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Freelancing Lawyer on DP -- Help Please

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Freelancing Lawyer on DP -- Help Please

Postby Cazador » Mon, 01 Apr 2013 11:07 pm

Hello Everyone,

Thank you all for the wealth of information contained on this website. My wife and I are moving to Singapore from the United States in July. My wife will work on an employment pass; I will have a DP. We currently live in Denver, Colorado, USA, where I am a lawyer. I am not employed by a law firm. Instead, I own a single-member LLC that contracts with law firms to provide freelance legal writing services (and I take the occasional client). In short, I am a freelance legal writer and all of my clients are in Denver.

I have seen a number of posts on this board regarding freelancing in Singapore on a DP, but would appreciate any clarification on the following subjects:

1. To your knowledge, would I run afoul of any Singapore laws by providing freelance legal work to law firms in the United States while on a DP? I would do the writing on a laptop (mainly from my condo, but perhaps from the occasional café), email the documents to Colorado clients, and participate in phone calls with Colorado clients. No work product would be sold in Singapore and no services would be provided to companies or individuals in Singapore.

2. Would I need to go through the (at this point) daunting process of obtaining authorization for this business with the MOM via an LOC or can I do my work without this document because of its nature?

3. All of my income for work done in Singapore will be deposited into an American bank account by American companies. May I then transfer the funds to my Singapore bank (a process I have already worked out) without running afoul of your answers to questions 1 and 2.

4. It is important to note that I am not trying to avoid paying Singapore taxes. On the contrary, I would like to file a Singapore tax return under this scheme without obtaining an LOC or other similar document. Can I simply file a personal income tax return in Singapore without owning a Singapore business based on the information above?

Thank you all in advance for any knowledge -- personal or otherwise -- that you can provide.
"He not busy being born is busy dying." -- Bob Dylan

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Re: Freelancing Lawyer on DP -- Help Please

Postby Strong Eagle » Tue, 02 Apr 2013 12:38 am

Cazador wrote:Hello Everyone,

Thank you all for the wealth of information contained on this website. My wife and I are moving to Singapore from the United States in July. My wife will work on an employment pass; I will have a DP. We currently live in Denver, Colorado, USA, where I am a lawyer. I am not employed by a law firm. Instead, I own a single-member LLC that contracts with law firms to provide freelance legal writing services (and I take the occasional client). In short, I am a freelance legal writer and all of my clients are in Denver.

I have seen a number of posts on this board regarding freelancing in Singapore on a DP, but would appreciate any clarification on the following subjects:

1. To your knowledge, would I run afoul of any Singapore laws by providing freelance legal work to law firms in the United States while on a DP? I would do the writing on a laptop (mainly from my condo, but perhaps from the occasional café), email the documents to Colorado clients, and participate in phone calls with Colorado clients. No work product would be sold in Singapore and no services would be provided to companies or individuals in Singapore.


Income that is realized from overseas is generally not taxable in Singapore.

http://www.iras.gov.sg/irasHome/page04.aspx?id=3558

Since no services are supplied in Singapore, you are not engaging in taxable events.

2. Would I need to go through the (at this point) daunting process of obtaining authorization for this business with the MOM via an LOC or can I do my work without this document because of its nature?


If you wanted to, you could file for a LOC and be "official" in Singapore. However, as noted above, the income is not taxable anyway, and I'd just let it fly under the radar. You affect zero jobs in Singapore.

Since you are an American, you could get a LOC and declare all your income in Singapore and pay tax here. You could then take advantage of the earned income exclusion and not pay USA tax on earnings up to about $95K. Tax rates are cheaper here. But, you would have to be paid here, not in the USA for this to work.

3. All of my income for work done in Singapore will be deposited into an American bank account by American companies. May I then transfer the funds to my Singapore bank (a process I have already worked out) without running afoul of your answers to questions 1 and 2.


No issues.

4. It is important to note that I am not trying to avoid paying Singapore taxes. On the contrary, I would like to file a Singapore tax return under this scheme without obtaining an LOC or other similar document. Can I simply file a personal income tax return in Singapore without owning a Singapore business based on the information above?

Thank you all in advance for any knowledge -- personal or otherwise -- that you can provide.


I am not a lawyer, and, the IRAS website divides individuals into resident and non-resident taxpayers. Non resident taxpayers don't need to file tax returns at all if all the income is earned outside Singapore.

http://www.iras.gov.sg/irasHome/page.aspx?id=8502

But, you are a resident, and on a DP. As noted in 1) above, you are not required to pay tax on your earnings, and if you choose to do so, you will need to be able to legally work in order to earn an income, and therefore, you will need a LOC.

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Postby Cazador » Tue, 02 Apr 2013 11:39 am

Strong Eagle,

Thank you for the quick and helpful reply -- I appreciate it! A few follow-up questions, if you have the time:

1. Flying under the radar is very tempting at this point, for ease of execution if for no other reason. By doing this, I assume you mean maintaining business as usual in Colorado, but doing the work in Singapore. That is, maintaining clients in the U.S., getting paid into a U.S. bank account, and paying U.S. taxes. Do you know folks for whom this path has worked? It seems the only way this plan would fail is having authorities notice large transfers into a Singapore bank account. In your opinion, would it be better to only move small amounts at a time? And the real question, am I just getting too worried about a simple issue?

2. If I did want to make things official with the MOM, you suggested obtaining a LOC. However, I understood these to be nearly impossible to obtain, especially for a DP holder like me that just does solo legal consulting overseas and would not have a local sponsor, etc. Thoughts? Are there certain factors weighing in my favor, such as profession, income, and lack of interference with local business?

Again, thanks for taking the time to help me out.

Regards,

Cazador
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Postby Strong Eagle » Tue, 02 Apr 2013 12:03 pm

Cazador wrote:Strong Eagle,

Thank you for the quick and helpful reply -- I appreciate it! A few follow-up questions, if you have the time:

1. Flying under the radar is very tempting at this point, for ease of execution if for no other reason. By doing this, I assume you mean maintaining business as usual in Colorado, but doing the work in Singapore. That is, maintaining clients in the U.S., getting paid into a U.S. bank account, and paying U.S. taxes. Do you know folks for whom this path has worked? It seems the only way this plan would fail is having authorities notice large transfers into a Singapore bank account. In your opinion, would it be better to only move small amounts at a time? And the real question, am I just getting too worried about a simple issue?


Maybe "flying under the radar" is the wrong term to use. It is pretty clear that IRAS says that money earned overseas is not taxable. It is also pretty clear that there are no specific laws or regulations governing your situation, and that makes perfect sense. You affect zero jobs in Singapore. You cost the government zero dollars. You don't even exist in your transactions. So, rather than saying, "under the radar", it would be appropriate to say there is no law that prevents this activity, and no law that requires reporting of income or payment of tax.

Second, and as an example, I maintained real estate in the US. I bought and sold properties. I invested in a big commercial project. I had to file income with the USA but never filed anything in Singapore because my funds were earned abroad. Same with you.

Third, are you planning on dumping millions into your Singapore account? That's a large transfer. Singapore is the Switzerland of banking in Asia... millions of dollars flow into this country from Indonesia, China, Thailand, Burma, Vietnam... and do you think the authorities actually want to know about the sources of this money? They do not. In fact, Singapore refuses most USA fishing expeditions for banking information... if the USA government cannot provide specific details to support revealing of bank information, they won't get it. No worries on transfers.

2. If I did want to make things official with the MOM, you suggested obtaining a LOC. However, I understood these to be nearly impossible to obtain, especially for a DP holder like me that just does solo legal consulting overseas and would not have a local sponsor, etc. Thoughts? Are there certain factors weighing in my favor, such as profession, income, and lack of interference with local business?

Again, thanks for taking the time to help me out.

Regards,

Cazador


You need to stop in at the Careers forum. LOC's are not that hard to get, especially if you demonstrate expertise, experience, and the opportunity to earn income that will generate Singapore tax revenues. You would need a local nominee director to start a private limited, and there has been a recent poster that got a LOC as a sole proprietorship.

Otherwise, you don't need a local sponsor... you just need to convince the gahmen that you have a viable business that supports your income in the application.

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Postby Cazador » Wed, 03 Apr 2013 1:27 pm

SE,

Thank you -- your input has been awesome. You prompted some legal research of my own today and I agree: there is no law that prevents my business activities and no SG tax liability resulting from those activities. In fact, in case you're interested, I spoke with an American-based CPA who specializes in expat tax issues in SG and SE Asia and he agreed with all aspects of your advice. So, in short, thanks for the wisdom and guidance. Hopefully I can buy you a beer or tea (your choice) after I arrive in July. Thanks again and be well.

Until Then,

Cazador
"He not busy being born is busy dying." -- Bob Dylan

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Postby Duckfan » Fri, 14 Jun 2013 11:46 am

Hi Cazador, I was happy to find this thread as I am in a similar position. I am moving to Singapore this summer because my spouse is relocating there for business and I'll be on a DP. My law firm is willing to allow me to work remotely from Singapore, same points apply: U.S. firm (no offices abroad), work performed will only be for U.S. clients and will have absolutely no connection to Singapore, and I'll be paid into my U.S. bank account.

The firm's tax advisors are suddenly concerned that simply by my telecommuting presence in Singapore, the firm will somehow become obligated to pay corporate tax to Singapore. That's false, right? Since I don't have to pay Singapore income tax, why would they?

Any insight on this would be greatly appreciated.

Edited to add: hmm, I just noticed that the IRAS provision that says that income received from outside Singapore is nontaxable applies to sole proprietors/people who are self-employed. I'm not, obviously, since I have an employer. Wouldn't the income still be nontaxable, though, simply by virtue of the fact that it has no connection to Singapore? I'm not moving there at the behest of my employer and won't be doing any firm business there - I'm moving there because my spouse is.

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Postby Strong Eagle » Fri, 14 Jun 2013 11:55 pm

Duckfan wrote:Hi Cazador, I was happy to find this thread as I am in a similar position. I am moving to Singapore this summer because my spouse is relocating there for business and I'll be on a DP. My law firm is willing to allow me to work remotely from Singapore, same points apply: U.S. firm (no offices abroad), work performed will only be for U.S. clients and will have absolutely no connection to Singapore, and I'll be paid into my U.S. bank account.

The firm's tax advisors are suddenly concerned that simply by my telecommuting presence in Singapore, the firm will somehow become obligated to pay corporate tax to Singapore. That's false, right? Since I don't have to pay Singapore income tax, why would they?

Any insight on this would be greatly appreciated.

Edited to add: hmm, I just noticed that the IRAS provision that says that income received from outside Singapore is nontaxable applies to sole proprietors/people who are self-employed. I'm not, obviously, since I have an employer. Wouldn't the income still be nontaxable, though, simply by virtue of the fact that it has no connection to Singapore? I'm not moving there at the behest of my employer and won't be doing any firm business there - I'm moving there because my spouse is.


Your law firm's tax advisors are a bunch of nincompoops. Let's split this into two sections.

First, let's look at tax consequences for your firm. Your firm has no legal presence and is not required to have a legal presence unless it is doing work for Singapore firms or individuals. Since it is doing no business in Singapore it doesn't need a company. It couldn't pay tax if it wanted to because it doesn't have a legal entity.

Maybe your tax advisors looked at this page: http://www.iras.gov.sg/irasHome/page04.aspx?id=1338. But again, this refers to a company that is doing business in Singapore. No business in Singapore? Then, no applicability.

Your tax advisor's position would be a nightmare for tens of thousands of companies who provide payments to individuals in Singapore.

Finally, even if, through some convoluted reasoning, your law firm actually started a company in Singapore, the company wouldn't have any earned income here. The Singapore company would not be invoicing any entity; therefore zero income. It would always make a loss because of expenses. No tax. Even if the company did declare foreign service income, it is non taxable in much the same way as for an individual.

But, the bottom line is: They don't need to create a company and they don't have any tax liability.

Second, individual service income is specifically marked as non taxable if the following conditions are met:

a) The income is derived from services performed outside of Singapore... and that doesn't mean where you are sitting, it means that the recipient of the services is outside of Singapore and not related to a Singapore company.

b) Taxes have been paid on the income in the country where the services were performed.

c) There is a fixed place of operation in the country where the services are being performed.

It doesn't matter whether you are a sole proprietor or an employee. See this page for info.

http://www.iras.gov.sg/irasHome/page04.aspx?id=13826 and

http://www.iras.gov.sg/irasHome/uploade ... Income.pdf

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Postby Duckfan » Sat, 15 Jun 2013 9:29 am

Thank you, thank you, Strong Eagle. I thought the firm's position seemed implausible and am glad to know that I am not in fact insane or a poor researcher. (I am not by any means a tax expert, though, so I wondered if there were something I had missed.)

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Postby JR8 » Sat, 15 Jun 2013 1:19 pm

Duckfan wrote:The firm's tax advisors are suddenly concerned that simply by my telecommuting presence in Singapore, the firm will somehow become obligated to pay corporate tax to Singapore.


Sounds to me rather like they think they'd found a cherry-patch of fees, in investigating that one.

Just my 2c.

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Postby Strong Eagle » Sat, 15 Jun 2013 11:32 pm

Here is a couple more items to consider and which might be asked of those "tax advisors".

Because you are performing work in the USA for a US company for US clients, you do not qualify for the earned income exclusion. In fact, even though you are out of the country, your firm must still withhold FICA and income tax (unless of course you have some sort of partnership arrangement, in which case you would be responsible for your own quarterly filings).

Your firm is invoicing USA clients in US dollars and taking payments and putting them into a USA bank. Clearly, the client/firm commercial transaction occurs wholly within the USA. Perhaps those advisors could shed light on how a transaction done wholly within the USA (and subject to USA company tax) could result in Singapore corporate tax. I'm sure Singapore would like it.

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one more thing

Postby jonivefan » Sat, 15 Jun 2013 11:38 pm

Hi, I'm a law student here (for what its worth). Here's my five cents:

While you seem to be on the clear as far as 'working' goes, I'd do a bit more research on the nature of your work as well, i.e. legal practice. The legal sector is pretty heavily regulated in Singapore, and especially since i don't know much about the nature of work you undertake, i'd exercise a bit of caution or maybe research more about undertaking legal work in Singapore, even though it concerns foreign clients.

And even if you don't incur taxes on income earned outside of SG, i'm not sure you can 'work' albeit remotely while on a DP. And that ICA is pretty strict on.

I know this is NOT legal advice, and I for one would not trust anyone here for actual advice, but if it helps: http://www.expatforum.com/expats/singap ... loyer.html

TLDR: Its not just the taxes you should think about but also whether you're able to do legal work here in sg.

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Postby katbh » Sun, 16 Jun 2013 7:56 am

Hi Cazador

Just saw your link. Not sure if your situation has been resolved. I have exactly the same set up as you - I am a lawyer doing 'lawyering' remotely. But not from America.

My advice to you would be to get a LOC if you can or even an EP by setting up your own company. You may find also that you can pick up drafting work here - you should not need a PracCert for this here. Also you can look at international precedent data bases that pay well.

The advantage of course is Tax.

The issue is really that the services are provided IN Singapore and are potentially taxable if you live here for 6 months + 1 day per year. Your clients, like mine, may not even know you are in Singapore, but you are doing the work here - regardless of it being by internet.

There is no problem with your clients paying into US bank account and you can either leave the funds there or transfer them here. But they are potentially taxable here and if that is the case, it is better to get under the regime here than pay high American taxes (unless of course you want to contribute to the country where you no longer live).

PM if you need technical advice.

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Postby katbh » Sun, 16 Jun 2013 8:04 am

Hi Cazador

Just saw your link. Not sure if your situation has been resolved. I have exactly the same set up as you - I am a lawyer doing 'lawyering' remotely. But not from America.

My advice to you would be to get a LOC if you can or even an EP by setting up your own company. You may find also that you can pick up drafting work here - you should not need a PracCert for this here. Also you can look at international precedent data bases that pay well.

The advantage of course is Tax.

The issue is really that the services are provided IN Singapore and are potentially taxable if you live here for 6 months + 1 day per year. Your clients, like mine, may not even know you are in Singapore, but you are doing the work here - regardless of it being by internet.

There is no problem with your clients paying into US bank account and you can either leave the funds there or transfer them here. But they are potentially taxable here and if that is the case, it is better to get under the regime here than pay high American taxes (unless of course you want to contribute to the country where you no longer live).

PM if you need technical advice.

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Postby Strong Eagle » Mon, 17 Jun 2013 12:54 am

katbh wrote:The issue is really that the services are provided IN Singapore and are potentially taxable if you live here for 6 months + 1 day per year. Your clients, like mine, may not even know you are in Singapore, but you are doing the work here - regardless of it being by internet.


This is patently NOT correct. From the IRAS website: http://www.iras.gov.sg/irasHome/page04.aspx?id=154

Generally, overseas income received in Singapore on or after 1 Jan 2004 is not taxable. These include overseas income paid into a Singapore bank account.

You do not need to declare overseas income that is not taxable.


Further, the IRAS site directly deals with "professional" income derived overseas.

http://www.iras.gov.sg/irasHome/uploade ... Income.pdf

3.1 Foreign-sourced Income
Foreign income that does not arise from a trade or business carried on
in Singapore.


The meaning is clear. It is where the business is conducted, not where the work is performed. Duckfan's firm is clearly not conducting business in Singapore. It invoices in the USA. Your assertion that because Duckfan works from a PC in Singapore somehow makes him liable for tax is unsupported by any law or regulation I can find. Perhaps you'll provide the citation that supports your assertion?

With respect to foreign service income:

Foreign-sourced service income
Service income refers to income from professional, technical,
consultancy or other services provided by a specified resident taxpayer
in the course of its trade, profession or business. Such service income
is considered foreign-sourced if the services are provided through a
fixed place of operation in a foreign country. If the services are not
provided through a fixed place of operation in a foreign country, the
service income will be considered Singapore-sourced even though:
a. The income is derived from services rendered outside Singapore;
and
b. Tax is payable in that foreign country in accordance with the
provisions of a DTA with the foreign country.
6.4 A fixed place of operation refers to a place of management, an office or
some floor space where the specified resident taxpayer or its
employees provide the services.


Although Duckfan may be working in Singapore, he is providing his services at the law firm's offices in the USA. He emails. He sends reports and opinions. He sends contracts. They all arrive in the office in the USA and are used in the USA.

So long as he pays taxes in the USA, which he is required to do under USA tax law, he is not subject to tax in Singapore.

But again, show me the citations that you believe supports your original assertion.
Last edited by Strong Eagle on Mon, 17 Jun 2013 9:25 pm, edited 1 time in total.

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Postby Duckfan » Mon, 17 Jun 2013 1:59 am

Thank you for your informative posts, Strong Eagle, and I appreciate the citations to authority.

My firm's tax people are saying that the way they read Singapore law, they are required to file for me the Singapore equivalent of a W-2, and that way I would be on IRAS's radar. Which means the firm would get on IRAS's radar, and that's what they don't want.


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