Is Singapore truly a Tax Haven?

[TheCryptoAnt]

What tax rate would this company pay then? I assume the corporate tax rate in the country of where you as a person is resident right ?

On paper yes, but for ive been able to gather they require no proof of this so

 

[tnt500]

Just spoke to a Singapore based accountant regarding setting up in Singapore and their response to corp tax exemption was basically this:

- If everything is overseas then you can claim exemption from corporation tax.
- However if everything is overseas then IRAS or other regulators may question why you have a need to have a Singapore company in the first place.
- If everything is overseas then you will need to show that taxes are paid in other countries.
- Their concern is that you will end up paying a higher % elsewhere instead of the lower rates in Singapore.

I've spoken to 3-4 different accountants about this and get some mixed opinions still. This can't be a common situation if nobody can clearly state what is and isn't possible. I'm living in Thailand and revenue comes from US, Canada and UK.

 

[Marzio]

I'm living in Thailand and revenue comes from US, Canada and UK.

Then go for a US LLC

 

[tnt500]

Then go for a US LLC

I've spoken to several US accountants and their opinions are even more mixed. Some say LLC other say can't use LLC because I'm not classified as a manufacturer so S Corp is best. S Corp is 21% but can deduct salary obviously.

Finding good, reliable people in the US seems like the biggest problem, apart from their incredibly complicated tax system.

 

[Marzio]

S Corp is best

Why do they want you form an S-Corp? Are you a US person?

 

[tnt500]

Why do they want you form an S-Corp? Are you a US person?

No, not a US person. This article explains that I essentially have effectively connected income as the transfer of ownership of my inventory to the customer occurs in the US:

https://onlinetaxman.com/foreign-owned-llc-taxation
I sell via Amazon FBA and everything is made in the far east. Apparently because of this I will need to pay federal income tax so I was told an S-Corp would be the better choice.

 

[daniels27]

The long discussion. I think we had this elsewhere recently. There are about an equal number of CPA and lawyers that claim you are "engaged in a US trade or business" as are against it. And most of the time the reasoning completely lacks any sense of understanding the law.

Now, the bigger question is where your company is effectively managed from. Could you please elaborate?

If you believe the ETBUS guys, note that paying taxes in the US does not exempt you from paying taxes again at the place of management. Also, even believing the ETBUS guys, you may be able to benefit from a treaty, exempting you from paying tax in the US.

Long discussions, no easy solutions...

For Singapore, as far as I know, they are more lenient in terms of where taxes are paid than Hong Kong. It seems the better choice to me.

 

[tnt500]

Now, the bigger question is where your company is effectively managed from. Could you please elaborate?

I live in Thailand and manage everything myself. But hoping to fly under the radar here and not get them involved so I won't benefit from any treaty.

For Singapore, as far as I know, they are more lenient in terms of where taxes are paid than Hong Kong. It seems the better choice to me.

I've mostly settled on Singapore due to the simpler system, and the people I have spoken to seem much more competent than most in the US who give me little confidence. I don't know whether to push for the exemption or just settle for lower (than UK) corporation tax in Singapore. I want as little risk as possible so I am leaning towards just paying at this point.

 

[Marzio]

I sell via Amazon FBA and everything is made in the far east.

First time i hear about this "ownership transfer" thing

From the same article:

The seller is typically considered the owner of the product.

If it's sold by Amazon, Amazon is the owner.

.

 

[tnt500]

If it's sold by Amazon, Amazon is the owner.

I believe it says that only for Amazon brands or maybe also people using vendor central.

For most sellers it says "Sold by <seller name>"

 

[Marzio]

I took the first product from the Amazon.com homepage and it's not an Amazon brand.

https://www.amazon.com/Razer-DeathAdder-Essential-Gaming-Mouse/dp/B094PS5RZQ/
I'm not involved in FBA so i don't really know how to display "sold by Amazon" but i know you can because multiple brands are doing that.

BTW how much of your income derives from:
- US?
- Canada?
- UK?

 

[tnt500]

I'm not involved in FBA so i don't really know how to display "sold by Amazon" but i know you can because multiple brands are doing that.

Just looked it up and it's as I say. Either Amazon themselves own that brand (they have their own "non-Amazon" private label brands too) or the seller is using Vendor Central which means Amazon is buying upfront like a normal retailer. When you're a vendor you relinquish control of your listings so you have no control over anything as far as I know.

 

[daniels27]

There are plenty of options.

• Amazon sells their own stuff
• Amazon Vendor Central: Amazon sells, you ship to Amazon warehouses
• Amazon Seller Central FBA: You sell, you ship to Amazon warehouses
• Amazon Seller Central Seller-Fulfilled Prime / Seller Fulfilled: You sell, you ship to the customer.

I had long discussions in regards to the taxation in the US. Is is complicated and most of the time the reasoning is wrong (or only covers half of the reality.) The facts are that all discussions about dependent agent, ownership transfer, effectively connected income, only come AFTER you are ENGAGED IN A US TRADE OR BUSINESS. The big question is whether you are engaged or not. This is the question. Also, please note that if you can benefit from a tax treaty, you won't have that issue in the first place as your distribution center in the US won't trigger any tax consequence.

For the under the radar, discussion, you can follow us here
https://www.offshorecorptalk.com/th...-is-a-salary-taxed-in-hong-kong-or-not.44824/
tnt500, Roo, bananaf and me all have the same issues and all of us want a solution. I personally see Hong Kong as more risky than Singapore as they are more often the ones asking where tax has been paid. For Singapore, you are the first one that tells me this today. Maybe, we need to gather more information about all of this. Guernsey would be another option.

 

[JohnLocke]

Guys you are going off topic, the thread says "Is Singapore truly a tax have ?!!!! Open a new thread to discuss Amazon and US LLC stuff please.

 

[tnt500]

Guys you are going off topic, the thread says "Is Singapore truly a tax have ?!!!! Open a new thread to discuss Amazon and US LLC stuff please.

Apologies.

I am planning on speaking to another accountant who seems to think profits in Singapore will indeed be exempt so I will update if anything is relevant.

For the under the radar, discussion, you can follow us here

Thanks - I will follow that thread. Very keen to find a solution otherwise I will need to either do nothing and continue with my UK setup or pull the trigger on Singapore and receive the startup exemptions for the first 3 years to bring the rate under 17% (100% dividends, no salary).

 

[daniels27]

Apologies.

I am planning on speaking to another accountant who seems to think profits in Singapore will indeed be exempt so I will update if anything is relevant.

I sent you my contact from Sovereign. If you have time, please check with him too and let me know your final analysis. I am still unsure what to do and in the very same boat as you. I am considering Guernsey, Singapore at the moment.

For the ETBUS question, I had some discussions already here:
https://www.offshorecorptalk.com/th...ould-i-pay-us-taxes-or-not.44605/#post-298727https://www.offshorecorptalk.com/threads/w8-ben-form-needed.44574/#post-298547They are both offtopic there too

 

[baio12]

And if you run a Singapore company in a way that income doesn't derive from and isn't transferred to Singapore, you can in many cases end up with a company that's not subject to any local tax in Singapore (similar to BVI/Caymans).

Means owner has to be resident in 0% tax place? Why it is being called loophole in Singapore rules isn't it the purpose of such law?

You need to choose wisely your tax residency or constantly be on the move (at some point you'll be tired of that)

Some country maybe the country of your company will ask you to show residency and tax you if not a resident anywhere.

I'm not gonna complain either, i'm just specultaing on the fact that SG non resident company doesn't make any sense for SG and IRAS could change that overnight like Cyprus did for the CY non resident company.

What they changed in Cyprus?

 

[daniels27]

Means owner has to be resident in 0% tax place? Why it is being called loophole in Singapore rules isn't it the purpose of such law?

Either:

• live in a country with 0% tax
• live in a country without PE rules
• spend less than the required days in any country to become tax resident (can be as low as 30 up to 183)

Some country maybe the country of your company will ask you to show residency and tax you if not a resident anywhere.

Only if the company is managed from there and fulfills all requirements to be taxed.