EP pass - Tax

[expatinsg1234]

Hi all!!!

I’ve gotten my EP pass approved recently, however, due to recent changes in plans, I will be working out of Malaysia instead. As the tax resident is defined as someone who has worked in Singapore for at least 183 days, what would be the tax implication if I will be staying in Singapore for less than 183 days?

Any advice or comment is much appreciated!!

[Myasis Dragon]

You will be paying your Singapore tax at the non-resident tax rate, which is a flat 15 percent or the resident tax rate, whichever is higher. This is for employment income while you were physically present in Singapore.

[PNGMK]

Why do you need an ep if you're based in MY?

[Siv]

You will be paying your Singapore tax at the non-resident tax rate, which is a flat 15 percent or the resident tax rate, whichever is higher. This is for employment income while you were physically present in Singapore.

I was under the impression that as an EP holder you are a tax resident by default. Was that never the case ?

[Siv]

You will be paying your Singapore tax at the non-resident tax rate, which is a flat 15 percent or the resident tax rate, whichever is higher. This is for employment income while you were physically present in Singapore.

I was under the impression that as an EP holder you are a tax resident by default. Was that never the case ?

[PNGMK]

You will be paying your Singapore tax at the non-resident tax rate, which is a flat 15 percent or the resident tax rate, whichever is higher. This is for employment income while you were physically present in Singapore.

I was under the impression that as an EP holder you are a tax resident by default. Was that never the case ?

You're correct. I think MD has missed that point. What you're going to engage in is a very common method of corporate tax fraud practiced in this region. Your employer has you on an EP so they can pay you in Singapore at a much lower tax rate than you would pay in Malaysia (the alternative being they pay you more in RM to make up for the hefty 30% tax rate in MY). They may offer to pay something in Malaysia as well (for example a housing allowance) so you look kosher to the Malaysians. Be VERY careful about this arrangement - if it goes south the penalty will be on YOU and not your employer.

I've dobbed in a boss who I hated to the MY tax authorities over this type arrangement so be careful who knows about it - it's a point of weakness and vulnerability that your competitors and colleagues may exploit. Also the MY tax dept is NOT naive.

[Siv]

You will be paying your Singapore tax at the non-resident tax rate, which is a flat 15 percent or the resident tax rate, whichever is higher. This is for employment income while you were physically present in Singapore.

I was under the impression that as an EP holder you are a tax resident by default. Was that never the case ?

You're correct. I think MD has missed that point. What you're going to engage in is a very common method of corporate tax fraud practiced in this region. Your employer has you on an EP so they can pay you in Singapore at a much lower tax rate than you would pay in Malaysia (the alternative being they pay you more in RM to make up for the hefty 30% tax rate in MY). They may offer to pay something in Malaysia as well (for example a housing allowance) so you look kosher to the Malaysians. Be VERY careful about this arrangement - if it goes south the penalty will be on YOU and not your employer.

I've dobbed in a boss who I hated to the MY tax authorities over this type arrangement so be careful who knows about it - it's a point of weakness and vulnerability that your competitors and colleagues may exploit. Also the MY tax dept is NOT naive.

Yup, thought as much.

I think, without presuming too much, that perhaps the company doesn't have a Malaysian entity, and maybe saving some cost in moving him to Singapore outright. There are companies who do this particularly for those who are live in JB, and don't have to be physically in office in SG to work.

Again, maybe OP will give a clearer picture...

[Myasis Dragon]

You will be paying your Singapore tax at the non-resident tax rate, which is a flat 15 percent or the resident tax rate, whichever is higher. This is for employment income while you were physically present in Singapore.

I was under the impression that as an EP holder you are a tax resident by default. Was that never the case ?

I see what you are saying/thinking, and that's not my reading of the IRAS regulations. An EP grants you tax residency status if issued for more than one year but, "...your tax residency status will be reviewed at the point of tax clearance when you cease your employment based on the tax residency rules. If your stay in Singapore is less than 183 days, you will be regarded as a non-resident."

https://www.iras.gov.sg/taxes/individua ... -residency

My view is that it is presumed that you will be tax resident but if you don't make the actual 183 days, your status will be changed to non resident.

[Siv]

You will be paying your Singapore tax at the non-resident tax rate, which is a flat 15 percent or the resident tax rate, whichever is higher. This is for employment income while you were physically present in Singapore.

I was under the impression that as an EP holder you are a tax resident by default. Was that never the case ?

I see what you are saying/thinking, and that's not my reading of the IRAS regulations. An EP grants you tax residency status if issued for more than one year but, "...your tax residency status will be reviewed at the point of tax clearance when you cease your employment based on the tax residency rules. If your stay in Singapore is less than 183 days, you will be regarded as a non-resident."

https://www.iras.gov.sg/taxes/individua ... -residency

My view is that it is presumed that you will be tax resident but if you don't make the actual 183 days, your status will be changed to non resident.

Just from my experience...I'm a Malaysian living in JB and have been on EP the last 7 years and have changed jobs 3 times. Never encountered any issues every time I did clearance with IRAS. I've always been a tax resident. EP holders are such by default, is what I was told by the folks in IRAS once when I was in touch during clearance process between jobs.

Edit : Perhaps JB folks working in SG who commute are special case that are regarded as such ?