Open a Sole Proprietorship on a DP and getting the LoC

[JK28]

Hi there,

Great info on here thanks.. I'm new here with a few questions,

1) Can a DP holder work for an overseas based company (not registered in SG) from home? Does MOM require anything?

2) Has any DP holder with SP applying for LoC been successful with MOM recently? (July 2016 onwards)??

THANKS!

[Varcelos]

JK28, I queried MOM about point number 1, and here is the answer (August 2016):

We wish to share that a work pass is not required for you to work in Singapore when:

1) You are working for an overseas company from home; and
2) The overseas company has no local presence; and
3) You are not meeting or providing services to clients in Singapore.

Therefore, you may still perform work for your overseas employer via electronic or telecommunication from Singapore.

If you have a DP, you do not need anything else to able to work from Singapore, provided you do not work for clients in Singapore.

If you choose this route, be sure to check where you will be paying your taxes over those earnings - I'm still waiting for a final answer to this, but it seems the IRS code in my country has been changed in a quirky way so that I have to pay taxes in both countries, even though there is a double taxation agreement in place (the catch-22: our IRS code demands that I have an "office" in SG not to pay taxes in my home country, but SG does not allow me to have a "local presence"). If this is the case, I'm probably opening an offshore company.

[JK28]

Thanks Varcelos! Are you on a DP?

From what I understand I will be paying taxes here in SG as I will be carrying out the work here and I reside here.

I will need to invoice the overseas company monthly- do you think I can do this with a sole proprietorship in SG? ACRA have said yes but I'm wondering if the whole LoC will need to be submitted to MOM? Surely not if they have given all clear to work for overseas company with no LoC on a DP?

Thanks again!

[Varcelos]

I'm not yet on a DP, but I will be in a couple of months.

There are other people here that are much more experienced then I am, but if you want to work from SG for a client outside SG, of course you could register a sole proprietorship company in SG. But for this to work you have to go through ACRA and MOM and get your LoC approved.

It seems getting a LoC from a sole proprietorship is becoming harder now, but I don't think we have any feedback on someone with a business plan that only features clients outside SG.

On the other hand, if like me, your clients are all outside SG, why not register a company elsewhere (your home country, in an offshore, wherever is easiest, cheapest and safe), invoice your clients through it and just work? This complies to the 3 points addressed by MOM in the email I quoted above.

[JK28]

Thanks for that.

If I was to set up a business overseas wouldn't that breach the second MOM point "the overseas company has no local presence"?

Would you happen to know how it works for Australia?

Thanks

[Varcelos]

I feel like I'm answering way too many questions for the level of experience that I have :p
So PLEASE do not take what I say below as 100% correct according to SG law. Any doubts should be taken to MOM.

My simple understanding is that the overseas company would have no local presence.

Its general office would be in the country where you would set it up (ex: Australia). And you, albeit the manager, are working from your SG home, your residence, for that overseas company. It would not be from a store, a construction site, or even an office, and you are not going to advertize it in SG, or register an .sg domain for it, or meet with business partners in SG or work for/with anyone in SG which, again to my understanding, means no local presence.

Here is the agreement between SG and Australia regarding double taxation: https://www.iras.gov.sg/irashome/Quick- ... ional-Tax/

It would be best if you would search for the Australian version of the agreement as well (my country's language is not English and this agreement is open to different interpretations whether you read it in its SG version or my home country's version).

[JK28]

Great thanks again.

Yep, totally understand just searching for an initial understanding on this as it seems to be a grey area..

Appreciate your thoughts and good luck to you!

[Strong Eagle]

I, too, have contacted MoM and IRAS regarding the situation described in earlier posts.

A work permit is not required when working for a foreign company with no presence and no business in Singapore.

The normally resident person in Singapore must pay personal income taxes based upon the physical location of the person earning the income. Most countries follow this rule, the USA being a notable exception.

I don't understand why you think you will be double taxed unless you create a company. What other country do you think will tax you?

[Varcelos]

Portugal. And of course, it would only tax me if I create a company based in Portugal.

It's a specific article in our IRS code that has been recently redrafted. Even though I will have residence in SG (over 183 days), I will not work in a working space (because according to SG the company cannot have local presence). So therefore, from Portugal’s perspective, all the company's earnings, although coming from work produced in SG, are connected to the company's fiscal address, and not my SG residence, because there is no official working space in SG. If I could register my SG home as an office, the earnings would not be taxed in Portugal.

This is a specific situation that I don't think translates to other countries. I've taken this up with the local fiscal entity that would oversee my double tax exemption if I ever did register a company here and I will get an answer next week.

If they say double taxation does apply, I might let go of the familiar and register an offshore company. I'm only hesitating because my clients may not be happy with this situation due to offshore businesses reputations.

So why not register a company in SG, like I wanted? I do not want to arrive in SG and go through the motions of establishing a business based there, and maybe get that denied. I want to arrive and have everything sorted right from the beginning, so my clients have the most seamless experience with my displacement.

[Strong Eagle]

As I think about this, I see that international law and policy has a hard time keeping up with the effects of global technology with respect to remote working.

My guess is that if you were to create a sole proprietorship, it would not change MoM's response with respect to the need for a work permit, for the situation of a foreign employer, etc, has not changed.

Your IRAS reporting would change in that you would have to file a SP return as part of your personal return.

However, there is yet another wrinkle for you to consider. As you have previously noted, the Business Registration act provides for no registration at all if:

4.—(1) The following persons are not required to be registered when carrying on business in Singapore:
(a)
any individual proprietor carrying on business under only the individual proprietor’s full name;

My view (and I am not a lawyer) is that if you believe that you would have the necessary entity in kind without a registration, then you can always claim to be working for a Singapore entity registered in accordance with Singapore law and let it go at that.

Or, go ahead and register a named SP. Again, my view is that if the Singapore authorities were to actually look into the setup, you'd be in good shape. You are not conducting business in Singapore, and given that the intent of the SP is only to avoid double taxation, you're clean.

Lastly, contact IRAS. Explain the situation. They will provide a ruling that may work in your favor without the need to have a legal entity in Singapore.

[Varcelos]

Just an update to my situation. For recap, I am going to SG on a DP pass and would like to continue to work for my clients In Europe. For this, I need to have the means to invoice them for my services.

Double-Taxation: If I create a single-ownership company in my home country (Portugal) and invoice them through it while in Singapore, I am liable for double-taxation. I already explained the situation above and believe this is specific to the portuguese agreement with SG regarding DT. This is law, it's not grey.

ACRA: If I create a sole-proprietorship in Singapore, under my own name, under the New Business Registration Act of 2014 I do not have to register with ACRA. If you find this interesting, please ask ACRA or read Part I of the Act to know if it applies to you.

MOM: As for the need for a LOC from MOM for a sole-proprietorship, I took a cue from you Strong Eagle, and got pleasantly surprised. My advice is that, if your situation is similar to mine, you inquire them specifically for your need for a work permit or work pass if you are solely working through self-employment in SG for foreign clients with no representation in SG. I believe this is grey.

IRAS: I have not contacted them yet, but since I won't make more then 1 million SGD/year, it seems I do not need to register with them. I just have to fill the normal yearly tax file.

[Varcelos]

Is there something I am missing? I keep feeling there is hole somewhere, this is just too simple.

Sorry for the double post, I'm on my phone's tiny screen.

[mackeral]

Hi All,

I just wanted to report that my LOC was just renewed today. First got it in 2012.

I was quite concerned hearing about the rule change regarding sole proprietorships and the LOC. I thought perhaps MOM would disallow them even for existing holders. Apparently not.

This worry was compounded by a couple of phone conversations with MOM representatives prior to the renewal. They stated in no uncertain terms that they do not allow a DP with an SP to get an LOC.

[abhi200211]

Hi,

I am a DP holder Indian(DP of an EP).
I am a web designer and launching my mobile app for singapore market. It would be general mobile app for just dummy example: fitness.

1) What is the best should I open an SP on DP ? does ACRA/MOM in recent 2016 allow to open an SP, I mean does someone got approved in recent time.
2) If SP cannot I have a local PR friend who is willing to help me should I go for open an LLP. here confusion is i want to control 100% ownership but whatever advertisement/service 10~20% will give commission to him. what is the best way i can control our partnership agreement while forming LLP.
does singapore have any website where I can download this kind of draft source of partnership agreement or I should pay heavy fees of lawyer and get it done.

Pls advise what is the best option..thanks!!

[Tw32]

Need advice pls.
Husband on an EP, I'm on an EP but have a possibility for a dream job, working with SG clients for a company registered in France, they have no entity in Singapore. We live in Singapore.
Looks like getting an LOC on a DP would be tricky, especially as they have no office here.
The entrepass option also looks tricky and requires a cash outlay.
Can I set up a sole proprietorship, or similar, and the sub contract my services to the company in France? Is that costly/lengthy?
Any other options?