Self-Employed in SG by Overseas Entity

[kelvinchua]

Hi all,

Seeking for some advice here as it's the first time I'll become a self-employed status - if you are self-employed appreciate your help!

Background:An Australian company is trying to hire me as first person in Singapore (they do not have an entity in Singapore yet), and the plan is to bring in business first and subsequently setup an entity here.

Therefore, they can only offer me a "contractor" agreement and will not be paying Employer CPF.

Have checked with an employment lawyer - I am definitely considered self-employed and can only seek legal resolution in Australia in the event if they default on salary etc.

Annual salary: 120K

Questions:

1. What are my CPF implications aside from compulsory Medisave? I understand I can make voluntary OA/SA contributions monthly
2. What are my income tax implications? I understand I have to declare my income on an annual basis?
3. Any other implications as a self-employed?

I understand you probably did not want to ask these questions to an employment lawyer (even though you really should) to avoid paying fees outside the initial consult, but in all frankness you really should as this is very legally vulnerable position you will be in.

[kelvinchua]

anyone can advise?

Probably a little late for you, but I looked into this situation before. As long as you are working in Singapore, you have to file SG income taxes even working for overseas entities. You have to pay CPF etc yourself.

One way you can save on taxes is you can consider setting up a local Pte Ltd entity wholly owned by yourself, that acts as the consultant for this overseas entity. You employ yourself as employee for this local Ptd Ltd company, where you are both owner and employee. This way, your highest marginal tax bracket would be capped at 17% corporate tax rate (taking Ptd Ltd profits as dividends instead of salary), instead of the personal income tax at 22%. This helps you when you get to higher income $160K per annum where the personal income marginal rate is >17%. Hope this helps.