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Freelancing Lawyer on DP -- Help Please

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Postby katbh » Mon, 17 Jun 2013 8:26 am

Remember that tax law is not just what is stated on the IRAS website and also goes beyond legislation, but also into public and private tax rulings. My situation is exactly the same as the poster. I have a private tax ruling. But this was because I WANTED to pay tax in Singapore at the Singapore rate, rather than at the high rate of my originating country (which I no longer call my home country).
He/she, as a resident (living more than 6 months in a country) is entitled to treat the income as received in Singapore and therefore liable only to pay tax in Singapore. It is also my belief that they are at risk of a ruling against them in Singapore if they are 'ordinarily resident here' and are telecommuting. If they were to stay 5 months and 29 days only - no problem.
The foreign company has no liability to pay tax here.
The other aspect to be considered, that seems to be overlooked in this tread, is that the poster is a contractor, not an employee. Therefore those he contracts with have no obligation to him in relation to employment or tax notifications to Singapore IRAS or MOM.

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Postby Strong Eagle » Mon, 17 Jun 2013 11:12 am

Duckfan wrote: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.


They would never need to file anything. The Singapore equivalent of the W2 is the IR8A. But, that's only filed by Singapore companies. It beats the shit out of me how they think a company with no legal entity in Singapore would need to file an IR8A.

Ask these clowns if they would need to file a 1099 for someone permanently outside the USA, a non American, working on contract for the company. The answer should be a resounding, "NO" because 1099's are not required to be filed for persons that don't have a USA tax obligation.
So, why the hell would Singapore be different? They are not.

There is a possibility that you might have to file a tax return just so you can state that the company has a foreign office and that you paid tax, and that the minimum tax is 15%. But, I don't think that even this is applicable to you. But this sure as hell won't trigger a request for an IR8A.

Really, your next step should be to call IRAS and discuss. Take two or three very large patience pills and have at it. You'll get what I told you.

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Postby Strong Eagle » Mon, 17 Jun 2013 11:16 am

katbh wrote:Remember that tax law is not just what is stated on the IRAS website and also goes beyond legislation, but also into public and private tax rulings. My situation is exactly the same as the poster. I have a private tax ruling. But this was because I WANTED to pay tax in Singapore at the Singapore rate, rather than at the high rate of my originating country (which I no longer call my home country).
He/she, as a resident (living more than 6 months in a country) is entitled to treat the income as received in Singapore and therefore liable only to pay tax in Singapore. It is also my belief that they are at risk of a ruling against them in Singapore if they are 'ordinarily resident here' and are telecommuting. If they were to stay 5 months and 29 days only - no problem.
The foreign company has no liability to pay tax here.
The other aspect to be considered, that seems to be overlooked in this tread, is that the poster is a contractor, not an employee. Therefore those he contracts with have no obligation to him in relation to employment or tax notifications to Singapore IRAS or MOM.


So... to be clear... you want to pay tax in Singapore... and I agree... much cheaper than the USA. The Poster and his company really ought to consider creating a company... when all said and done the tax liabilities for both company and individual would be much lower. Too bad the company's "tax advisors" are too ignorant to suggest this as a positive alternative.

It is only your "belief" that there could be a negative ruling. State some precedent that supports this position. I know of no one who has been denied tax relief under this rule... although I freely admit I've not met all 100,000 expats in Singapore.

It doesn't matter whether the OP is a contractor or employee... the rules are the same... I'll give you the citation if you want.

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Postby katbh » Mon, 17 Jun 2013 11:57 am

[quote="

It doesn't matter whether the OP is a contractor or employee... the rules are the same... I'll give you the citation if you want.[/quote]

It does matter. Because, the foreign company, who the poster does not work for, and which is not his company, is not liable to report him. They are merely his clients.

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Postby Strong Eagle » Mon, 17 Jun 2013 9:23 pm

katbh wrote:

It doesn't matter whether the OP is a contractor or employee... the rules are the same... I'll give you the citation if you want.


It does matter. Because, the foreign company, who the poster does not work for, and which is not his company, is not liable to report him. They are merely his clients.


My response was to DuckFan who says he works for a law firm.

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Postby IronMac » Sun, 23 Jun 2013 12:43 pm

Strong Eagle wrote:
katbh wrote:
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?



Ok...maybe I am stepping into a morass but I would tend to agree with katbh. I talked with a Canadian tax accountant about my own situation and it is very much akin to Duckfan's.

First, Duckfan's business is as a self employed independent contractor. That is his business. He conducts it in SG. The American law firm conducts its business in the US and that is fine.

Second, Duckfan is in SG for greater than 183 days out of the year so that makes him a tax resident of SG.

On the IRAS site:

http://www.iras.gov.sg/irasHome/page.aspx?id=11538

He is considered a foreigner and not a local:

Under our tax residency rules, you will be regarded as a tax resident for the calendar year(s) concerned if you stay or work in Singapore:

    for at least 183 days in a calendar year; or
    continuously for 3 consecutive years; or
    for at least 183 days for a continuous period over two years (from 1/1/2007)

Otherwise, you are regarded as a non-resident for tax purposes.


If he is considered a tax resident, he will be taxed on income earned in SG.

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Postby IronMac » Sun, 23 Jun 2013 12:48 pm

Strong Eagle wrote:My response was to DuckFan who says he works for a law firm.


DuckFan does not work for a law firm. He (does) certain work for a law firm.

This is what DF says:

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.


So, there is no employment contract, he is free to take work from other firms (or not), and I assume that he has a great degree of freedom in how he accomplishes his job.

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Postby Strong Eagle » Sun, 23 Jun 2013 9:49 pm

IronMac wrote:
Strong Eagle wrote:My response was to DuckFan who says he works for a law firm.


DuckFan does not work for a law firm. He (does) certain work for a law firm.

This is what DF says:

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.


So, there is no employment contract, he is free to take work from other firms (or not), and I assume that he has a great degree of freedom in how he accomplishes his job.


You are confusing the original poster, Cazador who does have the LLC, with Duckfan who posted later in the thread that he does work for the firm.

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Postby Strong Eagle » Sun, 23 Jun 2013 9:51 pm

IronMac wrote:First, Duckfan's business is as a self employed independent contractor. That is his business. He conducts it in SG. The American law firm conducts its business in the US and that is fine.


Again, you are confusing the original poster, Cazador with Duckfan who posted his question much later in the thread. Duckfan works for the firm.

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Postby Strong Eagle » Sun, 23 Jun 2013 10:20 pm

In the interests of making "my" views clear on this subject, I will repeat pretty much what I said in another post to uscate. Please note that I am not giving legal advice, nor do I have connections with any government official.

First, the laws regarding Singapore income tax on foreign sourced income are pretty clear. If a resident Singapore person were to fly to KL and work there for a company, and also paid Malaysian personal income tax, the law clearly states that this is foreign sourced income and not subject to tax. She would go to work, log into the KL based servers, and do her job.

Singapore laws don't do a very good job of handling telecommuting. Take the same scenario as above. Only this time, the Singapore resident, employed by the same company, and paying income tax in Malaysia on income earned from the company, logs into the KL based servers from her HDB flat in Singapore. Is she doing work locally or on a foreign basis.

I say this if foreign sourced income. She is employed by a foreign company. She uses the foreign company's resources that are located outside of Singapore. She pays foreign income tax on her income. There is absolutely no difference in her working circumstances except that in the first case she works at the office, in the second case, out of her home.

As a practical matter, this arrangement affects exactly ZERO in the Singapore employment and job market. No work permits need to be obtained to do this kind of work. I am of the view that so long as a person in Singapore is not performing work (ie - producing products or services) for a Singapore based company or person, and so long as they are paying income taxes in the country where the money is earned, the Singapore government does not care.

Things are more fuzzy as a contractor. If the same person is contracting to the company, then the question arises: Where is the contractor declaring income? If the contractor has a Malaysian entity and pays tax in Malaysia then it is the same as being an employee for Singapore foreign sourced income determination.

If however, the contractor is not paying foreign income taxes (no legal entity in Malaysia, for example), then that person must have a legal entity in Singapore, have a work permit and pay taxes in Singapore.

Where are the holes in this logic, and what part of the income tax laws would you use to question my position?

Edited to add the following about 2 hours after original post.

Let's go back and look at each poster's circumstance.

Cazador wants to operate his business through a single member, US based LLC. He provides no services in Singapore so he doesn't need to register and company and get a work permit. He affects the employment picture in Singapore not one iota.

His LLC is a USA registered business which means he has a USA place of operations. He must file quarterly IRS tax estimates for income tax and FICA. He will not be able to tax advantage of the USA foreign income exclusion because the IRS views him as doing the work in the USA because of his USA registered LLC. Therefore he meets all the criteria of Singapore tax exempt foreign sourced income and will pay no tax in Singapore.

Duckfan will actually be working for his company as an employee. Neither he nor his company need to file for a company or work permit because they provide no services in Singapore. Duckfan's USA company is obligated by law to withhold FICA and income tax from his earnings, and like Cazador, he will not be able to claim a foreign income exclusion.

All the work is done for a company with a USA place of business for clients that are USA based (or at the very least, not Singapore based). Therefore Duckfan also meets the criteria for tax exempt foreign sourced service income.

Summary: It does not matter where the individual is actually logging in from to do the work... it could be anywhere in the world. What does matter is where the legal entity performing the work is located and where the individual doing the work is paying income tax.

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Postby IronMac » Mon, 24 Jun 2013 5:50 am

Ok, you're right SE, I got it confused between the two.

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Re: Freelancing Lawyer on DP -- Help Please

Postby Popinjay » Mon, 02 Mar 2015 1:58 pm

A related question that hopefully builds on the discussion on this thread.

I've just arrived in Singapore on a DP, my spouse is posted here with an EP. I have been working freelance as a consultant for a UK-based company that provides advisory services in the UK and abroad, although not yet in Singapore. I make contracts with them on a job-by-job basis to provide services to their clients. I am not therefore an employee, but I was self-employed where I lived before moving here.

I understand I need no change in my permit status to continue to fulfil contracts for this company where the service is delivered outside of Singapore. However, obtaining an LoC may be beneficial whether through the SP route or by setting up a private limited company. That is because whilst I could operate entirely offshore - fulfil contracts for the UK company, not provide a service in Singapore, be paid into offshore accounts I'm not sure how legal that option is. I would then have no entity to pay tax from - in UK, here, or elsewhere. I could establish an offshore company, but there's no benefits as this foreign income is not taxable in Singapore where I now live anyway. Right?

However, it would also be good to also provide services for the UK-company here in Singapore (it has some global clients with a presence here). In this case, the UK company contracts with a client in Singapore for the service, and then I contract with the UK company to provide the service to the client in Singapore. One one hand the authorities would have no visibility of my relationship with the client here, it could be made to look no different to any of my other foreign jobs. However, I want to be above board, pay taxes where mandated, and it feels that given I am providing a service in Singapore, even though indirectly, it would be better done openly. How can this best work?

The advice on this forum is excellent and I'm hoping someone has some experience or valid opinions here, and I will feed back on my progress too. Much appreciated!

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Re: Freelancing Lawyer on DP -- Help Please

Postby Popinjay » Wed, 11 Mar 2015 12:32 pm

Adding some information and perhaps answering my own post above. I met with the global tax team of one of the big 4 accountancies yesterday, both a personal and corporate tax specialist. They were clear that working in Singapore for offshore entities was very likely to be viewed as taxable here and that doing this on a DP without a LoC was very risky. Yes, it may not be noticed, but it's not something that will be looked upon beneficially if uncovered. It may also have an impact on the company you are working for in the US or wherever as the authorities here will want to tax them too if it looks like profits are being generated by work done here. Describing it as 'telecommuting' makes it sound a bit more innocuous than it is, I would think carefully about the potential consequences for yourself and your spouse! For declared work where a Singapore resident delivers something overseas e.g. a lecture then the burden of proof is to show that the income is derived from non-Singapore based activities. Working remotely from here is a different matter it seems.

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Re: Freelancing Lawyer on DP -- Help Please

Postby PNGMK » Wed, 11 Mar 2015 4:48 pm

Popinjay wrote:Adding some information and perhaps answering my own post above. I met with the global tax team of one of the big 4 accountancies yesterday, both a personal and corporate tax specialist. They were clear that working in Singapore for offshore entities was very likely to be viewed as taxable here and that doing this on a DP without a LoC was very risky. Yes, it may not be noticed, but it's not something that will be looked upon beneficially if uncovered. It may also have an impact on the company you are working for in the US or wherever as the authorities here will want to tax them too if it looks like profits are being generated by work done here. Describing it as 'telecommuting' makes it sound a bit more innocuous than it is, I would think carefully about the potential consequences for yourself and your spouse! For declared work where a Singapore resident delivers something overseas e.g. a lecture then the burden of proof is to show that the income is derived from non-Singapore based activities. Working remotely from here is a different matter it seems.


Thanks very much - you should into the regional representative stuff on the IRAS website as well...

http://www.iras.gov.sg/irashome/page04.aspx?id=336

Under the Area Representative Scheme, if you work for a foreign employer and operate from a base in Singapore to discharge your regional functions and duties, you may enjoy time apportionment of employment income, subject to qualifying conditions.

If you qualify to be assessed as an Area Representative, you will be taxed on the amount of your remuneration attributable to the number of days spent in Singapore. However, benefits-in-kind (BIK) provided in Singapore are fully taxable.
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