Better to have PEP or EP? PR or expat status?

queenie71 · Post by **queenie71** » Sat, 18 Jul 2009 2:43 pm

We are transferring with our company who will sponsor work visa and accord us a certain expat package.

If we then apply for a PEP and perhaps later on, apply successfully for PR, then will this affect our "expat" status?
Could a company turn around and take away the "extras", claiming that we've "gone local?"

Also, is tax much lower for PRs? Once PR, we can buy landed property but not if we don't have PR status???

Post by **jpatokal** » Sat, 18 Jul 2009 2:51 pm

queenie71 wrote:If we then apply for a PEP and perhaps later on, apply successfully for PR, then will this affect our "expat" status?
Could a company turn around and take away the "extras", claiming that we've "gone local?"

Contractually, no, because becoming PR presumably does not violate your employment contract.

In practice, though, no company is going to be happy that a) you're not locked into them anymore, and b) they need to start paying their share of your CPF as well. Reactions vary widely, from instant firing (cf. the case we had a few weeks back) to grumbling acceptance. Just don't expect a raise anytime soon after going PR...

Also, is tax much lower for PRs?

No, it's considerably higher, since they will start deducting CPF from your salary. (Of course, CPF funds are theoretically yours, but you lose a lot of control over it.) The upside is that the company has to pay CPF as well, so you get an effective raise of ~15% over three years.

Once PR, we can buy landed property but not if we don't have PR status???

No, buying landed property is limited to citizens, unless you get an exception.

bogdang · Post by **bogdang** » Mon, 20 Jul 2009 10:32 am

There are companies offer some kind of a "pension plan" to their foreign employees in lieu of CPF. Your contribution to such plan are taxable, so is company's match, so this increases your overall tax rate compared with PRs (which of course may not be a problem if the company contribution also covers the tax).

queenie71 · Post by **queenie71** » Mon, 20 Jul 2009 12:38 pm

instant firing? On what grounds can a company do that???

Thanks for the advice. Will certainly wait a while before making any "moves"

Post by **sundaymorningstaple** » Mon, 20 Jul 2009 1:30 pm

queenie71 wrote:instant firing? On what grounds can a company do that???

"Unsuitability" for the position or the corporate identity (in their eyes). They don't need an excuse. They just pay you your salary in lieu of notice and you don't have any leg to stand on. They may even help you pack your things and escort you to the door with your final check in your hand. Perfectly legal? Yes. Cold? Yes. Employees are always on the short end of the stick here with little laws to protect them unless they make less than 2000/month.

Post by **Strong Eagle** » Mon, 20 Jul 2009 4:54 pm

sundaymorningstaple wrote:
queenie71 wrote:instant firing? On what grounds can a company do that???
"Unsuitability" for the position or the corporate identity (in their eyes). They don't need an excuse. They just pay you your salary in lieu of notice and you don't have any leg to stand on. They may even help you pack your things and escort you to the door with your final check in your hand. Perfectly legal? Yes. Cold? Yes. Employees are always on the short end of the stick here with little laws to protect them unless they make less than 2000/month.

Virtually every MNC in the world has a common practice that the instant someone is terminated, their security is revoked and they are escorted out of the building. Mostly all about security.

Lyn-C · Post by **Lyn-C** » Wed, 22 Jul 2009 5:08 pm

queenie71 wrote: Also, is tax much lower for PRs?

Yes, lower tax for PRs' cos CPF contribution is non-taxable but capped at $5,000.00

Post by **sundaymorningstaple** » Wed, 22 Jul 2009 6:21 pm

Lyn-C wrote:
queenie71 wrote: Also, is tax much lower for PRs?
Yes, lower tax for PRs' cos CPF contribution is non-taxable but capped at $5,000.00

Sorry Lyn-C, but CPF is not a tax. It's a contribution to your retirement fund and you can get it all back. Additionally it's capped at contributions on the first $4500 not $5000.

The tax rates are the same for PR, Citizen & EP holder and even WP holder if they are here more than 183 days.

Post by **Strong Eagle** » Wed, 22 Jul 2009 10:47 pm

sundaymorningstaple wrote:
Lyn-C wrote:
queenie71 wrote: Also, is tax much lower for PRs?
Yes, lower tax for PRs' cos CPF contribution is non-taxable but capped at $5,000.00
Sorry Lyn-C, but CPF is not a tax. It's a contribution to your retirement fund and you can get it all back. Additionally it's capped at contributions on the first $4500 not $5000.

The tax rates are the same for PR, Citizen & EP holder and even WP holder if they are here more than 183 days.

True, but the fact is that your CPF employee contributions are not taxable, removed from total income in the deductions section of your IR8A form.

Post by **sundaymorningstaple** » Wed, 22 Jul 2009 11:29 pm

A difference in translation or definition?

When somebody says the "tax rates" are different I take that as the tax rates, not taxable income. At least that what I was taught all those many years ago. In the US for instance you have different tax rates for single, married or H of H status. Here the tax rates are the same graduated rates regardless provided you are being taxed as a resident.

maneo · Post by **maneo** » Thu, 23 Jul 2009 6:09 am

jpatokal wrote:
queenie71 wrote:Also, is tax much lower for PRs?
No, it's considerably higher, since they will start deducting CPF from your salary. (Of course, CPF funds are theoretically yours, but you lose a lot of control over it.)

You can put CPF deductions to better use, such as paying for a mortgage.

Nath21 · Post by **Nath21** » Thu, 23 Jul 2009 10:28 am

I just got a letter asking if I want a PEP and I am on a EP.

My question which I couldnt see answered on the MOM site was if I accept this offer will they then inform my current employer of my change in status (you can see where that is leading) and on a PEP do I start making CPF contributions?

Post by **jpatokal** » Thu, 23 Jul 2009 10:34 am

Nath21 wrote:My question which I couldnt see answered on the MOM site was if I accept this offer will they then inform my current employer of my change in status (you can see where that is leading) and on a PEP do I start making CPF contributions?

No CPF is payable, and I would presume that your employer is not notified, since it doesn't (directly) affect them at all. But check with MOM to be sure, and tell us!

bogdang · Post by **bogdang** » Thu, 23 Jul 2009 12:54 pm

You don't pay CPF on a employment pass regardless of the type of the employment pass.
After you get your PEP you will have to cancel your current EP, so the employer will know. Also, the company has to send a notification when they employ a PEP holder.

Post by **jpatokal** » Fri, 24 Jul 2009 11:26 am

bogdang wrote:After you get your PEP you will have to cancel your current EP, so the employer will know. Also, the company has to send a notification when they employ a PEP holder.

Oops -- you learn something new every day

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Better to have PEP or EP? PR or expat status?

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