Surely any application for an Employment Pass is an attempt to procure an Employment Pass?Otherwise it will be seen for what it is; am attempt to procure an EP.
Thank you. So it seems like something similar was possible, but not sure if it is anymore. If I apply to the MoM I will let the forum know how things went. I'm going to do more research myself first to try and make sure it is feasible before I apply. Thanks alot.
Wow thanks very helpful, and good to know.PNGMK wrote: ↑Mon, 22 Feb 2021 11:51 amYes, good luck. For what it's worth I just realized I still have an Aussie friend here who uses this to keep an EP (his primary income is from leased farm land).
He would have set this up back in 2007 I think. He has a business degree (like I do) and probably had it nailed down paperwise.
Which is always appreciated, so I thank you very much for your detailed reply, I was hoping you would see this post.
No, after last discussing the issue with yourself on this notice board, I never wound up taking any money out of the company in any form. It was only a small profit that year, so after considering everything it made sense to leave the money in the company. But after our past conversation and my own research, it was fairly clear that if I paid myself anything as a non-resident it would have to be declared as a director fee and tax withheld at 22%, I had no interest in doing anything dodgy.Myasis Dragon wrote: ↑Thu, 25 Feb 2021 5:25 amYou mention that you are aware that non-resident directors are subject to a 22 percent withholding tax. Have you actually paid yourself anything as the non-resident director?
This makes perfect sense, and this is how I will frame my application, thank you for the suggestion.Myasis Dragon wrote: ↑Thu, 25 Feb 2021 5:25 amMy view is that you want to position yourself as making a move to Singapore in order to hands on manage a small company that has been profitable for 5 years, and take it to the next level. This is the best light in which to cast your EP application; take a successful Singapore company and run it locally in order to expand its revenues.
This would be a short period of time, 1-2 years. I don't have bottomless pockets, within that 1-2 years I either need to:Myasis Dragon wrote: ↑Thu, 25 Feb 2021 5:25 amIRAS is probably not going to care if your company is loss making for at least one or two years, maybe three, even, because, you’ve come to Singapore to grow it and profits are not expected immediately. If you’re injecting money into the company then it has to be a loan from a director (even though you are also a shareholder), or it has to be in the sale of more shares of stock. I have no inside information regarding this, and, I would be very surprised if IRAS didn’t red flag something like this, not because they give a shit about your circumstances but because loaning money in and taking it back out as expenses is a great way to launder money.
Doing this over anything other than a short period of time is going to create all kinds of bizarre situations on your financial statements.
Myasis Dragon wrote: ↑Thu, 25 Feb 2021 5:25 amTaxes are so much fluff in this whole conversation. You’re EP status isn’t going to be determined by how much tax you did or didn’t pay. Yes, your salary reduces your corporate profits and so you pay taxes on your salary and not on your corporate profits. Within a few percentage points, it’s a wash.
Myasis Dragon wrote: ↑Thu, 25 Feb 2021 5:25 amWhat will raise flags is to pay yourself dividends as a shareholder, but not pay yourself a salary... this is personal income tax avoidance. But, since you’re loss making, you can’t pay dividends out of paid up capital anyway… although, I _think_ that you can pay them out of a loan.
Thank you, this is very helpful and encouraging. My fault, I should have clarified that this scenario was only for 1-2 years until either the company could generate enough profits to justify the salary, or my wife secures a decent job where I can apply for a dependent pass off her EP, or we just leave Singapore. It was never intended as a long term solution, I should have been clearer.Myasis Dragon wrote: ↑Thu, 25 Feb 2021 5:25 amBottom line: If your resident director is willing to do the work to get the necessary documents to MoM for evaluation, I think you have a pretty good shot at getting an EP. But, I don’t think your idea of indefinite funding while loss making is going to work for very long.
Thank you, I will keep his details on file and if I decide that doing it myself (with the local director) is too difficult and I need professional help, I will reach out to him. Appreciate you giving me the contact. Have a great day!PNGMK wrote: ↑Mon, 01 Mar 2021 10:40 amNarcisse, I have a CPA who sets my stuff up if you need help and he was experience in drafting plans and getting EPs for these type of ventures. Not to push business his way, but he is pretty good and is an actual CPA as opposed to a book keeper (but not the cheapest).
There is no time limit to repayment of loans by a director made into the company. This is a common way to fund a company and is an alternative to taking an equity position. So, the company might never pay the loan back for years and years, if ever.
It's not only if you are non-resident, the same thing applies to resident company owners. In Singapore, dividends are not taxed on your personal income return.This isn't significant in this case, as I only have interest in paying a salary to obtain an EP. But I'm guessing what you are saying is that if in the past the company has chosen to pay dividends instead of a salary to a non-resident director (which would have had tax withheld at 22% as a director fee), then it is not illegal (tax evasion), but looks like tax avoidance, which raises red flags and would make the EP application more likely to be rejected. I seem to remember another post (to another OP) where you wrote something along the lines of "that form of tax avoidance was legal, yes, and you had the right to do it, just like they have the right to tell you to p!ss off when you apply for an EP." I'm guessing this is what you are saying here too?
Thank you, this was my understanding and it is how I have funded the company. I misinterpreted your post and started to worry that there was a time limit to repay the loan. Crystal clear now.Myasis Dragon wrote: ↑Tue, 02 Mar 2021 5:21 am
There is no time limit to repayment of loans by a director made into the company. This is a common way to fund a company and is an alternative to taking an equity position. So, the company might never pay the loan back for years and years, if ever.
No intention of ever taking a loan from the company, but thanks for the information.Myasis Dragon wrote: ↑Tue, 02 Mar 2021 5:21 am
But a loan to a director from the company is different. It's a scam way to compensate the director in lieu of salary or fees and it avoids tax (and if you're a Singapore citizen or PR, it also avoids CPF payments). Therefore, these loans are more closely scrutinized, and I don't know all the details, but if you have a lot of loans to directors hanging on the books for a long time, it might set off a red flag or two at IRAS.
Ah, I understand now. Nope, no intention of every doing anything like that. Our first 3 years has passed, I was very grateful for the tax exemptions for new start ups, but left all the money in the company, so we could re-invest in the company, and didn't pay any dividends.Myasis Dragon wrote: ↑Tue, 02 Mar 2021 5:21 am
So, the game is this. You own the company. You don't pay yourself a salary. Because you don't pay yourself a salary, the company makes $100,000 in profit, which is not taxable. So, you issue yourself $100,000 in dividends which attracts no tax on your personal return, and shazam!, you haven't paid any tax at all.
Understood. I wouldn't be doing anything like this. Would be paying myself a salary that has to be fairly high to qualify for the EP, and paying full income tax as a Singapore tax resident on that salary. As we already discussed, the extra personal income tax being paid would probably roughly cancel out with the less corporate tax being paid due to more expenses (salary). But I'm not concerned about small differences.Myasis Dragon wrote: ↑Tue, 02 Mar 2021 5:21 am
Second thing: If you're on EP or PR (and this is anecdotal on my part), you risk your pass by not paying tax. I am aware of a Brit (if I don't have CRS syndrome) who did exactly as stated above. When it came time for is PR REP to be renewed, it wasn't. Now, he may have been a shit in other ways, but he did brag about how clever he was, tax wise.
There are circumstances where such loans make sense. For example, you wish to send an executive to some area of the country that doesn't have housing equivalent to what he had where he previously was.
Understood, I didn't mean to give the impression I thought it was dodgy, just indicating that we didn't have a need for this type of loan in the near future for our circumstances.Myasis Dragon wrote: ↑Wed, 03 Mar 2021 1:04 am
There are circumstances where such loans make sense. For example, you wish to send an executive to some area of the country that doesn't have housing equivalent to what he had where he previously was.
Users browsing this forum: No registered users and 5 guests