Extra income - how to channel it legally?

[Fortan]

I work in a very specialized area and have quite a strict contract saying I can only be employed here in Singapore by the company I work for. I have several times been offered to go abroad on consultancy projects for 1-2 or 3 days but up until now I have been reluctant to do so. I have now formally asked my company whether they would have any problems with me doing a little consultancy on the side and they had no problems at all - as long as I take annual leave to do it and it doesn't relate to other companies in our industry.

I recently got asked to come to Jakarta to do some training for a company there for 2 days and the money they offered are quite significant. I am just wondering how I am going about doing it legally correct? As far as I know, I am not allowed to write them a tax invoice, as I have no company registered and I couldn't imagine they would be willing to pay me in cash (which I reckon wouldn't be legal)..... I don't mind paying income tax of the money here in Singapore, so how do I do this ??

[Manoj.K]

Can they do a bank transfer? Are you willing to accept that? Anyone can issue a receipt as long as there is an authorized signature( in this case, yours)

[Fortan]

Can they do a bank transfer? Are you willing to accept that? Anyone can issue a receipt as long as there is an authorized signature( in this case, yours)

I was in doubt as how to issue a receipt. I can easily create an invoice/receipt for them but then I reckon it would just be my name and address on it and nothing else - no company name....

[Manoj.K]

Unless they have a finance regulation on who can be hired for such training, they should be okay to accept the bill from you. Best check with the company what requirements they have of the bill you will provide.

Post that, please do make sure, you show the income for IRAS...

Refer to: https://www.iras.gov.sg/irasHome/upload ... ceipts.pdf

For more information

[zzm9980]

and I couldn't imagine they would be willing to pay me in cash (which I reckon wouldn't be legal).

In Indonesia? Sorry , i have nothing to contribute but that made me chuckle.

I'm actually also interested in whatever the response is.

[Fortan]

and I couldn't imagine they would be willing to pay me in cash (which I reckon wouldn't be legal).

In Indonesia? Sorry , i have nothing to contribute but that made me chuckle.

I'm actually also interested in whatever the response is.

Haha.... yeah everything seems to be legal in Indonesia I was more worried about what they would think here in Singapore It is a European company so I think they might be interested in doing it the right way....

[ecureilx]

I recently got asked to come to Jakarta to do some training for a company there for 2 days and the money they offered are quite significant. I am just wondering how I am going about doing it legally correct? As far as I know, I am not allowed to write them a tax invoice, as I have no company registered and I couldn't imagine they would be willing to pay me in cash (which I reckon wouldn't be legal)..... I don't mind paying income tax of the money here in Singapore, so how do I do this ??

When I did freelance work, I made my own invoice in Word, based on what a contractor gave me... and used it to bill anybody, mostly for smaller amounts though .

You can use it as an invoice, as long as it is not a TAX invoice. And always payment to me was in Cheque .. never in cash, even the 100$ I billed somebody for a site visit (yah, I learnt - don't do free service, if you go to look-see, charge them .. )

And the only time my fee was reasonably large, I declared it to IRAS .. the 200$ and 300 $ I made maybe twice a year - I didn't .. not that it would have mattered for tax purpose I guess.

now, my work was not into 5 figure pay .. even the couple or three work I got annually .. didn't add up to more than 1,000 $ except the one off time ..

[x9200]

Post that, please do make sure, you show the income for IRAS...

This is an income received abroad while he is abroad and it is not connected with the job he performs in Singapore. I am not that sure if this is taxable under Singapore income tax.
https://www.iras.gov.sg/irasHome/page.aspx?id=8502

The only case it is taxable seems if his company is a foreign employer as defined by IRAS.

[Beeroclock]

Post that, please do make sure, you show the income for IRAS...

This is an income received abroad while he is abroad and it is not connected with the job he performs in Singapore. I am not that sure if this is taxable under Singapore income tax.
https://www.iras.gov.sg/irasHome/page.aspx?id=8502

The only case it is taxable seems if his company is a foreign employer as defined by IRAS.

Yes it seems not taxable here as per the link, even if the money received in a bank account in Singapore. Wonder if any Indonesian tax implication though?

[Beeroclock]

Post that, please do make sure, you show the income for IRAS...

This is an income received abroad while he is abroad and it is not connected with the job he performs in Singapore. I am not that sure if this is taxable under Singapore income tax.
https://www.iras.gov.sg/irasHome/page.aspx?id=8502

The only case it is taxable seems if his company is a foreign employer as defined by IRAS.

I was thinking further on this, if correct then it seems a loophole that " tax minimizer " types might exploit. E.g financial high flyer makes sgd 1mill bonus gross (equates to 800k net). He plans privately with his company ABC in lieu of this they enter a consultancy agreement with company XYZ for say 910k to advise on a refreshed interior design for the office (or whatever). Company XYZ separately and subsequently engages financial high flyer to give a keynote motivational speech to their staff (or whatever) in a faraway land for a princely fee of 900k (with company ABC's permission for the freelance work. So the outcome = company ABC+90k, company XYZ +10k, FHF +100k, IRAS -200k. This doesn't seem right to me but I can't quite see what will stop it.... ??

Sorry for the digression Fortran. And to make clear I'm not at all supportive of such schemes and would be most pleased if authorities close tax loopholes to make it fairer for all.

[x9200]

IMHO it's not a loophole. Just a fake agreement, false statement in the tax declaration papers and if proven so beyond reasonable doubts this would be charged as criminal for sure. More money involved more attention it will attract from both SG and ID authorities.
Loophole would be if the thing was legal. Here it's not because de facto they do not pay for the renovation/interior design.

[Beeroclock]

Yes you're right. But I guess they will find a more realistic agreement with a deliverable of intangible/opaque value. Like the way google, if I understand correctly, take a tax position that the intellectual property behind the search algorithm resides in the Bahamas instead of Silicon Valley. I don't know if you would call this fake or at very least stretching credibility, but many big corporates and wealthy individuals seem to push the boundaries quite a lot in these areas and it seems to me just another way the rich get richer and poor get relatively poorer. Much noise last year at global summits about fixing these issues but I'm not holding my breath.

[ScoobyDoes]

Can they do a bank transfer? Are you willing to accept that? Anyone can issue a receipt as long as there is an authorized signature( in this case, yours)

I was in doubt as how to issue a receipt. I can easily create an invoice/receipt for them but then I reckon it would just be my name and address on it and nothing else - no company name....

How often, and how long would you think consultancy or extra income might be for you and what kind of annual income do you think would come from it?

Your option is to set up your own company, BVI or Seychelles for example, whereby you can legally invoice from your own wholly owned company. I have my own company registered in the Seychelles, with multi-currency bank account in Hong Kong, for any such purpose I see fit though provisionally setup in case my EP is rejected again next renewal (Plan B).

For around USD1000/yr you have a legal company and company bank account that you can use for all trade and invoicing. You don't, legally, need to keep a set of accounts, do an audit, or submit financial statements so it's very easy to maintain.......and tax free. For a licence fee of ~USD1000/yr it's all perfectly easy.

From a Singapore point of view, it's an overseas company so you don't need to declare it. You don't need to take out a salary so you've nothing to declare to IRAS either.

You already have an agreement from your current company to do outside work and that's actually usually the hardest to do. All other issues are quite straight forward provided you think ~USD1000 is easily covered by the extra income.

[PNGMK]

Can they do a bank transfer? Are you willing to accept that? Anyone can issue a receipt as long as there is an authorized signature( in this case, yours)

I was in doubt as how to issue a receipt. I can easily create an invoice/receipt for them but then I reckon it would just be my name and address on it and nothing else - no company name....

How often, and how long would you think consultancy or extra income might be for you and what kind of annual income do you think would come from it?

Your option is to set up your own company, BVI or Seychelles for example, whereby you can legally invoice from your own wholly owned company. I have my own company registered in the Seychelles, with multi-currency bank account in Hong Kong, for any such purpose I see fit though provisionally setup in case my EP is rejected again next renewal (Plan B).
vided you think ~USD1000 is easily covered by the extra income.

I agree with this approach. I used to do this all over the world - Australia, Singapore, China etc - issue an invoice for 'services' from my Seychelles company and have the money TT'd to my HSBC account in HK. I declared and paid tax on the personal drawings while I was resident in Singapore and HK and the remainder is in the account for retirement.

[Fortan]

How often, and how long would you think consultancy or extra income might be for you and what kind of annual income do you think would come from it?

I wouldn't think it would be more than a maximum of 2 or 3 times a year and probably around 4-6,000 SGD each time.