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Open a Sole Proprietorship on a DP and getting the LoC

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colio
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Postby colio » Thu, 21 Mar 2013 11:45 am

Has anyone had their DP LOC's approved in the past few weeks??

We called a VISA agency to help us with my wife's because apparently mailing it in will take up to 5 weeks for approval whereas the agency gets 7 day turnaround. The agency say that MOM are clamping down on this & that the employer needs to be different to the employee now.

That would mean they are rejecting all consultants really unless they work for another company??

We are going to try anyway but be interested to hear if anyone has had recent success.

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Postby Strong Eagle » Thu, 21 Mar 2013 12:02 pm

colio wrote:Has anyone had their DP LOC's approved in the past few weeks??

We called a VISA agency to help us with my wife's because apparently mailing it in will take up to 5 weeks for approval whereas the agency gets 7 day turnaround. The agency say that MOM are clamping down on this & that the employer needs to be different to the employee now.

That would mean they are rejecting all consultants really unless they work for another company??

We are going to try anyway but be interested to hear if anyone has had recent success.


It means you should blow off the visa agency and do it yourself.

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Postby colio » Thu, 21 Mar 2013 1:39 pm

StrongEagle: Are you sure? Or is that based on what people have said in the past? The word, not just from the agency, but other sources is that MOM have clamped down on this just recently (like in the last couple of months). So it would be good to know if anyone had success just recently, in the past month or so..

Thanks
Colin

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Postby MrsMagnum » Thu, 21 Mar 2013 2:48 pm

Colio, the last success posted on here was Jan 8th 2013. But no one has said since then that theirs has been rejected either. An agency will be quicker because they'll be using EP Online, but I would still follow the instructions on here and do it for free yourself. Most people are hearing back within three weeks.

I submitted my application two weeks ago and haven't heard anything yet...

pompyb, have you got a yes or no yet?

MrsM

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Postby Strong Eagle » Thu, 21 Mar 2013 11:22 pm

colio wrote:StrongEagle: Are you sure? Or is that based on what people have said in the past? The word, not just from the agency, but other sources is that MOM have clamped down on this just recently (like in the last couple of months). So it would be good to know if anyone had success just recently, in the past month or so..

Thanks
Colin


The caveat: Opinions expressed are mine alone. I do not have a pipeline into MOM or any other government agency.

Colin, let me ask you a few questions.

a) If MOM has indeed clamped down, how is the agency going to be of any use to you?
b) If your application is denied what can the agency do to appeal that you cannot do yourself?
c) What can the agency offer in the initial application that you cannot do yourself?

And my answers to my own questions: The agency cannot do anything that you cannot do yourself (other than submit online to speed things up, which, IMHO, is not the right way to go). Indeed, if an appeal is to be made, it is you that needs to supply the material changes to make the appeal. And, if the original application is done correctly, there should be no need for an appeal.

Here are the facts as I see them.

a) There is nothing on the MOM website that prohibits the formation of a company by a DP for the purposes of obtaining a LOC. If MOM had actually changed formal policy, it would be published.

b) The purpose of a LOC is to allow you to work, that is, there is confirmed employment ahead of you. I suspect that many who are being rejected are trying to form a company just to go fishing... they have no real freelance or consulting prospects in the pipeline.

c) If you want to get your LOC, you will have contracts lined up, or at least letters of commitment that show you will have work. You'll have preferably more than one in the pipeline and your contracts will demonstrate how it is that you will support your stated salary in the LOC application.

d) You will create a private limited and not a sole proprietorship. Yes, it is more expensive and more of a hassle, and that's exactly the point: You are demonstrating that you are creating a serious venture and not some spur of the moment, turn my hobby into profit... maybe, pie in the sky scheme. You may also have less hassle with the ACRA with a pte ltd.

e) You will want to file manually so that you can include all your supporting documentation... your contracts, a short business plan with projections, maybe, certainly a resume and other docs that qualify you for the business.

As I have stated elsewhere, the gahmen probably didn't foresee the LOC used for this kind of purpose, and the ACRA probably didn't foresee that a DP would want to create a company. At the same time, prohibiting one or both would create all sorts of wrinkles for other legitimate applications.

Your goal is to convince MOM that you are not simply setting up a business that has no hope of getting customers or turning a profit; further, that your business is not one which is normally prohibited under the Entrepass scheme.

If you think an agency can meet these goals, then by all means, go for it. My view is that most of these agencies are paper pushers, with very little in the way of creative inspiration and problem solving. If you read through the LOC success stories here, you'll see perseverance and an execution of the general principles I have enumerated here.

Best to you.

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Postby colio » Fri, 22 Mar 2013 7:36 am

Thanks for the advice Strongeagle. I think it is very good advice & you'll be pleased to know we have told the agency to take a long walk off a short boardwalk.. maybe not in those terms! :)

We've instead engaged an accountant who also has an EPOL. She is forming a company for us instead of sole proprietorship.. & she will submit the application to MOM but this time for free, so it's best of both worlds.

There IS a change coming in to MOM that will affect all expats. Apparently by 1st April, a company that wants to sponsor a DP LOC must have at least 1 local employee first. This is obviously a major change & will impact a lot of expats wanting to get this DP LOC. The way I see it, a business can be borne out of this where a local can set up a company to sponsor DP LOC's.. maybe anyway..

Anyway, even the accountant said that MOM does not want the owner of the company to be the same as the DP LOC, so maybe the agent wasn't just blowing hot air. The accountant has nothing to gain from saying this as she is not charging for the DP LOC application, just for the company incorporation. So I had to put the company in my name which is OK as long as I don't do any work for that company nor derive any income from it.

We are just in the process of doing this now. Will report how we go ASAP.

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Re: Will this work if the DP is sponsored by a S-Pass holder

Postby mallim » Fri, 22 Mar 2013 9:09 am

mallim wrote:Hi Everyone

I am a DP holder sponsored by my husband holding a S-Pass (downgraded from EP recently).

I have been trying hard to find a job but to no avail.

My question is will I be able to get a LOC in my case assuming I can satisfy all other conditions.

Regards
Amy


For those trying under this scenario, the LOC will get rejected reason being S-Pass' DP holder cannot apply for LOC.

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Re: Will this work if the DP is sponsored by a S-Pass holder

Postby sundaymorningstaple » Fri, 22 Mar 2013 9:20 am

mallim wrote:
mallim wrote:Hi Everyone

I am a DP holder sponsored by my husband holding a S-Pass (downgraded from EP recently).

I have been trying hard to find a job but to no avail.

My question is will I be able to get a LOC in my case assuming I can satisfy all other conditions.

Regards
Amy


For those trying under this scenario, the LOC will get rejected reason being S-Pass' DP holder cannot apply for LOC.


For the record:

Q10 Will dependants continue to be allowed to work?

A10 Work privileges for dependant pass holders remain unchanged. Dependant pass holders of EPs can continue to apply for Letters of Consent. LTVP holders and dependants of S pass holders can continue to apply for work passes.

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Postby MrsMagnum » Fri, 22 Mar 2013 5:20 pm

Hi all

I'm thrilled to be able to report that I've today received approval for my Letter of Consent (Dependant's Pass) from MOM, just over two weeks after submitting my application. I really can't thank you all enough for your invaluable advice.

To address a few points recently discussed, I was very specific in my supporting documentation that I would be self employed as the owner/manager of my sole proprietorship (not a Pte Ltd) and also the employee. So, providing MOM are happy with the rest of the application, this obviously isn't an issue. It will be interesting to see if this changes after 1st April.

Also, I have no way of knowing whether this made a difference, but I've held an Employment Pass in the same industry/occupation as my LoC application for the last few years. While I do have some potential projects lined up, I didn't mention this in my application.

I followed the advice on here exactly and included a covering letter re-iterating my experience. I included the reasons an EntrePass wouldn't be applicable (as described in this thread), but it might be best to change this section to why a Pte Ltd isn't necessary (one employee/no business loan/office lease requirements etc.) in light of the fact that someone already resident (such as a DP holder) wouldn't need an EntrePass. Please correct me if I'm wrong.

Strong Eagle, it's a very fair point that a Pte Ltd demonstrates a more serious venture than a sole proprietorship. However, I suspect that many people, like me, want to see how things go first before the time/cost outlay required to start a Pte. All being well, I will investigate setting one up a few months down the line. Or I may decide to find permanent employment again.

I hope that this has been of some help. Thanks again to all the posters/moderators and best of luck to everyone else.

MrsM

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Postby colio » Fri, 22 Mar 2013 8:54 pm

That's GREAT news MrsM.. so it does seem like so called "experts" are not experts at all, which is what everyone suspected..

Having said this we've since found good reasons to have a Pte Ltd versus a SP as there are additional tax benefits we can gain, as explained by the accountant. Not that the tax rate is very high here, but if we can save a little more, than why not.

The cost of a Pte Ltd is only about $S850 so not a big investment anyways.

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Postby sundaymorningstaple » Sat, 23 Mar 2013 12:16 am

colio wrote:That's GREAT news MrsM.. so it does seem like so called "experts" are not experts at all, which is what everyone suspected..

Having said this we've since found good reasons to have a Pte Ltd versus a SP as there are additional tax benefits we can gain, as explained by the accountant. Not that the tax rate is very high here, but if we can save a little more, than why not.

The cost of a Pte Ltd is only about $S850 so not a big investment anyways.


So who are these "experts" you are talking about. Where did you find them? I'm curious as nobody here claims to be the "experts" as all we do is collect anecdotal evidence and give trends as we see them.

But as a little side note, don't forget, SP need to pay income taxes from the git go if their taxable income is over 20K whereas I believe the 1st 100K profits are not taxable on a new Pte Ltd for the 1st three years.

What tax incentives are available for new startups in Singapore?

New tax incentives for Singapore start-up private limited companies have been introduced since 2005 to support entrepreneurship and to help foster growth of SMEs. Under the new scheme, a newly incorporated company that satisfies the qualifying conditions (viz. be incorporated in Singapore, be a tax resident of Singapore and has no more than 20 shareholders of which at least one is an individual shareholder holding at least 10% of shares) will be taxed as follows:

For each of its first three consecutive tax years - corporate tax rate of 0% on the first S$100,000 of taxable income and 9% (partial exemption) tax rate on the next S$200,000 of taxable income. The taxable income above S$300,000 will be charged at the normal headline corporate tax rate of 17%.
From the fourth tax year onwards - 9% tax rate on taxable income of upto S$300,000 per annum. The taxable income above S$300,000 will be charged at the normal headline corporate tax rate of 17%.


So if you are a high flying consultant, you may well want to look at it again.

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Postby colio » Sat, 23 Mar 2013 9:54 pm

sundaymorningstaple wrote:
So who are these "experts" you are talking about. Where did you find them? I'm curious as nobody here claims to be the "experts" as all we do is collect anecdotal evidence and give trends as we see them.


SMS: I wasn't referring to anyone on this forum. I was referring to these agents that we consulted that market themselves as experts. The advice they gave us is wrong in the face of the fact that MrsM got her DP LOC approved.

But as a little side note, don't forget, SP need to pay income taxes from the git go if their taxable income is over 20K whereas I believe the 1st 100K profits are not taxable on a new Pte Ltd for the 1st three years.


What tax incentives are available for new startups in Singapore?

New tax incentives for Singapore start-up private limited companies have been introduced since 2005 to support entrepreneurship and to help foster growth of SMEs. Under the new scheme, a newly incorporated company that satisfies the qualifying conditions (viz. be incorporated in Singapore, be a tax resident of Singapore and has no more than 20 shareholders of which at least one is an individual shareholder holding at least 10% of shares) will be taxed as follows:

For each of its first three consecutive tax years - corporate tax rate of 0% on the first S$100,000 of taxable income and 9% (partial exemption) tax rate on the next S$200,000 of taxable income. The taxable income above S$300,000 will be charged at the normal headline corporate tax rate of 17%.
From the fourth tax year onwards - 9% tax rate on taxable income of upto S$300,000 per annum. The taxable income above S$300,000 will be charged at the normal headline corporate tax rate of 17%.

So if you are a high flying consultant, you may well want to look at it again.


Thanks for this but still really good news to us as seriously lower tax rate than we are used to in Australia. My wife would be happy to get this tax rate!

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Postby Strong Eagle » Sun, 24 Mar 2013 6:19 am

MrsMagnum wrote:Hi all

I'm thrilled to be able to report that I've today received approval for my Letter of Consent (Dependant's Pass) from MOM, just over two weeks after submitting my application. I really can't thank you all enough for your invaluable advice.

To address a few points recently discussed, I was very specific in my supporting documentation that I would be self employed as the owner/manager of my sole proprietorship (not a Pte Ltd) and also the employee. So, providing MOM are happy with the rest of the application, this obviously isn't an issue. It will be interesting to see if this changes after 1st April.

Also, I have no way of knowing whether this made a difference, but I've held an Employment Pass in the same industry/occupation as my LoC application for the last few years. While I do have some potential projects lined up, I didn't mention this in my application.

I followed the advice on here exactly and included a covering letter re-iterating my experience. I included the reasons an EntrePass wouldn't be applicable (as described in this thread), but it might be best to change this section to why a Pte Ltd isn't necessary (one employee/no business loan/office lease requirements etc.) in light of the fact that someone already resident (such as a DP holder) wouldn't need an EntrePass. Please correct me if I'm wrong.

Strong Eagle, it's a very fair point that a Pte Ltd demonstrates a more serious venture than a sole proprietorship. However, I suspect that many people, like me, want to see how things go first before the time/cost outlay required to start a Pte. All being well, I will investigate setting one up a few months down the line. Or I may decide to find permanent employment again.

I hope that this has been of some help. Thanks again to all the posters/moderators and best of luck to everyone else.

MrsM


Thank you for the update... personal experiences of others are invaluable in trying to understand the inner workings and thought processes of MOM.

It is quite interesting that you were able to set up under a sole proprietorship. I say this only because Entrepass requirements were changed in 2009 to require a private limited, mainly to sort out and reject the "fluff" applicants.

I am curious about one thing though. You need to state a monthly income on the LOC form. How were you able to do that (and justify the amount) in light of not submitting any supporting documents that you have clients lined up.

Thanks again for sharing, and congratulations to you.

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Postby MrsMagnum » Mon, 25 Mar 2013 3:38 pm

Hi StrongEagle

Thanks for the congrats. I think everyone on this thread is specifically referring to Dependant's Pass holders who want to work for themselves via a sole proprietorship rather than a Pte Ltd. If I was setting up a Pte, I'd probably want my own Employment Pass rather than hinging everything on my spouse's pass. Disclaimer: I haven't investigated this route so am only assuming this is how it works.

The way I see it, someone applying for an EntrePass is in quite a different situation. For a start, they might be moving their whole family here, who will all be dependent on their new business. DP holders are resident anyway, so may as well be working and ploughing some earnings back into the Singapore economy. A Pte Ltd seems a bit excessive for someone who just wants to be self employed on a freelance basis. But maybe that's just my opinion.

In terms of monthly income, I followed the advice on this thread and gave an educated guess based on what I'll be charging and what I know to be market rates. I guess every industry is different, but the nature of freelancing means you won't have a fixed monthly salary, and the LoC application is a standard form.

Hope that helps,

MrsM

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Postby pauline2509 » Thu, 28 Mar 2013 12:59 am

Hi

Can you please advise if these steps applied to someone with a Long Term Visit Pass + or only for Dependent Pass Holder.

I'm a Singapore Citizen but not working and so cannot apply for a dependent pass for my husband when we move back to Singapore. But I think we should be able to get him a LTVP+ since we have been married for almost 8 years ( fingers crossed ) He wants to work as a freelance translator when we relocate to Singapore.

Thanks for any information


wackyjaqy wrote:I had compiled the information from the various posts along with my experiences and put it all in one document for a friend. Sharing it for everyone else as it appears that people are losing track of the various postings.

Tips to Open Sole Proprietorship with Dependent Pass Holder

Your spouse DOES NOT need to sponsor your business if you're a Dependent-that's the whole point of being a sole-proprietor and signing your own letter of consent

There is a difference between a company and a business and the ACRA operators aren't trained to answer questions about a sole-proprietorship (business). They are only trained to answer questions about an Entre-Pass. Don't waste your time asking.

If you do ask anyways and the operators and tell you that if you want to open a company, �YOU NEED AN ENTREPASS!� They are wrong. You do not need an EntrePass. Just check out the descriptions on the MOM site for a distinction between "sole-proprietorship" and "company." That's their standard default recommendation-"You need an EntrePass"-they are CLUELESS!!

When filling out salary, guess a reasonable amount you might get paid per month. Previous approvals were listed at minimum of SGD$2500 per month.

Paid up capital � ok to list as $0. Nothing is required in the way of paid-up capital. Remember, you are opening a "sole proprietorship" or "business" not a "company", ergo you don't need to prove liquidity.

Do sign your own Letter of Consent.

The LOC ask for a business stamp. It is ok to not have one. Just note N/A on the form.

Steps to complete:
1) Register your business name with ACRA and pay the $65 fee
2) Download and complete the LOC Form from MOM
3) Submit the following documents and put your business logo on all forms
a. ACRA Business Profile
b. Completed LOC Form
c. Detail Description of Job Duties
d. Venue where you will be performing job duties
e. Reasons why EntrePass is not applicable (Ex: not appropriate for an independent consultant, with no capital investment requirements, physical place of business or employees)
f. Undertaking Letter- a letter stating that you will terminate all workings of the company should your DP be cancelled.
g. Self-employment Letter � write a letter stating that you will be employing yourself
h. Any other documents supporting your experience (if applicable) � Resume, License, Copy of College Degrees or Certificates
4) Mail documents to MOM or head to the office on Havelock and submit in their mail room
5) Expect 3-5 week wait. Call MOM or email MOM as a follow up if you don�t receive a notice in the mail within 3 weeks. MOM says they will not answer questions until it has been 3 weeks.


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