speaker : asha dixit, fcca money matters for expats pte ltd · 10/2/2013 · 1 by asha dixit...

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By Asha Dixit

October 2, 2013

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

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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.

SINGAPORE

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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 Asia-Pacific and it also offers the advantage of having a comprehensive network of Double Tax Agreements with more than 60 countries. Singapore’s personal income tax rate also compares favorably with most countries in the region.

SINGAPORE

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In his 2013 National Day speech, Prime Minister Lee Hsien Loong revised his forecast for economic growth to a range of 2.5% to 3.5 % for the year. However, he also re-iterated that growth will not be the only criteria to measure how the economy is doing For the first time since Singapore’s independence, the budget speech began with the goal of building a more inclusive society. The finance minister specifically talked of “significantly slowing down the growth of foreign workforce” and set specific limits to reduce work-pass quotas. In typical Singapore style, new measures combining a carrot and stick approach has been implemented. Just last week, the Minister of Manpower introduced the Fair Consideration Framework with tighter regulations for all work passes. New regulations will require all employers to advertise for vacancies for two weeks, before an application will be considered by the Ministry.

Economic Outlook – 2013

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All these changes mean that the outlook for foreigners looking to start working in Singapore is going to be quite challenging 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

Economic Outlook – 2013

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- 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.

Factors to consider before registering a business in Singapore

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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, compliances requirements of the different business vehicles? Is the business vehicle easy to close?

Factors to consider before registering a business in Singapore

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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.

Sole Proprietorship

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.

Types & Features of Business

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Sole Proprietorship

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

Advantages


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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.

Disadvantages Sole Proprietorship


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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.

Partnership


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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.

Partnership


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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.

Advantages

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.

Partnership


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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 in the LP. Limited Liability Partnership (LLP) Each partner’s liability is limited and capped at the amount of his agreed investment in the LLP.

Limited Partnership (LP) & Limited Liability Partnership (LLP)


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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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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 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.


Company

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Company

Shareholders have limited liability. Shareholders cannot be held personally liable for the company’s debts and/or losses. A company can be registered with S$1 as paid up capital. 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.

Advantages


Company

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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.


Company

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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.

Compliances & Regulatory Requirements

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).


Company

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• 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”

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.


Non-Profit Entity (NPO)

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Choice of type of NPO will depend on factors, such as size and complexity, potential legal liabilities and funding etc. Types of NPO • Public company limited by guarantee • Society • Charitable Trust



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- There is no share capital - The company has guarantors/members instead of shareholders - Members guarantee/undertake to contribute a predetermined sum to the liabilities of the company which becomes due in the event of the company being wound up - Subject to ongoing public disclosure obligations and statutory control and more complex annual reporting requirements

Public company limited by guarantee



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Trusts are licensed by the Monetary Authority of Singapore (MAS) and are governed by the Singapore Trust Companies Act. A trust is set out in a written document (trust deed) in which an owner or founder hands over property / funds to a group of people (trustees) who administer the assets for the benefit of other people (beneficiaries) for a stated objective example bursary, scholarship.


Trusts


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- Suitable for membership or volunteer based groups, especially smaller groups with strong community links and not heavily dependant on donations and external funding

Society

- Minimum 10 persons - Mandatory 3 key office bearers – President, Secretary and Treasurer who should be Singapore Citizens or Singapore Permanent Residents - Must audit accounts - Must file Annual Returns with Registrar of Societies - Must draft a Constitution that governs the society

Societies are registered with the Registrar of Societies (ROS) and are governed by the Singapore Societies Act.



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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 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.

Employers’ Obligations

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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.

Other Important Information

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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

Conclusion and VERY important point

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Question and Answer

speaker : asha dixit, fcca money matters for expats pte ltd · 10/2/2013 · 1 by asha dixit...

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