In this three-part series, lawyer Lau Kah Hee talks expats through what you need to know about the law in Singapore. If you are moving to Singapore, you will want to take a read!
Singapore topped a poll for the best places to live and work for expats according to HSBC’s latest Expat Explore and is also ranked as the nicest city to live in Asia for expats as reported in the Straits Times. Singapore was chosen because it provided the right balance of career opportunities, lifestyle, infrastructure as well as a stable economy.
Moving to Singapore — have a plan
If you are considering coming to work in Singapore, you might want to read on to know what you need to consider from a legal perspective. Lawyer Lau Kah Hee outlines the most important considerations to help you plan and prepare in advance so that you will not be caught out by any surprises.
Get the right visa
There are various types of visas to stay in Singapore for work, depending on factors such as your level of skills and your salary.
The Ministry of Manpower oversees all foreign employment matters.
Generally, the types of work visas available are:
- the Work Permit (for unskilled labourers)
- the S Pass (for medium-skilled manpower)
- Personalised Employment Pass (for top-earning executives) and
- the Employment Pass (highly-skilled and educated workers).
Each of these types of work visas has various benefits and restrictions and you should be aware of your obligations under each before applying for one.
As the Employment Pass and Personal Employment Pass are the most common work visas among most expats in Singapore, here’s a closer look at both.
Employment Pass:
- Your Employment Pass binds you to your employer. If you switch jobs, you have to re-apply for another Employment Pass.
- The Pass is usually issued for 1-2 years and subsequently, is to be renewed every 3 years.
- If you earn above $5,000 a month, you are eligible to bring your spouse and children in under the Pass as well. If you earn above $10,000, you can also bring your parents into Singapore.
- To qualify, you need to have a diploma or degree from a well-established educational institution and have worked for at least 3 years in that field. You are more likely to be given the Pass if your skills are in demand in Singapore.
Personalised Employment Pass:
- Similar to the Employment Pass except that you are not tied down to one employer. You can change jobs without applying for another work visa and you can stay unemployed in between jobs for up to six months, after which your Personalised Employment Pass will be revoked.
- You can apply for this before even securing a job in Singapore.
- To qualify for this, you must be earning $18,000 a month and above.
- The visa is valid for three years with no option to renew. Before it ends, you can apply for an Employment Pass based on your current employment.
Do take note of the requirements for your specific work visa.
Also, it is important not to start doing any work in Singapore until your work visa has been issued. Working in Singapore without a valid work visa constitutes a criminal offence which carries criminal sanctions.
Some expats come to Singapore on a social visit pass to meet their future employer and to see what the company is like. In such cases, do not perform any work-related matters in the office or meet clients.
Setting up a business
Many expats moving to Singapore come here to set up their own business. Before setting up a business, you should decide on the business model.
In Singapore, there are five basic types of business models – sole proprietorship, partnership, company, limited liability partnership and limited partnership.
Each of these models has a different regulatory framework such as the number of owners required, the amount of liability placed on the owners as well as other matters such as accounting and taxes.
For example, to start a company, there must be at least one local director. The owners must also submit audited annual reports.
Deciding which business model is most appropriate requires the expat and other stakeholders to take a multitude of factors into consideration, given the resources at their disposal as well as the constraints prevailing then. It is not possible to enumerate all factors and considerations exhaustively, and it would be highly advisable for the expat to seek professional legal advice so as to make a well-informed decision. As a rough starting guide, some of these factors due for consideration include –
- Operating cost budget;
- Raising of capital;
- Future plans for business continuity; and
- Room for manoeuvrability and ability to respond to unexpected changes in the market.
Things to note when hiring foreign staff
If you are hiring foreign employees for your company, take note of which work visa they should come in under.
Both the S Pass and Work Permit options have quotas and your application may be delayed. For staff hired under these types of work visas, you would need to pay a workers’ levy and insurance for them.
Also note that the work visa would specify the employee’s work address, meaning that he or she cannot work in other locations.
Ensuring the tax man doesn’t come after you
Depending on your nationality, you might need to pay taxes in both Singapore and your home country. This applies to citizens of countries such as the United States of America, as well as Australia. Double taxation relief may, however, be available to the expat. Again, it would be highly advisable for the expat to seek professional legal and tax advice before embarking on his or her decided course of action.
Tax season is usually in the months of March and April. You will receive a mail from the Inland Revenue Authority of Singapore (IRAS) with instructions on what you would need to do. Your tax bill will be sent out between end April and September.
If this is your first time filing your tax returns, do consider consulting a tax lawyer or an accountant to help you sort out your tax requirements.
If this is your second or subsequent year of filing tax, IRAS may inform you that you do not need to file a tax return. Instead, IRAS will base your Notice of Assessment (NOA) on your previous tax returns. It is still your duty to ensure the final NOA is updated with the latest information.
Singapore income tax is imposed on income derived in Singapore or received in Singapore from outside Singapore.
Tax deductions can be claimed on expenses which are incurred in the course of earning your income such as travel expenses, entertainment expenses and subscriptions.
There is also a range of tax reliefs such as those for taxpayers who have elderly parents, handicapped relative or children living with them.
If you own a company or business, you would also need to file for Corporate Income Tax.
Further, if the expat has a “side” job as a “freelancer”, and earns income from his or her moonlighting activities in Singapore, such income is likely to constitute trade income which must be reported to IRAS. Tax would be levied on such trade income.
Evading taxes is a criminal offence. In the most serious case, where there is deemed to be serious fraudulent tax evasion, the accused can be made to pay back up to five times the amount of tax evaded, pay a fine of up to $50,000, or face a jail term that could extend to up to five years.
Is buying a potential client lunch corruption?
Singapore has a zero tolerance attitude towards corruption, with high-level civil servants and even politicians taken to court for graft offences.
Make sure you do not act in a conflict of interest where you stand to gain some benefit for contracts you may enter into with another party.
Can something as simple as buying a potential client lunch constitute corruption? Not likely, unless there is a clear men’s rea or prior intention to bribe the client.
As a safeguard, it would be good to go through your company’s internal procedures to show that any activity with the client was entirely above board, rather than an under-the-table incentive.
Protecting personal data
In 2013, the Personal Data Protection Act (PDPA) came into effect in Singapore to safeguard people’s personal data such as mobile phone numbers and addresses.
Under the Act, it is an offence to collect, use or disclose personal data from an individual without consent. Breaches can draw penalties of up to $1 million.
This means that businesses have to be more careful and responsible with their clients’ information and seek their permission before using their data.
This also applies when dealing with employees and colleagues.
In a recent case, the Personal Data Protection Commission gave a warning to a firm after one of its directors shared personal data about a former employee in a WhatsApp group consisting of staff and volunteers.
The ex-employee had told the director, who was her supervisor, about her drug problems and infidelity and he had shared that highly-personal information with the group of about 50 people.
Get in touch with lawyers like Kah Hee
If you want to get advice for a specific immigration issue or any other issues mentioned above, you can have Kah Hee call you on the phone within 1-2 days with an Asia Law Network Quick Consult for a flat fee of S$49.
This article does not constitute legal advice or a legal opinion on any matter discussed and, accordingly, it should not be relied upon. It should not be regarded as a comprehensive statement of the law and practice in this area. If you require any advice or information, please speak to practicing lawyer in your jurisdiction. No individual who is a member, partner, shareholder or consultant of, in or to any constituent part of Interstellar Group Pte. Ltd. accepts or assumes responsibility, or has any liability, to any person in respect of this article.