Singapore Sole Proprietorship - Anyone done it?

[dogprince]

I'm still deciding where to set up my business (Asia-based digital nomad - Canadian citizen, no residential ties to Canada).

Since all I need is PayPal, I figured, why go through the expense and complexity of setting up a fully incorporated or limited company when I can set up a simple sole proprietorship instead?

I sell software from my laptop, and no one will ever sue me, so I don't need the legal protection an LLC offers.

Has anyone set up a sole proprietorship in Singapore or elsewhere in Asia?

I know it is technically possible for foreigners to set up a sole proprietorship in Singapore so long as they have a local rep, but has anyone done it? Which agency did you use?

 

[Sols]

Just form a company or find a cheaper jurisdiction if you're strapped for cash. Hong Kong is usually a bit cheaper.

The paperwork ends up being the same and because sole proprietorships are rare, you're likely not looking at any meaningful savings anyway. You still need a local representative and local filing agent. That's also what you need in order to form a company. The incorporation costs themselves are negligible. And unlike sole proprietorships, there is a lot of competition between service providers, which makes it possible to find a wide range of pricing options.

There are situations where deviating from the norm can be an advantage and a way to find new opportunities. This isn't one. Be normal. Be easy to understand for banks and payment processors.

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This is the probably the answer to your question.

 

[12345]

Maybe go with USA LLC? Easy to open a bank account, cheap to maintain, no need to pay taxes in the US unless there is PE

 

[dogprince]

I thought about the USA LLC, but the rules are so complex and ever-changing, and it's impossible to make sense of anything. Ask one question and get 10 different answers.

 

[12345]

dogprince said:
I thought about the USA LLC, but the rules are so complex and ever-changing, and it's impossible to make sense of anything. Ask one question and get 10 different answers.
Click to expand...

what do you mean? It's simple. No tax to be paid in the US if there is no pernament establishment there, that's how tax treaties between us and most countries look like

 

[dogprince]

About 30 percent of my customers are American. My understanding is that will make me tax liable in the US (ETOB and ECI). I sell digital software (downloads).

Last edited: May 11, 2024

 

[TheCryptoAnt]

dogprince said:
About 30 percent of my customers are American. My understanding is that will make me tax liable in the US (ETOB and ECI). I sell digital software (downloads).
Click to expand...

Selling to Americans (even if 100% of your customer base), doesnt qualify as PE.
Check the IRS website.

 

[daniels27]

dogprince said:
About 30 percent of my customers are American. My understanding is that will make me tax liable in the US (ETOB and ECI). I sell digital software (downloads).
Click to expand...

TheCryptoAnt said:
Selling to Americans (even if 100% of your customer base), doesnt qualify as PE.
Check the IRS website.
Click to expand...

ETBUS=ETOB is not the same concept as PE. You could have no PE but still be considered ETBUS.

Yes, we had this discussion a few times and it is a nightmare as IRS does neither sue nor do any advance ruling. But this also means in return, that they take the free tax of the 50% confused people that believe the 50% of the lawyers and CPA that recommend paying the tax.

I would say, it depends on what you want. If you have a decent turnover, you may be better off with a Singapore company with no local income (i.e. tax free). If will cost you 5k SGD but you save all taxes. And you potentially have less issues with the tax guys in the place you reside.

 

[TheCryptoAnt]

daniels27 said:
ETBUS=ETOB is not the same concept as PE. You could have no PE but still be considered ETBUS.

Yes, we had this discussion a few times and it is a nightmare as IRS does neither sue nor do any advance ruling. But this also means in return, that they take the free tax of the 50% confused people that believe the 50% of the lawyers and CPA that recommend paying the tax.

I would say, it depends on what you want. If you have a decent turnover, you may be better off with a Singapore company with no local income (i.e. tax free). If will cost you 5k SGD but you save all taxes. And you potentially have less issues with the tax guys in the place you reside.
Click to expand...

My bad brother, I had just woken up when I typed that.

I meant ETBUS in my head, not PE.

 

[12345]

daniels27 said:
I would say, it depends on what you want. If you have a decent turnover, you may be better off with a Singapore company with no local income (i.e. tax free). If will cost you 5k SGD but you save all taxes. And you potentially have less issues with the tax guys in the place you reside.
Click to expand...

Is it difficult to get decent bank account for SG company?

 

[daniels27]

12345 said:
Is it difficult to get decent bank account for SG company?
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EMI is normally not too difficult. If you want to benefit from zero tax, you cannot use any SG bank as money remitted to Singapore is taxed.

 

[wellington]

TheCryptoAnt said:
Selling to Americans (even if 100% of your customer base), doesnt qualify as PE.
Check the IRS website.
Click to expand...

Is this something new that's come in? From what year?

 

[Cloudbanck]

wellington said:
Is this something new that's come in? From what year?
Click to expand...

It - in the sense of no ETBUS - i.e. no US tax for non resident aliens selling to the US from abroad is not new. Basically it's since the US Revenue act of 1936 (which specified on what withholding tax would apply to for non resident aliens somewhat) and earlier.

And it was clarified in a court case in 1949 involving British author P.G. Wodehouse who while living in France in the 1930s and 1940s (including being interned as prisoner in n**i-occupied France), was receiving royalties from stories published in the US. It was ruled that Wodehouse's royalty income even if coming in lump sums would be subject to withholding tax in the US as it was considered fixed and periodical income sourced in the US.

In essence income from US sources (typically passive income - royalties, rents, dividends, annuities etc) is subject to US withholding tax, even for non resident aliens that are not ETBUS. But active income, when the work is done outside the US, is not US sourced and not subject to US tax when there is no ETBUS.

From the 1949 court case:

"The respondent, Pelham G. Wodehouse, at the times material to this case, was a British subject residing in
France. He was a nonresident alien of the United States not engaged in trade or business within the United States and not having an office or place of business therein during either the taxable year 1938 or 1941. He was a writer of serials, plays, short stories, and other literary works published in the United States in the Saturday Evening Post, Cosmopolitan Magazine, and other periodicals."

Full thing here: Commissioner v. Wodehouse, 337 U.S. 369 (1949)

 

[Xshore]

dogprince said:
I'm still deciding where to set up my business (Asia-based digital nomad - Canadian citizen, no residential ties to Canada).

Since all I need is PayPal, I figured, why go through the expense and complexity of setting up a fully incorporated or limited company when I can set up a simple sole proprietorship instead?

I sell software from my laptop, and no one will ever sue me, so I don't need the legal protection an LLC offers.

Has anyone set up a sole proprietorship in Singapore or elsewhere in Asia?

I know it is technically possible for foreigners to set up a sole proprietorship in Singapore so long as they have a local rep, but has anyone done it? Which agency did you use?
Click to expand...

Could you use a sole proprietorship in Canada, if you're not tax resident there? I don't know about rules in Canada, but that is possible (and easy) in many other countries. If you only need Paypal, do you even need a sole proprietorship? Can't you manage to open a bank account where you are based (or have bank accounts/some address proof)?