some advice on new arrival to Singapore

[alittlerisky]

Hi All,

I've just been offered a contract for a year in Singapore with a financial institution. The contract is a fixed daily rate, no other perks/expenses/accomodation/expat package...hence this daily rate is a not inconsiderable GBP900 a day, about USD1800. This equates to about $430k for the year.

Currently i work in Belgium, where I have a similar contract, fixed rate per day and nothing else. I've handed over all my invoice processing and tax stuff to an umbrella company based in Holland and Ireland, who pay me while deducting local taxes from a very low local belgian salary, and then pay the rest as dividends to Jersey as i am a shareholder in the umbrella company...don't ask me how this works, all i know is that they do everything: deduct all relevant tax at the most efficient rates for me and do my tax returns. This means i pay an overall tax of about 22% on what I invoice. This is great for me as belgium would be taxing me at just over 50%....

Now...Singapore... from the research I've done, it seems tax rates are very low compared to Europe, the highest income tax bracket being 20%. Are there any other contractors from Europe/UK out in Singa that could advise on how to proceed. My umbrella company only operate in Europe. Do i just turn up in Singa and go and see an accountant? Or can a contractor in a similar situation advise on how he/she went about getting invoices processed and relevant taxes deducted. As for as i can see it would benefit me the most to be registered as a Singa resident and pay local income tax...but how the f**k do i go about doing that??

Many thanks for your help.

[Strong Eagle]

1) To work in Singapore you will need an employment pass (EP) to have the right to work. If you are a contractor the company engaging you will not be able to file for an EP for you (it is a company initiated activity). EP's can only be applied for a full time employee.

2) Your other option is to create your own company and file a business plan under the Entrepass scheme. See http://singaporeexpats.com/forum/ftopic38927.html for more information.

Personal tax rates are relatively low in Singapore, as you mentioned. Company tax rates are 18 percent for 2008. So, if you pay yourself a salary from the company, all of it is taxed at personal rates. Dividends are paid from profits and profits are subject to corporate tax. The dividends paid are not subject to personal income tax.

So, something doesn't add up in your explanation of your current situation. If you are getting paid dividends then they are being paid out of company profits. Unless there is zero corporate tax in Belgium something about your setup doesn't add up.

[alittlerisky]

wow...great thread you linked there...very informative...thank you for that. I'm not sure that a one year contract merits the hassle of going through this Entrepass thing though. Do you have payroll processing umbrella type companies in Singapore? Can anyone recommend one?

Strong Eagle...re my current Belgium situation, as far as i can gather the way they maximise my take home is this:

1. Same sort of rule as in Sing in Belgium: if you're there more than about 180 days a year you are liable for Belgian income tax.

2. I am employed by some Belgian arm/subsidiary of the overall umbrella co in Belgium. I get paid about 2700 euros take home from these guys every month. This is basically just under the highest tax bracket.

3. I'm employed by a UK arm/subsidiary of the umbrella co as a "market researcher". For this I have to fill out a questionaire once a month, for which I am paid about £400 sterling. This is to give me a UK tax free allowance (income under about £5000 a year is not taxed in the UK).

4. As a shareholder in the umbrella co, the balance is paid as dividends less corporate tax of about 20% to a UK bank...well, to Jersey actually.

Sounds horrendously complicated, but they look after everything. I have not had to fill out one form. In fact when i first signed up an agent was sent to Brussels with all the forms completed and we spent 20 mins going through them and all i had to do was sign a bunch of papers. I have my own UK Ltd co for when i was contracting in The City, but this was just not tax efficient for working in Belgium. Umbrella companies are pretty crap in the UK for maximising your take home and private ltd companies are the best. However for working in Europe, i found after a fair amount of reseach that this one gave me the best return of about 22% tax including their admin fees. One umbrella co i contacted suggested they just pay me pretty much everything to an anonymous numbered account in Luxembourg! When i asked how I was supposed to get the cash to the UK to pay my mortgage they told me that all I had to do was hop on the train down to Luxembourg, take it out in cash and carry it back to the UK...which didn't really strike me as being totally above board...apart from carry thousands of euros in cash across three borders once a month.

Anyway...thanks for the info...the search for an easy solution continues! I start on January 8th so time is pretty short....erk!