"Substance" Trick for your offshore company -- would this work?

[Kakarot]

Let's say I form a Singapore company. I like in thailand for the territorial tax break.

If I hire Singaporean virtual assistants, and they work from home for me -- does that qualify as SUBSTANCE?

Couldn't they claim on my behalf their home is office space for me? I'm not even sure that much would be necessary, because the fact would be, I have employees in Singapore.

The purpose of this would of course be to have substance, which helps me get bank accounts etc.

Maybe you don't want substance for a singapore company -- but many jurisdictions nowadays you do want to show substance.

Isn't this an easy trick to provide substance? And all you need is to hire 1 cheap virtual assistant off of craigslist to do this.

Let me know if you all think this would work -- or not.

 

[Sols]

You can have substance and tax residence in multiple jurisdictions for the same company, in which case a tax treaty would be invoked to sort out any tax-related the mess.

A home office can, indeed, be considered substance and thereby establish a Permanent Establishment (PE).

Establishing substance isn't a checkbox exercise. There are various guidelines issues by financial regulators and tax authorities, usually following models prepared by OECD. Depending on who's looking, they'll look at different parts of the whole business setup.

In your case, you might find that your Singaporean company is tax resident in both Singapore (by incorporation and local staff) and Thailand (if you exercise sufficient/significant control on the day to day of the business). However, it would require a rather hostile interpretation by the Thai authorities to declare your company tax resident there, or that your employees in Singapore aren't actually doing anything. Typically in such a setup, tax residence would be solely in Singapore provided that the employees in Singapore undertake a meaningful part of the business. But hiring a single person just to push some pencils around isn't good enough in most cases.

 

[Mercury]

AFAIK, one of the key requirements to register a private limited company in Singapore is to have at least one local director (either a Singapore citizen/permanent resident or EntrePass holder). So, considering you are not yourself a Singapore resident, the local nominee director should necessarily give you the substance your company needs taxwise.

 

[uplana]

How did this go for you?

 

[Sols]

Looks like OP got banned, so we'll never know.