SINGAPORE COMPANY TAXES ON FOREIGN INCOME IF REMITTED?

[ciccino]

I thought Singapore was tax-free for foreign income, now I read you can't transfer the money to a Singapore bank otherwise you need to pay taxes, is that correct?

Companies Receiving Foreign Income

Companies may enjoy tax exemptions and concessions on foreign income received.

www.iras.gov.sg

 

[fshore]

I thought Singapore was tax-free for foreign income, now I read you can't transfer the money to a Singapore bank otherwise you need to pay taxes, is that correct?

Companies Receiving Foreign Income

Companies may enjoy tax exemptions and concessions on foreign income received.

www.iras.gov.sg

Yes, company income/profits is taxable in SG unless you can prove that you have paid (dividend) tax in the foreign country.
Also, it's not easy to get 0% tax even if you bank outside Singapore. Lots of confusion about this.

 

[bigbite100]

any updates on this? it looks like getting the 0% is only working if you the singapore company recieves dividends from a foreign company. if the singapore company invoices a foreigin company and the foreign company sends the money to a transferwise account, it looks like it will be taxed in singapore.

 

[Marzio]

Not only that but generally, foreign-owned investment holding companies, nominee companies and non-Singapore incorporated companies are not considered SG tax resident.

Applying for a Certificate of Residence/ Tax Reclaim Form

Claim tax benefits under an Avoidance of Double Taxation Agreement or treaty by applying for a Certificate of Residence or via a tax reclaim form.

www.iras.gov.sg

 

[bigbite100]

Not only that but generally, foreign-owned investment holding companies, nominee companies and non-Singapore incorporated companies are not considered SG tax resident.

Applying for a Certificate of Residence/ Tax Reclaim Form

Claim tax benefits under an Avoidance of Double Taxation Agreement or treaty by applying for a Certificate of Residence or via a tax reclaim form.

www.iras.gov.sg

Thank you for letting me know.

So if I, as a non SG resident, own a SG PTE Ltd company and send a invoice to a US LLC (which I am also the owner of), will this be subjtect to taxes in SG?

If it is subject to taxes, to avoid that, I have to set the SG company as a member of the US LLC company, so it will act like a foreign owned investment company and recieve dividends.

Is that true?

 

[Marzio]

So if I, as a non SG resident, own a SG PTE Ltd company and send a invoice to a US LLC (which I am also the owner of), will this be subjtect to taxes in SG?

First of all a SG company needs a resident director, you can't manage the SG company from wherever you are.

Second if the SG company invoices the US LLC you are auto confirming that the SG company is the one doing the work for which is getting paid from the US LLC so obviously it will be taxed in SG.

If it is subject to taxes, to avoid that, I have to set the SG company as a member of the US LLC company, so it will act like a foreign owned investment company and recieve dividends.

US LLC doesn't distribute dividends but business profits.

Like @fshore said income/profits are taxable in SG unless you can prove that you have paid taxes offshore.

 

[bigbite100]

First of all a SG company needs a resident director, you can't manage the SG company from wherever you are.

Second if the SG company invoices the US LLC you are auto confirming that the SG company is the one doing the work for which is getting paid from the US LLC so obviously it will be taxed in SG.



US LLC doesn't distribute dividends but business profits.

Like @fshore said income/profits are taxable in SG unless you can prove that you have paid taxes offshore.

Thank you for the reply. I thought foreign income is not taxed in SG. Are there any exemptions when foreign income is not taxed?

Why i am asking- I would like to open a SG company to recieve dividends from it. Another alternative might be Seychelles (bad with banking and reputation) and Dubai (more expensive, company formation is not possible remote). Is there any other corporation where foreign recieved income is not taxed and which also allows to pay out dividends?

 

[Marzio]

I thought foreign income is not taxed in SG.

What you are calling foreign income isn't foreign at all because foreign sourced income usually is taxed elsewhere.

Is there any other corporation where foreign recieved income is not taxed and which also allows to pay out dividends?

You could receive dividends tax free in Portugal under NHR program or Cyprus as long as you don't manage the company that's paying dividends.

 

[bigbite100]

What you are calling foreign income isn't foreign at all because foreign sourced income usually is taxed elsewhere.


You could receive dividends tax free in Portugal under NHR program or Cyprus as long as you don't manage the company that's paying dividends.

I am based in Cyprus and I would like to recieve the dividends. But to recieve them, I need a company. In that case I thought of the Singapore company. I have a US LLC. The goal was, to send the money from the US LLC to the SG company and recieve the money as dividends.

I understood that I should not manage the SG company. Theoretically, if someone else (foreign based) would manage the SG company, would the income which goes to the SG company , still be taxed in Singapore? Please excuse the confusion, but I have often read that a SG company would be a good solution for that, but now I have found out that the income needs to be taxed in SG..

 

[Marzio]

So are you receivng some form of income (not dividends) and need a company to transform it into dividends that you can distribute tax free in Cyprus?

 

[bigbite100]

So are you receivng some form of income (not dividends) and need a company to transform it into dividends that you can distribute tax free in Cyprus?

Yes thats right. I am based in cyprus and earn money with a US LLC And would like to transform it into dividends. And I thought Singapore is the best solution for this. I dont want to deal with Seychelles or other "high risk" countries and Dubai is more expensive and is not possible to open remote.

 

[Marzio]

You should look into Maltese resident non domiciled company managed by a Maltese resident director.

The company will receive income from US and it will not be taxed if funds are not remitted to Malta, then you could distribute dividends tax free in Cyprus.

Use a UK LTD treaty non resident company (meaning it will be tax resident in Malta but not domiciled in Malta) instead of US LLC so you have access to EU EMI bank accounts.

The Maltese resident director should not be a nominee director otherwise you will fall into ATAD3

 

[bigbite100]

You should look into Maltese resident non domiciled company managed by a Maltese resident director.

The company will receive income from US and it will not be taxed if funds are not remitted to Malta, then you could distribute dividends tax free in Cyprus.

Use a UK LTD treaty non resident company (meaning it will be tax resident in Malta but not domiciled in Malta) instead of US LLC so you have access to EU EMI bank accounts.

The Maltese resident director should not be a nominee director otherwise you will fall into ATAD3

Interesting approach, haven´t heard of this yet.

Why would Singapore not work like this? Because as far as I understood in the other thread where the person was based in Dubai, Singapore or Hongkong company were both looked as residents in Dubai.

 

[Marzio]

Why would Singapore not work like this?

Because SG has different rules.

as far as I understood in the other thread where the person was based in Dubai, Singapore or Hongkong company were both looked as residents in Dubai.

Because both companies are managed from Dubai so both companies are Dubai tax resident.

The same principle apply to what i wrote, the UK LTD company managed from Malta it will become tax resident in Malta but since Maltese resident non domiciled companies are taxed only on local sourced income and foreign source income remitted to Malta, the income received from US will be tax exempt.

 

[bigbite100]

Because SG has different rules.



Because both companies are managed from Dubai so both companies are Dubai tax resident.

The same principle apply to what i wrote, the UK LTD company managed from Malta it will become tax resident in Malta but since Maltese resident non domiciled companies are taxed only on local sourced income and foreign source income remitted to Malta, the income received from US will be tax exempt.

1) I am curious- how do you mean SG has different rules? is this referring to the difference between CY and Dubai? To be honest I still dont understand why this is working in Dubai but not in CY. Is it only because the SG company would be looked as "managed from CY" and therefore be a tax resident in CY?


2) Can i replace the UK Ltd with US LLC, if I am satisfied with my US LLC banking? I use transferwise, this works fine for me.

3) And can you help with the Malta company formation and set a malta resident director? How can I contact you? If I click on your profile, it doesnt work, seems set to private.

 

[Marzio]

An offshore company managed from wherever you are it will become tax resident there.

So a SG company, HK company managed from Dubai will become tax resident in Dubai.

A SG company managed from Cyprus will become tax resident in Cyprus

A UK LTD managed from Malta will become tax resident in Malta.

You can use Wise also for your UK LTD as well, a US LLC will not work because US LLC doesn't distribute dividends but business profits so what you receive in CY would not be tax exempt.

@CyprusLawyer101 will be able to help you since he already worked with Maltese resident non domicile companies.

 

[bigbite100]

An offshore company managed from wherever you are it will become tax resident there.

So a SG company, HK company managed from Dubai will become tax resident in Dubai.

A SG company managed from Cyprus will become tax resident in Cyprus

A UK LTD managed from Malta will become tax resident in Malta.

You can use Wise also for your UK LTD as well, a US LLC will not work because US LLC doesn't distribute dividends but business profits so what you receive in CY would not be tax exempt.

@CyprusLawyer101 will be able to help you since he already worked with Maltese resident non domicile companies.

Thank you very much for the information.

Hypothetically speaking, if we say the SG company is tax resident in CY, must I prove this to the SG authorities? Because I was speaking with a SG company filing provider, he told me:

"I have checked in with our accountants and they confirmed that foreign sourced income for a Singapore registered company will still be subjected to paying the corporate tax.

The 0% tax only applies if you have paid tax on the income in another jurisdiction and would like to transfer that portion to your Singapore company."

 

[Marzio]

must I prove this to the SG authorities

Not having a SG resident director is all the proof you need.

 

[bigbite100]

Not having a SG resident director is all the proof you need.

Thank you. As far as I know, all Singapore Companies must have at least one director who is a Singaporean citizen
or permanent resident as well as must appoint a corporate secretary who must be an individual ordinarily resident in Singapore.

So in that case, this wouldn´t work ?

 

[Mike Forman]

Thank you. As far as I know, all Singapore Companies must have at least one director who is a Singaporean citizen
or permanent resident as well as must appoint a corporate secretary who must be an individual ordinarily resident in Singapore.

So in that case, this wouldn´t work ?

All Singapore companies indeed require a resident director, which can be a nominee director. The operations can be handled outside Singapore as non resident (and second director) but if you want to pay yourself a salary it will be taxed 22pct.

I don't believe being eligible for offshore 0pct taxation is very feasible in Singapore, unless you are a multinational and have everything structured out well by a legal / tax team.

Hong Kong is or at least was still feasible to claim for offshore at 0 pct, but you will need a good auditor / tax lawyer as they ask a lot of work proof. The process takes one year back and forth.
With the new draft in Hong Kong and the pressure from outside I'm not sure anymore it's still easy feasible. In general 0 % tax and offshore is not anymore as before and before find a low tax jurisdiction and pay some tax.

You might get away with the offshore setup but once they ask questions and look around you will be finally taxed in the country you have received the income with all the fines, interest and fees of your tax lawyer.