October 8, 2014
Workshop – Working in Singapore
Speaker : Asha Dixit, FCCA
Money Matters For Expats Pte Ltd
583 Orchard Road
#06-01 Forum
Singapore 238884
Tel: 63728778
Email: [email protected]
www.moneymatters.com.sg
By Asha Dixit
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SINGAPORE
Singapore has one of the most open economies in the world and
has long been recognised as one of the best cities for business and
the best place in Asia to live and work.
English is the language of administration and commerce and is
widely spoken across the island.
Apart from strong pro-business and regulatory policies, other
factors such as the country’s strategic geographic position,
excellent infrastructure, favourable tax regime, a highly-skilled and
cosmopolitan labour force have made Singapore business very
conducive and attractive for companies and industries as well as
global investors.
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SINGAPORE
Singapore, being the only Asian country with a ‘AAA’ rating, is one
of the world's top international financial centers. The legal and
judicial system here is robust and efficient and Singapore is
reputed for its tough stance against corruption.
The public transportation is well-integrated and convenient to use,
and the communications networks are world-class, so getting wired
up is easy.
Singapore's corporate income tax rate is one of the lowest in AsiaPacific and it also offers the advantage of having a comprehensive
network of Double Tax Agreements with more than 70 countries.
Singapore’s personal income tax rate also compares favorably with
most countries in the region.
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Economic Outlook – 2014
The Singapore economy grew by 5.8 per cent on a year on year basis
in the third quarter of 2013, higher than the 4.4 per cent growth in the
preceding quarter.
The Ministry of Trade and Industry (MTI) announced that it expects the
Singapore economy to grow by 2.0 to 4.0 per cent in 2014.
The finance minister specifically talked of “significantly slowing down
the growth of foreign workforce” and set specific limits to reduce workpass quotas.
Minister of Manpower introduced the Fair Consideration Framework
with tighter regulations for all work passes. New regulations now
require all employers to advertise for vacancies for two weeks, before
an application will be considered by the Ministry.
All these changes mean that the outlook for foreigners looking to start
working in Singapore is going to be quite challenging.
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Options to work in Singapore
So what are your options?
Find a job – as a Dependent Pass holder, there are no reductions in the
number of Letters of Consent being approved.
Consider applying for Permanent Residence – it is a long-term plan, but
if your partner’s employer is willing to sponsor the application, you
should definitely consider it.
Register a business, which can then sponsor your work pass.
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Factors to consider before registering a business in
Singapore
-
You must be at least 18 years of age.
- You must not be an undischarged bankrupt or you must have
obtained the permission of the High Court or the Official Assignee if
you are planning to register a business entity in Singapore.
- You must not be disqualified under Sections 149, 149A or 154 of the
Companies Act.
- Since all transactions must be lodged online, you need to have a
SingPass in order to log into the online system.
- You need to be a local resident with an Employment Pass,
EntrePass, S Pass or Dependant Pass to be eligible to apply for a
SingPass. If you do not qualify, you will need to engage a
professional firm (law firm, accounting firm or corporate services
provider) to submit any online application.
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Factors to consider before registering a business in
Singapore
Whether you are planning to start an online shop or run a business from
your home; as long as it is an activity that is carried out on a continuous
basis to make profit, you need to register your business with ACRA.
Before registering your business, you should first find out about the
different business structures, & choose one that meets your
requirements :How much capital are you prepared to invest?
How many owners will there be in the business?
What liabilities and responsibilities are you prepared to assume?
What risks are you prepared to take?
What are the advantages and disadvantages,
requirements of the different business vehicles?
compliances
How long do you plan to stay here?
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Types & Features of Business
Sole Proprietorship
A Sole Proprietorship is a business that is owned by a single
individual. If the owner is a dependent pass holder or not resident
in Singapore, he/she must appoint a local manager, who is
ordinarily resident in Singapore.
A Sole Proprietorship is not a separate entity and the owner has
unlimited liability.
A Sole Proprietor is personally liable for all debts and losses of
business.
A Sole Proprietor will be taxed on the profits of the business and
will be subject to personal income tax rates (if it is owned by an
individual).
The business can be deregistered by filing an application to ACRA
or by the Registrar himself, if registration is not renewed.
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Types & Features of Business
Sole Proprietorship
Advantages
Sole proprietor has complete control in running the business
It is easy to setup/deregister and cost is minimal.
It is easy to operate.
There are few compliance requirements :
The business registration must be renewed annually with ACRA.
All changes must be filed with ACRA within 14 days.
If the a sole-proprietor is a Singaporean/Singapore PR, he or she
will be liable for MediSave contributions on the turnover of the
business
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Types & Features of Business
Sole Proprietorship
Disadvantages
Business will exist only as long as the owner is alive and desires
to continue the business or can find some one else to transfer the
business to.
If owner wants to expand business, it is almost impossible to get
financial assistance from any financial institution.
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Types & Features of Business
Partnership
A partnership can be owned by 2 or more (maximum of 20)
partners.
A partnership is not a separate legal entity from its owners
If owners are not resident in Singapore, they must appoint a local
manager, who is ordinarily resident in Singapore
Partners have unlimited liability
A Partnership cannot own property
Partners are personally liable for partnership’s debts and losses
incurred by other partners.
The registration must be renewed annually and all changes must
be filed with ACRA within 14 days.
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Types & Features of Business
Partnership
If the partner is a Singaporean/Singapore PR, he or she will be liable
for Medisave contributions the CPF Board on the turnover of the
business
Partners are taxed on the profit of the business and any drawings from
the partnership. Tax is computed at personal income tax rates
The business can be deregistered by filing an application to ACRA or
by the Registrar himself, if registration is not renewed.
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Types & Features of Business
Partnership
Advantages
The partners can share liabilities and responsibilities.
Similar to a Sole Proprietorship, it is easy to setup/deregister and
cost is minimal.
It is easy to operate with few compliances.
Disadvantages
Operations can be affected, if partners’ ideas/plans clash over
time.
Partners are personally liable for partnership’s debts and losses
incurred by other partners.
Similar to a Sole Proprietorship, getting financing will be almost
impossible.
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Types & Features of Business
Limited Partnership (LP)
& Limited Liability
Partnership (LLP)
Other types of partnerships are Limited Partnership (LP) and Limited
Liability Partnership (LLP). These are quite similar to a regular
partnership except for:Limited Partnership (LP)
The General Partner is responsible for the Limited Partner’s actions and
liable for all debts and obligations of the LP.
The Limited Partner does not take part in the LP’s management/running
and his liability is capped at the amount of his agreed investment of LP.
Limited Liability Partnership (LLP)
Each partner’s liability is limited and capped at the amount of his agreed
investment in the LLP.
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Types & Features of Business
Company
A company is a separate and distinct legal entity from its directors and
shareholders.
A Singaporean must have at least one director who must be a local
resident.
The company must have at least a shareholder. There is no restriction
on local ownership.
The company must appoint a company secretary within 6 months of
incorporation.
If the company has a corporate shareholder or its turnover of more
than S$ 5 million, then it must appoint an auditor within 3 months after
incorporation.
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Types & Features of Business
Company
Since the company is a separately legal entity, it can sue or be sued.
A company can own property
There are very strict statutory compliance requirements for general
meetings, directors, company secretary, share allotments, etc.
Different Types of Companies:
An Exempt Private Company can have 20 or less shareholders, all of
whom are individuals. If the shares are held by a corporation, the
corporate shareholder MUST not hold a beneficial interest (it can be
Trust)
A Private Company can have 50 members or less
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Types & Features of Business
Company
Company
Advantages
Shareholders have limited liability.
A company enjoys very attractive tax exemptions for the first
three years.
It is easier to get financial assistance from financial institutions as
compared to a Sole Proprietorship or a Partnership.
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Types & Features of Business
Company
Disadvantages
A company has many more formalities and procedures to comply
with.
It is more costly to register and operate. Since the compliance
requirements are more complex, you may need to engage a
professional firm – accounting or corporate services provider to
prepare statutory documents required for ACRA and IRAS.
The process for deregistering the company is also complex and
takes a long time.
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Types & Features of Business
Company
Compliances & Regulatory Requirements
A company must hold an Annual General Meeting and file an
Annual Return with ACRA every year.
Any changes must be filed with ACRA within 14 days generally
with some exception which must within 30 days.
The company’s profits are taxed at the prevailing corporate tax
rates (currently 17%).
The company must file a corporate tax return with Inland
Revenue Authority of Singapore (IRAS).
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Types & Features of Business
Non-Profit Entity (NPO)
NPOs are commonly referred to as Voluntary Welfare
Organisations (VWOs) and can be registered under the law as a
public company limited by guarantee, society, or charitable trust.
The company is self-governed by a board of trustees or managing
committee / governing council, comprising individuals who
generally serve in a fiduciary capacity.
The company produce benefits for others, generally outside the
membership of the organisation.
The company is ‘non-profit-making’ i.e. any surplus funds after
operations cannot be distributed to the members and MUST be
retained as reserves for future operations
The company’s surplus will be subject to tax and can only claim
full tax exemption, only if Inland Revenue has granted “charity
status”
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Types & Features of Business
Non-Profit Entity (NPO)
Applying for charity status / Institutions of a Public Character (ICP)
status
Being a charity is a matter of status, not of organisational structure.
All charities and IPCs in Singapore are governed by the Singapore
Charities Act and must be registered with the Commissioner of
Charities within 3 months of its set-up.
Donations to Charities/approved IPCs are eligible for tax deductions
on the donors’ tax returns.
Charities are governed by stringent statutory requirements.
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Employers’ Obligations
Employers MUST obtain work passes from the Ministry of Manpower.
Employers MUST issue a statement (Form IR8A or 8E) reporting the
total remuneration paid to each employee during the year to IRAS. The
tax liability of the employees will be determined on the basis of this
information.
Employers MUST to file tax clearance (Form IR21A) for all foreign
employees within a stipulated timeframe. The employer should withhold
monies payable to foreign employees, so the employee’s tax liability
can be settled before the employee leaves Singapore.
Employers are obliged to make monthly contributions to the Central
Provident Fund Board for Singaporeans and Singaporean PR
employees.
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Other Important Information
You are responsible for ensuring that your information lodged
with ACRA is up-to-date and accurate at all times, by filing any
changes of particulars with ACRA. Generally, any changes must
be filed with ACRA within 14 days
Record Keeping
Every business/company incorporated in Singapore must keep proper
accounting records.
The accounting records must be kept for five years from the end of the
financial year in which the transactions or operations to which they
relate have passed.
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Tax Filing and Submission
You are also responsible for ensuring that your residential address is
always up-to-date with IRAS to avoid non-receipt of tax documents.
IRAS will initiate recovery action for non-compliance of filing of tax
returns and non-payment of tax liability such as:
- Penalties and composition fees for non-compliance
- Appointment of Agent (your bank or employer) to recover outstanding
tax liability
- Court Summons
- Notification to checkpoints to prevent you from leaving Singapore
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Question and Answer
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