Working freelance in Singapore

[tiktok]

Thanks to both your explanations, I now see that my original suggestions to the OP re tax are wrong. I apologise for any confusion caused.

Yes MD, those 3 conditions did apply to me when I lived in HK. I might well be a fool for misinterpreting the available gov information here, but then so are several other people I know. No SMS, they are not my friends, because I don't have any.

However I'd be a greater fool for accepting advice verbatim from random internet users who back up their statements with no more than "because I say so". MD and SMS obviously have a huge amount of knowledge and experience. But how the hell is anyone supposed to know that.

The relevant part the the Singapore Income Tax act seems to be:

Employment exercised in Singapore
(4) The gains or profits from any employment exercised in Singapore shall be deemed to be derived from Singapore whether the gains or profits from such employment are received in Singapore or not.

This reads like it was written before the internet age. There might be a legal argument to be made about "exercising employment" as it relates to piece work done for a foreign entity, under an offshore contract, on offshore servers, with income received offshore. But I'm not a lawyer.

[PNGMK]

For what it's worth I have been in a situation with four different sources of income this year that high light the differences:

1. Regular employment income from a Singapore registered entity - they will file an IR8A and the income declared and tax assessed by IRAS. No brainer (use SRS, CPF contributions and all allowable deductions to reduce tax).

2. Contractual income to a UAE entity while working in a Singapore shipyard. My CPA advises that this is income derived in Singapore and should be declared for YA 2021. Additional tax deductions possible include things such as working clothes that I needed for the job. This money never hit a Singapore bank account but I am advised not to attempt to hide the income!

3. Contractual income to a UAE entity while working in Taiwan waters on a ship. My CPA advises that PROVIDED I can prove this is a separate contract to item 2 (which it is) the entire income earned while offshore is tax free (for Singapore).

4. Contractual income to a UK entity while WFH in Singapore. This is as per item 2 (tax liable) EXCEPT as my CPA reminded me I can claim a rebate for days outside Singapore as the UK entity does no trade in Singapore. There is a specific page on IRAS that explains this somewhere.

Hope this help... remember:

"Income earned from services rendered in Singapore is taxable. This also applies to those working for foreign employers."

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

[Myasis Dragon]

The relevant part the the Singapore Income Tax act seems to be:

Employment exercised in Singapore
(4) The gains or profits from any employment exercised in Singapore shall be deemed to be derived from Singapore whether the gains or profits from such employment are received in Singapore or not.

This reads like it was written before the internet age. There might be a legal argument to be made about "exercising employment" as it relates to piece work done for a foreign entity, under an offshore contract, on offshore servers, with income received offshore. But I'm not a lawyer.

It is completely relevant to the internet age, although it was written prior to the internet. But the terms are clear and applicable to the internet as well.

a) "employment exercised in Singapore" - There is no "legal argument to be made" about piece work for a foreign entity. The law is clear. As I've previously noted and documented via IRAS links, if you live and/or work in Singapore, you are tax resident in Singapore. Period. End. Therefore, if you are performing work while living in Singapore it is "employment exercised in Singapore". Period. End.

Therefore, if you are an eBay trader, buying crap in China, forwarding it to a fulfillment center in India, selling it on an eBay website in the USA, and depositing your funds into a Hong Kong bank, if you are doing all of this while sitting in your HDB flat in Singapore, this is "employment exercised in Singapore". Period. End.

Therefore, if you are a lawyer, processing contract claims for a company in Thailand, from the comfort of your Marina Bay high rise, and paid into your Malaysian bank account, this is "employment exercised in Singapore". Period. End.

Therefore, if you are a bag lady, living under the Newton flyover, making sandals out of old tires, and exporting them to a Myanmar company who resells them in Rangoon, this is "employment exercised in Singapore".

For emphasis: If you live in Singapore and you receive income for doing work for someone else (foreign or domestic) that income is taxable in Singapore. Period. End.

b) "whether the gains or profits from such employment are received in Singapore or not" - This phrase exists precisely for clarity. Some folks try to claim that they didn't exercise employment in Singapore because they didn't get paid in Singapore. This phrase says it doesn't matter where you decide to get paid. Think about it. You get paid into a Hong Kong bank account, then later transfer your funds into your Singapore bank account. There is no difference between that and getting paid directly into your Singapore bank account.

Read PNKMK's excellent post. It supports everything that SMS and I have said regarding tax residency. It also shows you that unless you have a bog standard situation, you need to contact a CPA for any unusual circumstances that may be affected by tax rulings and tax treaties.

It really is simple. If you work here, you pay here. If you work there, you pay there. "Here" and "There" is where you live and work.

[Ursula#]

Hi Everyone,

I came across this fascinating thread but ... I wanted to ask in case things have changed in SG from the time that conversation started.

I will be relocating from EU to SG, my husband is SG citizen and will be taking on new job back home.

May I ask if you know if I can work remotely from SG, providing services in the EU. I am totally ok with paying taxes in SG as I will become tax resident there.

I am not sure if I need to apply for work permit in SG then?

One solution I came across is setting up a company in SG but even at that I am not sure if as a director I can work? .... so confusing

Would anyone know what is the contact email for Ministry of Employment? I cannot find it anywhere on their website

Any guidance would be much appreciated

Thank you!
Kind regards
U

[PNGMK]

Hi Everyone,

I came across this fascinating thread but ... I wanted to ask in case things have changed in SG from the time that conversation started.

I will be relocating from EU to SG, my husband is SG citizen and will be taking on new job back home.

May I ask if you know if I can work remotely from SG, providing services in the EU. I am totally ok with paying taxes in SG as I will become tax resident there.

I am not sure if I need to apply for work permit in SG then?

One solution I came across is setting up a company in SG but even at that I am not sure if as a director I can work? .... so confusing

Would anyone know what is the contact email for Ministry of Employment? I cannot find it anywhere on their website

Any guidance would be much appreciated

Thank you!
Kind regards
U

You can work in this situation as a LTVP (like a spouse visa) and then eventually under PR (if you become one) without approval as you are not displacing a local. The ministries you need to know are:

ICA (Immigration for the LTVP)
MOM (manpower for rules on working)
IRAS (for taxes).

You don't need a company. Just ask the EU company to pay you directly into a Singapore bank account without withholding EU tax (they should also, IMO, execute a new employment contract so it is clear you are no longer resident in the EU to avoid EU tax issues). At the end of the tax year (by April 15) file your taxes in Singapore and declare the income - IRAS will then send you a bill.

This is becoming a fairly common situation now in Singapore and you will find the various govt ministries under it quite well.

[Myasis Dragon]

1. The company in the EU that you will work must have no legal presence in Singapore, and cannot provide goods or services in Singapore.
   
   1. Example 1: The company you work for in the EU provides accounting services for clients exclusively located in the EU. You can work remotely for this company while living in Singapore without the need for a work permit.
   2. Example 2: The company you work for in the EU but also has a legal business entity in Singapore. You cannot work for the EU company, you must work for the Singapore entity and that will require a work permit.
   3. Example 3: The company has no legal presence in Singapore but is going to use you to service clients that it picked up in Singapore. You cannot work for the EU company. The EU company must setup a Singapore legal entity and that entity will apply for a work pass for you.
2. It does not matter into which bank (or which country in which the bank is located), nor does it matter what currency you are paid in. If you hold an LTVP and are considered resident, then you are also resident for tax purposes, no matter how you are paid.
3. If you use your own name exclusively for all transactions, then you do not need to registered a business (probably a sole proprietorship) because using your name only is considered to be an unregistered sole proprietorship. So, if you are paid as "Tammy Adams", then you do not need to register, and you can deposit the check into your personal account. But, if you are paid as "Tammy Adams Consulting" then you must register a business and open a commercial bank account to cash checks that are styled in that manner.
4. It used to be that you had to fill out a sole proprietorship tax form when self employed, including income, expenses, etc. I believe this has been substantially modified for smaller total incomes, such that about the only thing you have to report is how much you made from self employment.
5. You should verify the particulars of any tax treaty between Singapore and your EU country, with an eye to avoiding the possibility of double taxation.

[Mangollama]

Question re: double taxation. Working remotely for US company and will be taxed by federal and state (greater than 20%). I saw in the IRAS tax guide that I could possibly file a tax exemption if I pay >15% elsewhere? Or did I (most likely) interpret that wrong?

[Myasis Dragon]

Question re: double taxation. Working remotely for US company and will be taxed by federal and state (greater than 20%). I saw in the IRAS tax guide that I could possibly file a tax exemption if I pay >15% elsewhere? Or did I (most likely) interpret that wrong?

Permit me to preface my remarks by saying that you need to contact a US based CPA familiar with earning a salary while abroad... there are a lot of arcane things to consider. If you need a recommendation, contact me.

I'm pretty sure that you read that wrong. If you are living in Singapore, you are Singapore tax resident. Singapore does not have a tax treaty with the USA. Therefore, you pay your taxes in Singapore. Because there is no tax treaty.

However, the USA IRS should grant you double taxation relief. First of all, you should qualify for the foreign earned income exclusion. You have a bona fide residence overseas, and are tax resident in Singapore. I don't think it matters that you are being paid by a US company in US dollars into a US bank account... you still qualify for the exclusion.

https://www.irs.gov/individuals/interna ... ned-income

For 2022, the exclusion amount is $112,000. Note that you must still pay taxes on unearned income at the rate as though the exclusion were not in place.

If, for some reason, you exceed the foreign earned income exclusion and therefore, must pay tax to both Singapore and the USA, you can take a dollar for dollar tax credit on your USA taxes for every dollar paid in Singapore tax, up to your total US tax liability or your Singapore tax total, whichever is smaller.

[PNGMK]

I will say this. Singapore is still one of the easiest countries tax wise to work freelance in. There is no regular reporting (as there would be in Australia on a quarterly basis) and no PAYE/PAYG tax obligation and no obligation to pay your estimated taxes up front. You merely calculate how you earned in the calendar year, add up allowable deductions and file by April 15. The burden is minimal compared to say Australia and in fact countries like Australia will not only tax you on your income earned in Australia, but your global income as well.

In terms of Visas if you are doing work that cannot be done by a Singapore physically present in Singapore you generally do not need a specialist visa or waiver on top of whatever visa you have that allows you to live here. This allows a whole realm of work possibilities to open up around content creation to offshore consulting. What you absolutely cannot do is displace a Singaporean from a job without permission (unless you are a PR).

The rules are really simple and but complicated by folks coming in who are used to more stringent systems.

[Myasis Dragon]

What you absolutely cannot do is displace a Singaporean from a job without permission (unless you are a PR).

THIS! If you want to understand the philosophical underpinnings of the entire work permit system for Singapore, it is as PNGMK stated. If the job you want to take would keep a Singaporean living in Singapore from taking the same job, then you need a work permit. Otherwise, you're good to go.

[PNGMK]

For what it's worth I have been in a situation with four different sources of income this year that high light the differences:

1. Regular employment income from a Singapore registered entity - they will file an IR8A and the income declared and tax assessed by IRAS. No brainer (use SRS, CPF contributions and all allowable deductions to reduce tax).

2. Contractual income to a UAE entity while working in a Singapore shipyard. My CPA advises that this is income derived in Singapore and should be declared for YA 2021. Additional tax deductions possible include things such as working clothes that I needed for the job. This money never hit a Singapore bank account but I am advised not to attempt to hide the income!

3. Contractual income to a UAE entity while working in Taiwan waters on a ship. My CPA advises that PROVIDED I can prove this is a separate contract to item 2 (which it is) the entire income earned while offshore is tax free (for Singapore).

4. Contractual income to a UK entity while WFH in Singapore. This is as per item 2 (tax liable) EXCEPT as my CPA reminded me I can claim a rebate for days outside Singapore as the UK entity does no trade in Singapore. There is a specific page on IRAS that explains this somewhere.

Hope this help... remember:

"Income earned from services rendered in Singapore is taxable. This also applies to those working for foreign employers."

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

I've got a 5th and 6th case.

5. Contractual income to a Singapore registered entity while in Singapore. This is obviously tax liable and I will report the income on my taxes in April. I've invoiced as an individual using my NRIC as a tax ID and we have a contract laying out the role. I particularly like this arrangement as the CPF is not withheld (although I am paying it on a VC basis) and there is no BS about medical leave or paid leave arrangements.

6. Contractual income to a Singapore registered entity while working on a voyage to Australia from Singapore while on a Singapore registered and flagged vessel. The territories transited included Commonwealth of Australia waters, Joint Petroleum Development Area in Timor-Leste's sovereign waters, Singapore waters, International waters. According to my CPA I have to declare the income for the one day we were in Singapore waters (admittedly a small area). The other 28 days I do not have to pay Singapore income tax. Interestingly enough the time spent in the Timor gap is also not taxable under Australian law and as I was not in Australian waters more than 40 days neither am I tax liable in Australian Commonwealth waters.

Honestly this one was messy and I was wondering whether a Singapore flagged vessel would somehow count as Singapore Sovereign territory but apparently not.

[Myasis Dragon]

Great stuff, PNGMK... it illuminates both how complex things can get, and the essential rule that governs personal income tax assessment... "income derived in Singapore".

[PNGMK]

For what it's worth I have been in a situation with four different sources of income this year that high light the differences:

1. Regular employment income from a Singapore registered entity - they will file an IR8A and the income declared and tax assessed by IRAS. No brainer (use SRS, CPF contributions and all allowable deductions to reduce tax).

2. Contractual income to a UAE entity while working in a Singapore shipyard. My CPA advises that this is income derived in Singapore and should be declared for YA 2021. Additional tax deductions possible include things such as working clothes that I needed for the job. This money never hit a Singapore bank account but I am advised not to attempt to hide the income!

3. Contractual income to a UAE entity while working in Taiwan waters on a ship. My CPA advises that PROVIDED I can prove this is a separate contract to item 2 (which it is) the entire income earned while offshore is tax free (for Singapore).

4. Contractual income to a UK entity while WFH in Singapore. This is as per item 2 (tax liable) EXCEPT as my CPA reminded me I can claim a rebate for days outside Singapore as the UK entity does no trade in Singapore. There is a specific page on IRAS that explains this somewhere.

Hope this help... remember:

"Income earned from services rendered in Singapore is taxable. This also applies to those working for foreign employers."

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

I've got a 5th and 6th case.

5. Contractual income to a Singapore registered entity while in Singapore. This is obviously tax liable and I will report the income on my taxes in April. I've invoiced as an individual using my NRIC as a tax ID and we have a contract laying out the role. I particularly like this arrangement as the CPF is not withheld (although I am paying it on a VC basis) and there is no BS about medical leave or paid leave arrangements.

6. Contractual income to a Singapore registered entity while working on a voyage to Australia from Singapore while on a Singapore registered and flagged vessel. The territories transited included Commonwealth of Australia waters, Joint Petroleum Development Area in Timor-Leste's sovereign waters, Singapore waters, International waters. According to my CPA I have to declare the income for the one day we were in Singapore waters (admittedly a small area). The other 28 days I do not have to pay Singapore income tax. Interestingly enough the time spent in the Timor gap is also not taxable under Australian law and as I was not in Australian waters more than 40 days neither am I tax liable in Australian Commonwealth waters.

Honestly this one was messy and I was wondering whether a Singapore flagged vessel would somehow count as Singapore Sovereign territory but apparently not.

So tax time is here. I've done my taxes. For item 1 above it was auto-included from my employer.

I had to self report income from item 2,4,5 and a portion of 6. I have a spreadsheet tracking the invoices and payments so I added it all up and converted it to SGD. I then totaled the allowed expenses (except for training courses which are recorded separately). For "self employed" income it's reported on as "Trade, Business, Profession or Vocation". You report the total sales / income (revenue) and then the adjusted profit/loss (which is your income less allowable expenses). The great thing is that if the revenue is under $500,000 you don't need to file any supporting documentation (i.e. a P&L statement or detailed list of expenses). I noticed an option to indicate "Are you the owner of the Sole-Proprietorship business registered with ACRA?" but as I am working as a self employed contractor this was not required to be ticked. One thing is you do have to indicate what nature of the business is that you earn this income from.

Once again, Singapore makes it easy for people like myself who earn income from multiple income streams. I'm expecting to add a 7th case this year which is "directors fees".

[Mangollama]

Question re: double taxation. Working remotely for US company and will be taxed by federal and state (greater than 20%). I saw in the IRAS tax guide that I could possibly file a tax exemption if I pay >15% elsewhere? Or did I (most likely) interpret that wrong?

Permit me to preface my remarks by saying that you need to contact a US based CPA familiar with earning a salary while abroad... there are a lot of arcane things to consider. If you need a recommendation, contact me.

I'm pretty sure that you read that wrong. If you are living in Singapore, you are Singapore tax resident. Singapore does not have a tax treaty with the USA. Therefore, you pay your taxes in Singapore. Because there is no tax treaty.

However, the USA IRS should grant you double taxation relief. First of all, you should qualify for the foreign earned income exclusion. You have a bona fide residence overseas, and are tax resident in Singapore. I don't think it matters that you are being paid by a US company in US dollars into a US bank account... you still qualify for the exclusion.

https://www.irs.gov/individuals/interna ... ned-income

For 2022, the exclusion amount is $112,000. Note that you must still pay taxes on unearned income at the rate as though the exclusion were not in place.

If, for some reason, you exceed the foreign earned income exclusion and therefore, must pay tax to both Singapore and the USA, you can take a dollar for dollar tax credit on your USA taxes for every dollar paid in Singapore tax, up to your total US tax liability or your Singapore tax total, whichever is smaller.

If I may ask, do you have the contact info for a US CPA?

[Myasis Dragon]

If I may ask, do you have the contact info for a US CPA?

I have private messaged you.