Singapore Resident - US LLC - Tax Resident Company - Tax Treaty

[CryptoIsFreedom]

As a Singapore resident, in Singapore I am technically exempt from foreign sourced income. If this is my personal income, I don't have to pay taxes in Singapore.
If I create a US LLC, it is a pass through entity, so it is technically same as personal income, from that point it I shouldn't have to pay taxes.

However there is this, a company can become tax resident in Singapore:
https://www.iras.gov.sg/irashome/Bu... board of directors meeting held in Singapore
I understand that a C-Corp can become a tax resident, but what about LLC? Is LLC is a loophole because it is pass through or is it still deemed as a tax resident company?

Also there doesn't seem to be any tax treaties between Singapore and USA, which is odd. Does this mean if I can make money in my US LLC, and do not pull profits to Singapore and do not pay tax? And US will not report this to Singapore and I can get away with it?

I'd like to hear your thoughts guys

 

[Sols]

It comes down to how LLCs are treated under Singaporean law. Are they viewed as partnerships or as corporations?

If they are treated as partnerships, the income from the LLC is probably personal income.
If they are treated as corporations, you have corporate tax residence to worry about.
If it's not clear (hasn't been tested before), then you can hope for the best or ask the IRAS for an advance ruling.

In either case, speak with a tax adviser for guidance.

The absence of a tax treaty is generally bad. It means you might have to pay double tax (corporate tax in US plus corporate tax in Singapore), unless there is a local law which generally accepts foreign taxes paid as tax credit.

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This is the probably the answer to your question.

 

[CryptoIsFreedom]

Very surprised to see that there is a way to reach IRAS via chat. I'll do that this Monday and post my results here.

 

[Sols]

Chat isn't how you get an actual advance ruling since that's normally something you have to request through formal channels, but it's a start. Will be interesting to read the results.

Advance ruling: IRAS | About Income Tax Advance Ruling

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This is the probably the answer to your question.

 

[CryptoIsFreedom]

Visitor : Hello, I am a Entry Pass resident here. I have a US single owner LLC, which is a pass through entity. 10 employees work for the LLC. All the money comes from international sources and not Singapore. All of the money stays in US banks and financial instuitions. No part of the business touches Singapore except me the owner being a resident here. So the LLC makes $900K monthly revenue. $400K are costs and $500K is profit. The profit stays in US bank accounts to invest in future business growth. I receive $10K monthly salary from the LLC and pay my Singapore personal taxes. Do I have to declare or show or pay taxes at Singapore on any of the profits made by the US LLC?
(08:40:11) Jayson : To confirm are you asking about the salary that you earn or the profit that the LLC earns?
(08:42:29) Visitor : Actually on both. I am already paying tax on the salary, because I work while in Singapore, and my salary comes to Singapore banks
(08:43:37) Jayson : Yes for the salary part you will be tax in singapore
(08:44:49) Jayson : For the LLC dont have to declare it in singapore as all operations are outside SG
(08:45:36) Visitor : So for the US LLC side, I don't have to do anything? As long as I am paying my personal salary in Singapore, I'm all ok with the tax laws here?
(08:45:47) Jayson : Yes that is correct
(08:47:39) Jayson : Is there anything else you wish to clarify?
(08:48:03) Visitor : One more thing
(08:48:28) Visitor : if I pulled some profits of the LLC to another personal bank account located in the US, am I liable to any taxes in Singapore?
(08:49:11) Jayson : And its not salary right ?
(08:50:40) Visitor : It's not salary
(08:50:57) Visitor : More like dividends
(08:54:27) Jayson : Since its not salary it wont be tax in singapore
(08:55:02) Jayson : And generally dividends are not taxable in singapore except for certain cases
(08:55:26) Visitor : Alright, thank you very much Jayson. Btw what is your title and the government department you work in?
(08:56:05) Jayson : Im a tax officer in inland revenue authority of singapore

 

[CryptoIsFreedom]

Sols said:
Chat isn't how you get an actual advance ruling since that's normally something you have to request through formal channels, but it's a start. Will be interesting to read the results.

Advance ruling: IRAS | About Income Tax Advance Ruling
Click to expand...

Yes not an advanced ruling but this chat history will probably save my a*s if my structure somehow gets in the radar of SG government and they decide to do an audit. I imagine it's a very low probability, but feel safer now.

Btw this is the 3rd tax officer I've talked to. The first one said same as this guy. The second one, I have no idea what he said. He started posting links and copy pasting huge walls of texts and giving me non-answers. I tried to force him into a yes or no question, he didn't bite.

 

[Sols]

If you want to prepare for a worst case scenario, a chat log is probably not going to be of much use, especially when there is a clearly laid out procedure to get an advanced ruling. Why not just follow proper procedure?

You might have misled the representative here (which a hostile adversary can use to nullify the rest of your conclusions):

(08:48:28) Visitor : if I pulled some profits of the LLC to another personal bank account located in the US, am I liable to any taxes in Singapore?
(08:49:11) Jayson : And its not salary right ?
(08:50:40) Visitor : It's not salary
(08:50:57) Visitor : More like dividends
(08:54:27) Jayson : Since its not salary it wont be tax in singapore

What gives you the confidence to say it's not salary? Under US law, it's taxed as personal income. That could mean Singapore will treat it as personal income (salary) as well. Singapore is very tax-friendly so it probably wouldn't be, but your 15-minute chat with a first-line support worker at the tax authority isn't going to be the lifeline you might need, if things ever turn sour.

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This is the probably the answer to your question.

 

[JustAnotherNomad]

How would a pass-through entity be able to pay out dividends? What is "more like dividends" even supposed to mean?
Furthermore, I always thought Singapore had a "subject to tax" rule for income to be exempted from taxation in Singapore?

See here:
https://www.iras.gov.sg/irashome/Bu...come/Tax-Exemption-of-Foreign-Sourced-Income/
They likely thought that your LLC is taxed as a corporation and ordinarily tax resident in the US. Many countries don't understand the concept of a "partnership with limited liability". So that would explain why the agents you spoke to were confused.
You should send a proper formal inquiry - that chat log won't hold up in a court of law.