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$20K Security Deposit on GST Registration?

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$20K Security Deposit on GST Registration?

Post by blackbirdz » Tue, 02 Apr 2013 1:56 pm

I just incorporate my business in SG (Pte Ltd) and I am holding EntrePass as the Managing Director to fully manage the company.

I did a voluntary GST and I got a letter from IRA that they require my company to deposit $20K as security deposit.

I read from IRA website that security deposit is required if one of the director/partner has outstanding issue with IRA - in which this doesn't apply to my case. I am the only Director in the company, I don't owe any tax to the SG gov. The other two people are local nominee Secretary (not Director).

I called IRA the reason for Security Deposit is because my company does not have "local Director". Even though I am local Director now, IRA considered me as Foreigner since I do not have NRIC.

Is this correct and proper?
I mean I don't mind putting security deposit, but the statement in IRA website itself never mention anything about foreigner is required to put security deposit. Can somebody please help to clarify this?

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Strong Eagle
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Post by Strong Eagle » Tue, 02 Apr 2013 9:40 pm

If you read the relevant IRAS webpage, it says, "Security deposit may also be imposed for any other reasons that the Comptroller deems fit."

In your case, it seems pretty clear. You have a newly incorporated business. You are a foreigner. You did a voluntary GST registration. Not that you would do it, and... this is a new start up business, with a fair probability of failure and an owner who might spend collected GST to keep the business running, and if not, would simply do a runner back to his home country.

The opportunity for and probability of abuse of GST collections and non payment will be considered high; hence the deposit.

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