Tax Responsibilities of Digital Nomads in Asia?

 

Last week we had a couple of clients asking about the tax consequences of working remotely in Singapore for clients in the USA.  In my other article, I dealt with it from the US perspective .

Today we would look at it from the Asian perspective.  I'll limit my analysis to Singapore, Malaysia, Thailand, and Indonesia (including Bali).  In short, the tax treatment is similar.  Moreso Singapore, Thailand, and Malaysia which practice territorial taxation.  Indonesia (including Bali) is slightly different in that residents are taxed on their worldwide income.

Singapore 

  • You will be treated as a tax resident for a particular Year of Assessment (YA) if you are -
      1. a Singapore Citizen (SC) or Singapore Permanent Resident (SPR) who resides in Singapore except for temporary absences;
      2. or a Foreigner who has stayed/worked in Singapore (excludes director of a company) for 183 days or more in the previous year. i.e., the year before the YA.
      3. Otherwise, you will be treated as a non-resident of Singapore for tax purposes.
      4. Generally, business income is sourced in Singapore if the business operations giving rise to the income are carried out in Singapore.  Such Singapore-sourced income is taxable in Singapore.  In the case of E-Commerce (EC) businesses, if the business operations underpinning the EC transactions are carried out in Singapore, the income so derived is considered sourced in Singapore and taxable.
    • Conversely, if the business operations are carried on outside Singapore, the income is considered foreign-sourced and taxable when remitted back to Singapore.  It can be tax-exempt under certain circumstances .
    • For a deeper dive into scenarios and their tax treatment, please read here

Note: The above reference link was live on April 2018, but due to a technical situation, the website is temporarily unavailable.

Malaysia 

    • Generally, income tax is imposed on the income of any person accruing in or derived from Malaysia.
    • Business income derived from sources outside Malaysia and which is received in Malaysia is exempt from income tax.  However, for a resident company carrying on banking, insurance, sea, or air transport, tax is imposed on that company's income derived from both Malaysia and outside Malaysia.
    • Generally, a non-resident person (fewer than 183 days) is taxed only on income accrued in and derived from Malaysia.
    • Generally, a resident person (more than 183 days) is taxed on income earned, regardless of where it is paid.
    • For a deeper dive into scenarios and their tax treatment, please read here .

Note: The above reference link was live on April 2018, but it has since been taken down

Thailand 

    • Salaries received from employment exercises outside Thailand are exempt from Thai tax if not paid in or remitted into Thailand within the same calendar year it is received and provided the cost is not recharged into Thailand.
    • Generally, a tax resident is defined as a person present in Thailand for an aggregate of 180 days or more in any given tax year.  Conversely, fewer than 180 days may make someone non-resident for tax purposes.
    • A non-resident is, however, subject to tax only on income from sources in Thailand.
    • If you're resident in Thailand, earning income online, and not paying tax in another jurisdiction, you are generally required to pay tax in Thailand.
    • For a deeper dive, please read here.

Indonesia (including Bali)

      • Resident taxpayers are defined as individuals who:
        1. are domiciled in Indonesia; or
        2. stay in Indonesia for more than 183 days in any 12-month period; or
        3. are present in Indonesia during a tax year and intending to reside in Indonesia.
      • A foreigner who qualifies to be a resident taxpayer becomes a tax resident from the date of arrival in Indonesia until Indonesia's final departure.
      • Both resident and non-resident taxpayers are subject to national income tax (Indonesia has neither federal nor state income tax).
      • Residents are taxed on their worldwide income and are generally allowed a credit for taxes paid abroad, whereas non-residents are taxed only on their Indonesian-source income.

We have offices across Asia.  From Beijing up North to Bali down South.  Let us know if you have questions

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