Singapore company structure for offshore taxation

[Xshore]

There might be ways to‌ get around it, but not easily without any tax:
https://www.iras.gov.sg/taxes/withh...tor/tax-obligations-for-non-resident-director

 

[Jerry1911]

Xshore, keep in mind director's remuneration/fees might be treated differently compared to remuneration from regular‌ employment. This is the case in Estonia as well for example.

 

[daniels27]

But have you checked the link I posted?

https://www.iras.gov.sg/taxes/indiv...he-tax-treatment-on-working-outside-singapore
I do not see anything that‌ would render the salary received to be taxable in Singapore. Can you please explain based‍ on what it should be taxable in Singapore?

(Also keep in mind that there may⁠ be a DTA in force with your residence country. Almost all DTA will clearly mention⁤ that the salary is only taxable in the residence country and not in Singapore.)

 

[Xshore]

Did you see the link I posted? It shows that salary to directors are taxed in⁠ Singapore, at least some parts of it. Maybe it can be avoided if the salary⁤ is for a managing director. However that's something I would double and triple check with⁣ the accountants. But you're right, a regular salary to non residents seems not taxable. When⁢ I looked into this a few years ago I found that it was taxable so︀ maybe they have clarified this since.

About dta, why would anyone run a Singapore company︁ and take a salary if they are tax resident in another country? Then the company︂ also likely becomes tax resident in that country.

 

[daniels27]

Yes the DTA does not make sense. Thanks.

You link is regarding tax resident companies‌ in Singapore. It seems to me that it would not apply for offshore companies. What‍ is your opinion?

Thanks for your effort. Do you have the same level of expertise⁠ for Jersey? It may be an alternative.

 

[Xshore]

I think it⁤ doesn't make sense that a non tax resident company is taxed in the same way⁣ as a tax resident company. All the source of the information regarding tax on foreign⁢ source income and remittance to Singapore comes from the guides to Singapore tax resident companies.︀
Here is a clear PDF that shows the tax treatment for SG tax resident companies︁ on foreign source income.

https://www.iras.gov.sg/media/docs/...ed-income285e5d43d6af4001b3ce35da1e9005b5.pdf
However, now I also found this, that indicates a SG︂ non tax resident company might be totally tax free in SG. But as this seems︃ not so common (no accountants etc know about it/want to talk about it) it might︄ be difficult to use in practice, unless you're ready to fight an uphill battle.

Look at FAQ point 8 in this link:
https://www.iras.gov.sg/taxes/corpo...ions-for-companies/taxable-non-taxable-income

I don't know Jersey, that's another jurisdiction that could be︍ interesting, but it seems expensive. I'd prefer Gibraltar, I think wise and Paypal should be︎ possible for Gibraltar companies.

 

[daniels27]

It is the same as in Hong⁤ Kong. Most of the tax literature is about tax resident companies. Non tax resident companies⁣ pay no tax and the government has limited interest in setting rules when you have⁢ to pay (because you don't have to pay).

This is FSIE. FSIE is in for passive income. The EU was︁ putting Singapore and Hong Kong on a grey list as many EU companies used Singapore︂ and Hong Kong shell companies without any substance in the country to move money out︃ of EU companies through royalties, dividends and interests. Singapore and Hong Kong have may DTAs︄ with EU countries with very preferential rates for passive income. It is not about active︅ income which is being discussed here.

It is very common. Just not in this forum which was many UAE sponsors, dudes looking︊ to set up in the UAE etc.

Gibraltar has audit and︍ all incorporating agents want to do the accounting for you. I think it is much︎ more expensive than Jersey with much less benefits.

 

[Jerry1911]

Yes but you failed to mentioned there‌ is an exemption which would apply to probably 99% of users here.

Ok so it is unclear and would probably require a⁢ tax ruling. Better to just set up a company in Estonia and pull out profits︀ via salary or use a classic offshore company.

 

[daniels27]

I think all companies with more‍ than 1.5 M GBP are subject to audit. I think all trading companies would fall⁠ under the audit for any decent income.

No need for a ruling, there are enough companies in this business and the usual︀ incorporation agents have enough experience and court cases at hand.

 

[Xshore]

It doesn't say it's not for active⁢ income. It says foreign source service income.

Ok, so we're back to what we've been discussing the︂ whole time 🙂. You claim it's very common, however there is no source of this︃ anywhere online. Sovereign, quotes the rules for tax resident companies (income remitted to SG etc),︄ no service provider that I've found online explains about non tax resident companies. Even you︅ said earlier in this tread that the company should be tax resident, and only foreign︆ source income not remitted to SG is not taxable.
But ok, if I was about︇ to start a new company now I could give it a try.

 

[daniels27]

You should just read it. It says

2.1 Under the FSIE‍ scheme, foreign-sourced dividends, foreign branch profits
and foreign-sourced service income received by specified resident taxpayers⁠
from 1 Jun 2003 are exempt from tax if the following qualifying conditions are
met:

Maybe, you just︂ Google 5 incorporating agents with offices in more than just Singapore. Then you write them︃ today you want to use their service. They will then propose a call. You talk︄ to them and then report back to us.

It does not cost you a cent︅ but gives you first hand information rather than questioning me. Just ask them if they︆ have clients using their Singapore company tax free and if they had any issue with︇ IRAS etc

 

[daniels27]

Have you called anybody?

 

[Xshore]

I have not, maybe op will?‌

Doesn't this mean active income from services?‍

 

[daniels27]

Are you still‌ talking about the FSIE? It is irrelevant to the discussion here because it pertains to‍ something completely different. FSIE is meant for passive income from other countries that have already⁠ been taxed there. You can then remit those incomes to Singapore tax free. (And this⁤ is the clue, you can remit them.) As we are talking about offshore, the whole⁣ FSIE story becomes useless as we are not interested in remitting money into Singapore.

Let's say, you are based in Singapore (either as person or as company) and you have⁢ a permanent establishment in China. This establishment is providing consulting in China to Chinese with︀ a Chinese office. It will be taxed 40% in China. Now, you after you made︁ 1M and paid 400k in China, you can take 600k back to Singapore and keep︂ you don't have to pay taxes in Singapore. It basically is passive income from a︃ subsidiary in China. And also, this really has nothing to do with the original question.︄

The original question is for some anywhere that wants and offshore company for no taxes︅ and invoice purposes. He won't remit the revenue to Singapore (what the FSIE is for).︆

Just for my interest: what do you actually want to do? Are you insterested in︇ incorporating in Singapore for a good or service business?

 

[baio12]

What does Singapore company do?

 

[daniels27]

Sell products/services in other countries‌ such as EUSSR.

 

[laksaboy]

Tax resident and non-resident companies are generally taxed in the same manner in Singapore. However,‌ some clients need the certificate of SG tax residency for Double Taxation relief purpose, or‍ letter of tax residency for other purpose (banks, tax incentives, etc)

Certificate/Letter of tax residency⁠ - we will need to apply to IRAS specifically to proof that the SG company⁤ owed by foreigner is a Singapore tax resident and the letter is getting more difficult⁣ to get. Having one board of directors' physical meeting in S'pore is not enough to⁢ proof the tax residency. IRAS requires a key person, e.g. ceo, coo, cfo, exective director︀ to be based in Singapore; or the SG company is supported administratively by other related︁ companies that have Sg business activities, to issue the tax residency letter for the company.︂

 

[alexkors]

Looks like you have experience there. What's the other option,︃ except Hong Kong/Singapore/classic offshores as the BVI, to register a company with a territorial tax︄ system? (=tax exemption for offshore revenue)

 

[daniels27]

You mean, you can pay 0 tax and still get︃ a residency certificate?

 

[daniels27]

Most British Overseas Territories, including Guernsey, Jersey, Isle of⁠ Man will fit the bill. But I guess they are already known enough and count⁤ as classic offshore.

Then, there are some freezones in various countries and then quite some⁣ very, very developing countries which basically don't care what you do outside the country, although⁢ you may have to resort on an additional US LLC to get banking outside of︀ the country.