Q&A on tax (VAT & CIT) regulations for Foreign Company with Non-Resident status in Singapore

Email: sin4ww@evershinecpa.com

Singapore CPA Lau Wei-Koon, speak in both English and Chinese
215 Henderson Road #03-03 Henderson Industrial Park Singapore 159554

NR-SG-110:
Can a foreign company with Non-Resident status apply for a VAT number in Singapore? If can, is it necessary to pay for the corporate income tax?
Official website? Application form?
Answer:
Can.
According to BNA VAT Navigator 9.2, under Section 33 of the GST Act, persons with no usual place of residence in Singapore that are liable to account for GST in Singapore.
According to BNA VAT Navigator 10.1, overseas registrants are generally required to appoint a local agent or representative and must include an “Appointment of local agent” letter.
On the other hand, overseas digital and non-digital services providers must register for GST under the overseas vendor registration regime, if they meet the following criteria:
• Yearly global turnover exceeding S$1 million
• Sell more than S$100,000 worth of digital services to customers in Singapore in a 12-month period.
Overseas services providers under OVR regime are permitted, but not required, to appoint an agent.
Application for GST Registration under the Overseas Vendor Registration (OVR) Simplified Pay-Only Regime can be done in the following link:
https://form.gov.sg/628c35095285380016698317
A company that does not have a permanent establishment in Singapore would be considered a non-resident company for tax purposes.
Non-resident companies only taxed on their Singapore-sourced income, which includes income derived from business activities conducted in Singapore, such as of goods or provision of services to customers in Singapore and foreign-sourced income received or deemed to be received in Singapore, subject to certain exceptions.

NR-SG-120:
If the foreign entity with Non-Resident status appoints an agent to applied for a VAT number in Singapore:
What is the official name of the agent?
What qualifications does the agent need?
Is the agent jointly and severally liable to the Singapore tax bureau?
Does the Non-Resident Entity need to pay for corporate income tax?
Official website?
Answer:
According to BNA VAT Navigator 9.2 and 10.4.
The official name of the agent is “GST Agent”.
The GST Agent must be a resident of Singapore and must be approved by the Inland Revenue Authority of Singapore (IRAS).
The GST agent must meet the prescribed qualifications which includes relevant academic qualifications, professional qualifications or work experience in accounting, taxation, or business-related fields.
The GST agent must pass the GST agent competency test conducted by the Inland Revenue Authority of Singapore (IRAS).
The GST agent must register with the IRAS before providing GST-related services to clients.
The GST agent can be held jointly and severally liable for the GST payable and any related penalties.
The GST agent can also be held liable if it is found to have aided or abetted the foreign entity in committing any GST offenses.

NR-SG-130:
What are the circumstances that a Non-Resident Company in Singapore will not be consider as having permanent establishment (PE) in Singapore? And what circumstances will be considered as having PE in Singapore?
Answer:
According to BNA Country Guide 2.2.
Deemed not having PE:
Singapore does not have specific law governs whether a nonresident has a taxable presence in Singapore when a customer in Singapore accesses the nonresident’s website, downloads information from the nonresident, or uses cloud services hosted by the nonresident.
According to IRAS’s Income Tax Guide on E-Commerce, the mere presence of a physical server in Singapore alone, providing cloud services, customer downloads or website access in Singapore will not amount to PE in Singapore.
IRAS will assess the extent of business activities in Singapore to determine whether a nonresident seller or service provider has created a taxable presence in Singapore.
Deemed as having PE:
Under domestic law, a PE in Singapore means a fixed place where a business is wholly or partly carried on. It specifically includes:
• A place of management
• A branch
• An office
• A factory
• A warehouse
• A workshop
• A farm or plantation
• A building or work site or a construction, installation, or assembly project.
A nonresident company is also deemed to have a PE if it has another person habitually concluding contracts on its behalf or if that person”
• Carries on supervisory activities in connection with a building or work site or a construction, installation, or assembly project in Singapore.
• Maintains a stock of goods or merchandise for the purpose of delivery on behalf of that person; or
• Habitually secures orders wholly or almost wholly for that person or for such other enterprises as are controlled by that person.  

NR-SG-210:
Does Singapore have Free Trade Zone and bonded warehouse system? How do foreign businessmen use the Free Trade Zone to obtain tax concessions?
Answer:
Refer to Depositing Goods in Free Trade Zones
Yes, Singapore does have a Free Trade Zone (FTZ) and a bonded warehouse system.
The FTZ is a designated area within Singapore where goods can be brought in for storage, repackaging, and re-export without incurring customs duties and taxes.
This zone includes the ports, airports, and other designated areas within the country.
The bonded warehouse system is a storage facility where imported goods can be stored without the need to pay customs duties and taxes until they are removed from the warehouse for local consumption.
Foreign businessmen can use the FTZ and bonded warehouse system in Singapore to obtain tax concessions by importing their goods into Singapore and storing them in the FTZ or bonded warehouse.
If the goods are subsequently re-exported, no customs duties or taxes are payable.
Duty and GST are only payable when the goods are consumed within the FTZ or leave the FTZ and enter customs territory for local sales or consumption.
This makes Singapore an attractive location for businesses that require a regional distribution center or a hub for their supply chain operations.

NR-SG-220:
Can a foreign company rent a bonded warehouse in Singapore Free Trade Zone under the name of a foreign company?
Can a bonded warehouse held under the name of a foreign company as a holder of the import and export documents?
Or can it be held by a cargo agent?
Answer:
Yes, a foreign company can rent a bonded warehouse in Singapore’s FTZ under its own name.
The Singapore Customs allows foreign companies to establish a presence in Singapore by registering a branch, a subsidiary, or a representative office.
Once registered, the foreign company can then rent a bonded warehouse in the FTZ and operate under its own name.
Yes, a bonded warehouse in Singapore can be held under the name of a foreign company as the holder of the import and export documents.
To obtain a Customs Import Permit, refer to Obtain a Customs Import Permit
In Singapore, cargo agents can act as “declarants” for importers or exporters of goods, which means that they can handle the customs clearance and documentation on behalf of the importer or exporter.

NR-SG-230:
Are there any similar roles as IOR (Importer Record in Germany), Tax Agent (Germany), Fiscal Representative (Netherlands), Registered Agent (USA Texas), ACP (Japan)?
How to avoid situation where the VAT cannot be deducted as input tax?
Answer:
Refer to Declarant – Application Process
The declarant is responsible for submitting customs declarations, obtaining permits or licenses for the import or export of goods, and paying any duties or taxes that may be applicable.

Refer to the below link.
Applying for GST registration
Foreign company can import goods for supply in Singapore with the following options:
1. Import goods into Singapore and supply them in own business name.
If the taxable supplies in Singapore exceed the $1 million threshold, GST registration is compulsory. Otherwise, can register GST voluntarily to claim GST paid on imports (subject to input tax claiming conditions).
If foreign entity is register for GST, he/she must appoint a local agent in Singapore, known as a Section 33(1) agent, who will act on behalf for all the GST matters.
2. Appoint a GST-registered Singapore agent who will import and supply goods on behalf.
This agent, known as a Section 33(2) agent, responsible for the imported goods as if the agent is the principal.
The agent will import goods into Singapore in its name and claim the GST paid on imports.
Subsequent supplies of the goods imported will be treated as its own taxable supplies.
The agent must account for GST on these supplies and foreign company do not need to register for GST.
Refer the link for GST guide on import, IRAS e-Tax Guide GST: Guide on Imports

NR-SG-240:
What are the ways of dealing with custom duties and VAT when a foreign company sells to domestic customers in Singapore from a warehouse in the bonded area in Singapore?
What are the differences when paying for the CIT in Singapore?
Answer:
Refer to IRAS e-Tax Guide – GST Guide for Free Trade Zones, Warehouses and Excise Factories
Unless special schemes are applicable, GST is payable on the importation of goods into Singapore.
Import GST is payable regardless of whether the importer is GST-registered or not.
If goods are imported and stored in FTZs, warehouses, import GST is suspended until these goods are moved into customs territory and subsequently sold to domestic customer.
When sells to domestic customers from a bonded area, the sales are considered imports for customs and GST purposes, import GST is payable.
If the foreign company has a permanent establishment in Singapore, which is defined as a fixed place of business, it will subject to CIT on the profits attributable to that PE.
However, if the foreign company does not have a PE in Singapore, it will only be subject to CIT on income derived from Singapore, such as sales made to domestic customers in Singapore.

NR-SG-250:
Foreign companies rent warehouses from bonded warehouses in bonded areas in Singapore, and then sell the items to domestic customers in Singapore. Will this make foreign companies Non-PE into PE and need to keep accounts and pay income tax?
Answer:
According to BNA Country Guide 2.2.4.
Renting a warehouse from a bonded warehouse in a bonded area in Singapore and selling goods to domestic customers in Singapore may or may not result in the foreign company being considered a Permanent Establishment (PE) in Singapore, depending on the specific circumstances.
If the foreign company does not have any employees or representatives in Singapore and is only using the bonded warehouse as a storage facility, it is unlikely to be considered a PE in Singapore.
In this case, the foreign company would be subject to Singapore Corporate Income Tax only on income derived from sources in Singapore, such as sales made to domestic customers.
However, if the foreign company has employees or representatives in Singapore who are involved in the sale of goods to domestic customers, it could be considered a PE in Singapore.
In this case, the foreign company would be required to keep accounts and pay income tax on profits attributable to its PE in Singapore.

NR-SG-310:
For Amazon and other e-commerce B2C, the Singapore government stipulates that natural persons should declare customs duties and VAT when importing. How they deal with it?
Answer:
For e-commerce B2C transactions, including those conducted on Amazon, the Singapore government requires the individual consumers to declare customs duties and VAT when importing goods into Singapore.
In practice, Amazon may provide an estimated or pre-calculated amount for customs duties and VAT at the time of purchase.
When the goods arrive in Singapore, the individual consumer is responsible for declaring the goods and paying any customs duties and VAT that may be applicable.
This can be done through the Singapore Customs’ online platform or at designated customs offices or checkpoints.
For more information, refer to Buying over the Internet and https://aws.amazon.com/tax-help/singapore/

Contact Us

Singapore Evershine BPO Service Limited Corp.
E-mail: sin4ww@evershinecpa.com

Singapore CPA Lau Wei-Koon, speak in both English and Chinese
215 Henderson Road #03-03 Henderson Industrial Park Singapore 159554

or
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please send an email to HQ4sin@evershinecpa.com
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Email address:dalechen@evershinecpa.com
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(version: 2024/07)
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