Open a Sole Proprietorship on a DP and getting the LoC

[Strong Eagle]

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?

If the French company has no presence in Singapore, and of equal importance, does not provide any goods and services in Singapore, then you can work remotely for that company without forming any kind of a legal entity in Singapore.

If you are working for clients in SG, then you are performing services for the company in Singapore and would need a legal entity to do so. That legal entity could be one that you set up and own, then contract your services to the French company, or the French company could setup their own wholly owned subsidiary and hire you to do the work.

You can forget about the Entrepass. Nothing that you have mentioned would qualify you for it and the conditions for renewal are onerous, to say the least.

My view (mostly from reading these various threads) is that DP/SP/LOC arrangement is becoming more difficult to get because it has been thoroughly abused. It's the low end, small potatoes kind of thing, and if you've read these threads, quite a few people have done this in order to take advantage of part time free lancing opportunities. I judge that too many people have applied for and received the LOC, then done nothing with it, or they have engaged in types of businesses that are normally reserved for locals, hair dressing or a nail salon, for example.

If you opt to go for the SP, it is quite cheap to register but you will need to prepare a proper business plan as I have detailed in many of my threads, if you expect to have success in convincing MoM to grant you a LOC.

Since you are working for a French company and can demonstrate a known pay structure of some sort, I'd opt for creating a private limited company, then using it to apply for your own EP. Again, it's only my view, and, I judge that there would be a larger chance of success were the French company to open the pte ltd and apply for the EP for you. If you opt to open your own pte ltd the burden of proof that you're not setting up a scam to get an EP rests with you. I've written many threads on the subject of the necessary documentation you must have in order to succeed.

Either way, the pte ltd costs about $300 to file with ACRA. Either way, you'll need an outside agent to register the company, become a temporary director, and apply for your EP so that you can take on directorship responsibilities. This will cost $600 to $3000 depending on whom is willing to do it.

And either way, make sure you put a proper business plan together... I've recently written about local idiot agents who think putting a $7,000 salary into an EP application is the magic potion to ensure success when the reality is that you must be able to support salaries and costs against revenues and cash on hand until break even.

[evadelachine]

Hello,

Just want to follow up about the situation, is there anyone succeeded to get the LOC with SP after Aug 2016? I'm struggling in the same situation here.

Thanks!
Eva

[anand797]

Hi Guys,

I have an EP here and my wife having DP and i want to open sole proprietor or pte ltd company here i checked hole thread and many information abt sole proprietor, can u please tell me what is the process for open pte ltd company here???? and do i need local director???? And if my wife open company or start business as sole proprietor then after some month my EP would be cancelled by my employer then what will heppen in this situation do we need to close the company or my wife can stay here????

[Curryfishman]

It's helpful. Thank you !

[bastien]

Hello,

I have an EP (I own & run my own company), my wife has a DP, and she has a genuine business project. I understand the MOM has clamped down on the Sole Proprietorship / LOC thing.
Wouldn't it be possible to simply setup a Private Limited (with me as the Director as I have an EP), and employ my wife through a LOC ? She would be the sole employee, at least at the beginning.

Has anyone done this, or gotten any information about this from the MOM ?
That sounds like something clean & legal, but I'd be interested to know if there's another "guideline" issued by the MOM about this...

Thank you.

[Varcelos]

Hello everyone,

Just an update to let everyone know how I was able to work freelance for foreign clients (basically, keeping my pre-expat job) with a DP pass in Singapore, legally, no LOC needed, no ACRA registration needed.

1) Confirm with MOM, in written, that a work pass is not required for you to work in Singapore when:
i) You are working for an overseas company from home; and
ii) The overseas company has no local presence; and
iii) You are not meeting or providing services to clients in Singapore.

So you can work for foreign companies (if they have no presence in SG) only with a DP pass. Yes, this means you can legally invoice foreign clients from SG, no work pass needed. You can easily find SG invoice templates are everywhere.

2) Confirm with IRAS, in written, that:
i) Under the New Business Names Registration Act 2014 (No. 29 of 2014) Part 1, you would be an “Individual proprietor carrying on business under only his full name”, without the need to register in ACRA.
ii) Because you would be working exclusively for foreign clients with no presence in Singapore, according to MOM you do not need a Work Pass or Work Permit to perform your business activity and your stay in Singapore will be dependent upon the duration of your DP pass.

Again, this means that yes, you can legally invoice foreign clients from SG, no work pass needed and no ACRA registration needed. Your business address is your home address. Your companies’ name is exactly your name.

3) If you are going to invoice a lot of money, you might need to register at IRAS for GST. And not all business activities with international clients are GST exempt. Check here to see if you need to charge GST in your invoices: https://www.iras.gov.sg/irashome/GST/GS ... -Services/

4) Confirm if your country has a double taxation agreement with SG. If they have, this typically means that if you stay in SG more than 183 days in a year (counting from January onwards), you will pay taxes for your SG earnings in SG and will pay nothing in your country of origin or countries you are invoicing. But don’t wing this, make sure the agreement says this.

5) Officially ask IRAS for a tax residency certificate. You can do this right after arriving. If you are registered at their portal you can do it online. Otherwise, phone them and they will tell you what documents you should submit to them via email. I submitted the DP pass, flight ticket out (proving I would be staying more than 183 days in SG in 2017) and a letter from one of my foreign clients acknowledging the situation. This is important: some clients will need this certificate so that the payments they make out to you aren’t taxed in the country of origin.

6) Get a bank account in SG. Legally, the values you invoice have to be deposited in a SG account (yes, even after you leave if you have payments pending). I went to an OCBC counter that refused to open an account in my name because I had a DP. But I then went to another OCBC counter with my spouse to open a joint one, and they gave me a personal account with no problems. Didn’t ask any questions, I was just glad to get that situation sorted.

7) Congratulations! All you have to remember is that 1 month before leaving you have to contact IRAS ([email protected]) and tell them you are leaving SG and want to settle your taxes. They will ask you for some information (including the 4 line statement – again many templates available). They will send you a link to their portal so you can see the value of your taxes. Pay them and leave.

Edit: incorrectly mentioned ACRA in points 3 to 7.

[DrGrill]

Hi,
First of all, let me thank everyone for keeping this thread running.
It really contains a lot of information.

I am in a similar situation and I am looking for advice.
The goal: Software development freelancing. Solo at first.
Main info:
- Wife is a Singapore citizen. I am German.
- I have completed a PhD degree from a Top 100 university.
- I have some, but not much, work experience.

In this forum, I have found several options that others have pursued:

- Letter of consent for a sole proprietorship: Seems like a great plan since I wouldn't need to involve my wife.
However, it seems like this has not been successful recently. The last success report was from 'singaporeoz' in April 2016.
- Singapore Pte Ltd with the help of my wife. She'd probably have to be the director and I'd hire an external secretary which seems to cost around 300$/year.
Open questions: Can I apply for LoC under this scheme? Should I apply for EP? I would then have to pay myself a salary, right?
Invoicing under the company and leaving the profits inside or paying them out to my wife to hide that I am doing the work would be illegal, right?

Forgoing clients from Singapore and companies that are present in Singapore, more options are available.
- Forming a company in my home country would work.
I'd then reside in Singapore but deal with the German system for taxes.
Until I pay myself a salary that is.
Not great because that system is tedious and the taxes are high.
Potentially, I could appear more trustworthy to EU clients and could use a EU bank account.
- Keep everything under my name (what Varcelos did, viewtopic.php?t=75000&start=255#p777945):
Get confirmations from IRAS and MOM. Then get tax residency certificate.
I cannot run anything through my EU bank accounts - worse for clients from that area.
Potentially a non-issue with Paypal and credit cards around.
Advantage: I could spend up to 180 days acquiring clients in Europe.
I do wonder what the German authorities say about work performed on site that I invoice through this scheme...

I suppose I could go the "Varcelos route" and upgrade to a Pte Ltd if things actually work.
Am I missing anything? What can you advise me?

[gamba123]

Hello, I am an EP holder and my wife (under DP) was thinking to set a SP and then apply for a LOC to legally work in that company. I have read all the post in this email tread (quite long but very very usefull) but now I wonder if the information here is still applicable.

Can currently a DP still apply for an SP? From ACRA:

"Foreigners who are currently residing in Singapore must seek approval from the Ministry of Manpower before registering a sole proprietorship or a partnership. If any of the proposed partners do not have a Singpass account, the applicants must engage the services of a registered filing agent (e.g. a law firm, accounting firm or corporate secretarial firm) to submit the application on their behalf. Only individuals with a Singpass or Corppass account can submit an application on BizFile+."

Does it means that the process nowadays starts by contacting MOM instead of registering the SP?

Also, once the SP is done, does the LOC still apply to work legally in Singapore in that company? The reason why Im asking this is becuase from May 1st it seems like DP won't be able to work under a LOC and they will need to apply for WP, S-pass or EP, but MOM site sais "From 1 May 2021, all dependants of foreigners holding a Dependant's Pass will need an applicable work pass (e.g. EP, S Pass or Work Permit) to work in Singapore, instead of an LOC. Dependant’s Pass holders who are business owners may continue running their businesses on an LOC if they meet specified criteria."

Since the post in this tread are quite old, does anyone has a better understandig of the current situation?

Thanks for your help

[Myasis Dragon]

Hello, I am an EP holder and my wife (under DP) was thinking to set a SP and then apply for a LOC to legally work in that company. I have read all the post in this email tread (quite long but very very usefull) but now I wonder if the information here is still applicable.

Can currently a DP still apply for an SP? From ACRA:

"Foreigners who are currently residing in Singapore must seek approval from the Ministry of Manpower before registering a sole proprietorship or a partnership. If any of the proposed partners do not have a Singpass account, the applicants must engage the services of a registered filing agent (e.g. a law firm, accounting firm or corporate secretarial firm) to submit the application on their behalf. Only individuals with a Singpass or Corppass account can submit an application on BizFile+."

Does it means that the process nowadays starts by contacting MOM instead of registering the SP?

Also, once the SP is done, does the LOC still apply to work legally in Singapore in that company? The reason why Im asking this is becuase from May 1st it seems like DP won't be able to work under a LOC and they will need to apply for WP, S-pass or EP, but MOM site sais "From 1 May 2021, all dependants of foreigners holding a Dependant's Pass will need an applicable work pass (e.g. EP, S Pass or Work Permit) to work in Singapore, instead of an LOC. Dependant’s Pass holders who are business owners may continue running their businesses on an LOC if they meet specified criteria."

Since the post in this tread are quite old, does anyone has a better understandig of the current situation?

Thanks for your help

The recent announcements by MoM regarding work passes for DP's is pretty much going to put an end to DP's working freelance for their own company, or, for that matter, working for another company on a LOC.

Here is my view of what this all means.

1. The language, "Foreigners who are currently residing in Singapore must seek approval from the Ministry of Manpower before registering a sole proprietorship or a partnership," is directed towards those DP's who are working remotely for a company that has no presence in Singapore and provides no goods and services in Singapore. DP's would file taxes as a sole proprietor. My guess is that ACRA will not approve a DP to setup a SP unless MoM has given the OK.
2. I would guess that generally, if you are otherwise on a DP or LTVP, you will need to meet all the criteria for starting a new business, including hiring of Singaporeans as specified in the new rules. The LOC is dead unless you already have a business and you hire Singaporeans.
3. Singapore companies can no longer hire DP's on a LOC for cheap cheap. Instead, they will need to meet the minimum wage requirements for an EP or S-Pass.
4. You can say goodbye to forming a sole proprietorship and applying for a LOC. If you already have this setup, you better be hiring Singaporeans or your company and LOC comes to an end in 2022.

So, no more loopholes for DP and LTVP. You either get a work permit or you don't work, regardless of whether it is for your company or someone else's.

[gamba123]

Thanks for your reply, I still have some questions I hope you can help with

new business, including hiring of Singaporeans as specified in the new rules. The LOC is dead unless you already have a business and you hire Singaporeans.

Is there a requirement to hire a Singaporean when you create a SP currently? I though that only applied for Companies, not SP. Did this change?

Singapore companies can no longer hire DP's on a LOC for cheap cheap. Instead, they will need to meet the minimum wage requirements for an EP or S-Pass.

If the LOC is no longer applicable, could my wife create the SP and apply for an EP or S-Pass? what would be the implications of this compared to applying for the LOC? (besides the probably more lenghly process and salary criteria).

You can say goodbye to forming a sole proprietorship and applying for a LOC. If you already have this setup, you better be hiring Singaporeans or your company and LOC comes to an end in 2022.

this is related to my first point. Will there be a requirement to hire a Singaporean if you have a Sole propietorship (not a company) in Singapore?

Thanks

[Myasis Dragon]

Thanks for your reply, I still have some questions I hope you can help with

new business, including hiring of Singaporeans as specified in the new rules. The LOC is dead unless you already have a business and you hire Singaporeans.

Is there a requirement to hire a Singaporean when you create a SP currently? I though that only applied for Companies, not SP. Did this change?

No, there is no requirement for any business type (corporation, partnership, sole proprietorship) to hire Singaporeans if you create a business and then get an EP to operate it. This does not change. But, MoM has made it pretty clear that if you are a DP, running a company under a LOC, and you don't meet the hiring requirements, then your LOC will be cancelled. Then, the DP has to meet the requirements of the EP (or S-Pass), and that will be much more difficult to do.

Singapore companies can no longer hire DP's on a LOC for cheap cheap. Instead, they will need to meet the minimum wage requirements for an EP or S-Pass.

If the LOC is no longer applicable, could my wife create the SP and apply for an EP or S-Pass? what would be the implications of this compared to applying for the LOC? (besides the probably more lenghly process and salary criteria).

Yes. There are hundreds of threads in the business forums on forming a company. But, here's the rub. If you're going to apply for an EP, you need to specify at least the minimum EP salary that will be paid. And when you do that, you better come up with a revenue source to pay that salary, otherwise your application will be summarily rejected. So... you need a business plan with a break even date for profitability, and some source of funds to pay those salaries until you reach profitability.

this is related to my first point. Will there be a requirement to hire a Singaporean if you have a Sole propietorship (not a company) in Singapore?

Not that I can see. But you are going to need to be able to meet the salary requirements for your EP, and the revenues necessary to support that EP. I've seen multiple idiotic submissions made by idiot company formation agencies in Singapore, where they specify $7000 or $8000 per month proposed EP salaries (as though the big numbers imply a heavy duty, gravitas filled EP) but specify zero revenues. Say buh-bye to your application.

Thanks

Sure