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$20K Security Deposit on GST Registration?

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blackbirdz
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$20K Security Deposit on GST Registration?

Postby 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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Postby 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."

http://www.iras.gov.sg/irasHome/page04.aspx?id=1822

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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