas company as DP in SG!

Post by Sana1988 » Sat, 21 Nov 2020 5:00 am

Hello!

My husband and I are moving to Singapore in a few months. He has a EP, while I will have an DP. We are both US citizens. I will continue working for my US based employer - with no presence/ business activities/ registration from home, while in Singapore.

I am hoping to get your thoughts/ clarity on some of my concerns/ questions beow:
1. Am I allowed to work for an overseas company as a DP? Based on what I read, Yes, I can - however, I cannot find this information on the MOM website. Does anyone have a link? or an email address for MOM?

2. Since I will be in SG, I will be a tax resident. What kind of income tax will I be paying to SG?

3. What will my employment look like in the US? Will I still be using a w2, and paying income tax there as well? I dont want to be paying income tax in both the US and SG.

Thanks in Advanced!

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malcontent
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Re: !! Working for overseas company as DP in SG!

Post by malcontent » 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. [Edit: you may be exempt in certain circumstances, as mentioned by the posters below; a check with MOM can never hurt too, just to be sure]

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.

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.
Last edited by malcontent on Mon, 23 Nov 2020 2:47 pm, edited 1 time in total.

Myasis Dragon
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Re: !! Working for overseas company as DP in SG!

Post by Myasis Dragon » Mon, 23 Nov 2020 12:16 am

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.

Wong_Jnr
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Re: !! Working for overseas company as DP in SG!

Post by Wong_Jnr » Mon, 23 Nov 2020 11:14 am

Myasis Dragon wrote:
Mon, 23 Nov 2020 12:16 am
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.
This is not fully correct as you don't have to work for the Singapore company.
When we first arrived here my wife still worked for the EMEA part of a large multinational who have a registered office and presence here and she did not require any form of permission or work permit. She was still getting paid by EMEA and receiving no income from the Singapore entity.
The only caveats that she had to fulfill was that she was not allowed to go into the Singapore office or deal with any clients who had Singapore presence. This was confirmed with MOMs by both the company she worked for and the company I worked for.

To be totally safe have a conversation with MOMs. They are very approachable.

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malcontent
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Re: !! Working for overseas company as DP in SG!

Post by malcontent » Mon, 23 Nov 2020 11:43 am

Myasis Dragon wrote:
Mon, 23 Nov 2020 12:16 am
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.
Agree with the points Myasis made.

An additional point worth noting on the 330 day rule, it’s not 330 days in a tax year, but any 12 month period which can span across part of a tax year and part of the prior or following year. Your exclusion will then be prorated according to how many days in the 12 month period fell within the tax year. In other words, you won’t get penalized just because you couldn’t meet the 330 days by the end of your first tax year.

One other small detail about the 330 days, in addition to being outside the US, you must also be in foreign country or countries. For example, days spent aboard a cruise over international waters do not count as foreign presence toward the 330 day requirement.

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