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VOICEOVER:
This podcast channel is about you. Successful international Entrepreneurs, successful expats, successful investors. Sponsored by HTJ.tax
DERREN JOSEPH:
All right, thank you to those who are joining us. My name is Derren Joseph, HTJ.tax which is a member of Moores Rowland in Asia Pacific. We do these live streams. We try to do it every week, although as we come closer to the US tax deadline, we’ll probably get a bit more delinquent. But we try to do these live streams every week. We also review, and release video content every day on our various social media platforms, including YouTube, and SoundCloud. Basically, wherever you get your podcast, we will release new, helpful content every day for you.
We seek to demystify the world of cross-border tax international tax, and today we have the honor and we have the privilege of two tax gurus who are colleagues in Moores Rowland. We have Boon Yip in Singapore and we have Ravi and KL, in Malaysia. Gentlemen, would you like to introduce yourself? Boon Yip?
BBON YIP YEE:
Hi, thank you, Derren. So my name is Boon Yip. I’m in Singapore, so I’m a partner in Moores Rowland in Singapore. So I did a few business advisories and also tax.
DERREN JOSEPH:
Okay, fantastic. And Ravi?
RAVI NARAYANASAMY:
Hi. Thanks Derren. My name is Ravi. You can address me as Ravi. I’m the tax director here from RTR Tax Services Sdn is affiliated to Moores Rowland Asia Pacific, mostly consultated on tax consulting and compliance work. Also international taxes. My colleagues, my partners, they’re mostly involved in audits. Thanks Derren.
DERREN JOSEPH:
Okay, fantastic. And as we always say that this, we are not giving tax advice. This is not meant to be tax advice. What we are doing is we are having a general conversation on general principles, which we hope will be helpful to you as you retain this, a tax team who is uniquely equipped to address your specific situation, right? So you need to get advice, you need to seek professional advice. We just having a general conversation. So thanks for that. We have a number of questions that we want to go through and everything that they will be helpful and bear, bear in mind that we don’t think that one is better than the other.
We don’t think Malaysia’s better than Singapore (more about American tax Singapore here), and vice versa. We think that these are very unique jurisdictions. They happen to be close to each other, but they’re unique and they would be appropriate to different types of businesses, different types of Entrepreneurs, and different types of, of startups, right? So what we are hoping to do is kind of kind of like tickled the imagination and helping you understand this. What makes each jurisdiction this thing and help you as you see to make a decision, right?
So the first question is, well, both Malaysia and Singapore are described as having a territorial tax system, but this is not technically 100% true in that there are circumstances generally speaking where foreign derived and can can be subject to tax comments. Let’s start with Ravi. Ravi, what are your comments on that? Especially Malaysia’s had some, quite a few changes as I understand within recent times, territorial attacks, Malaysia,
RAVI NARAYANASAMY:
Yes, it’s what you’re saying is, is absolutely correct. Okay. There’s been a lot of income tax cases in past year that income tax has been disputing. The income remitted back to Malaysia, whether is simulation source or o c source, there have a lot of cases in the court cases running all these years. Most of the cases income tax tend to lose the cases technically because there is no, how you say, clear guideline in the, to put a line say this is you can’t fulfill this condition, there’s no tax.
If you don’t fulfill, you’ll be tax simulation. So there’s no, it’s always been a gray area. So saying that also taxpayer has been taking opportunities, I can say that also bringing money into Malaysia without paying tax in overseas. Also, that means they don’t pay in tax in overseas and don’t pay in Malaysia. So as far as concern over here, the law doesn’t say anything that it is not taxing osis, it should be tax Malaysia. It doesn’t see that.
So taxpayer has been taking this as an advantage at their point. So always court case goes, all these things comes. So the point, the income tax will look at it is where the work done, the job is done, where it’s concluded, all these tests they will do before they conclude. Okay. So all these things are happening technically. So since this thing has been a gray area in context, saying this is a big issue and big, a lot of revenue being missile or lost for the government cause of this short pause in the rulings.
So they have changed the act since first January, 2022, two overseas income remitted back to Malaysia is taxable in Malaysia is taxable based on receive basis. Okay? So however, once they came out with this ruling, there’s a lot of who has the taxpayers and the general business community on this. So after that they re, they give some concession and they, they give some relaxation.
One of it is for the first six month period from January until June, whatever amount remitted to Malaysia will be taxed at 3%. Okay. Following that period, the tax will be based on the prevailing corporate tax rate the company have to pay. Okay. Then for individuals, they have give exemption on foreign income remit back to Malaysia on all income until 2 0 26.
For all for this is Malaysia tax resident only, non-resident, they can still bring money to Malaysia. It’ll be tax free, still will be tax free. This is for Malaysia tax resident only. And further to that dividend income also, this is for corporate, for dividend income. Corporate dividend received from OSIS is also exempted. But they have put certain conditions on this one is the baseline tax must be at at least 15%.
And some of the condition is now recently they put another condition saying that the dividend that you received from that company, they must have a, a substance, the company must have substance. That means that it is not a, how you say it’s not company, intermediate company. Yeah. Without anything just transferring the money, it must be a company in operation doing a rail activity that transfer the money. So we have this issue. So as what you say, yes, the definition is a territory text is no longer stays. So it’s going to be text everywhere we have to look.
DERREN JOSEPH:
Okay. So just to quickly summarize. So the first thing is, hasn’t changed, man. If management and control, if it’s a company or the economic activity, if it’s a person or whatever is being exercised within Malaysia, even though it’s collected outside, the point is it is taxable to Malaysia because in the, in the situation where management and control or some sort of economic activity being exercised within Malaysia, yes. However, the, it’s in a period of transition right now where, so any, so, okay, so the dividends piece, I think that’s straightforward. There’s a minimum tax above which, yes, it can be remitted free of charge, otherwise it’ll be subject to tax. And then you have the idea that if it’s a shell company, that doesn’t count. Yes, it has to be, there has to be real substance, an economic substance in some of the jurisdictions for the dividends to come in. Now, in terms of other types of remitted income, it will be subject to tax, but it’s gonna be phased in over a period of time. Okay? Yes. So right now we are looking at 3%, but eventually, by 2026 it will be whatever the prevailing corporate tax rate is, which tax, which roughly is around 25%.
RAVI NARAYANASAMY:
Yes. The thing Derren when replied this, so I just wanted just clarify because what I heard is Glacier currently is the remittance basis is purely based on the remittance basis. Okay. I heard Singapore, they only have, they also have a provision of setwhicht means you don’t, in Malaysia, you must, the money must actually come to Malaysia then only tax it if crediting the knocking off with accounts is not counted as for tax. But Singapore does have that provision saying that that also is counter, I’m not sure.
Boon Yip Yee:
Yeah, okay. Generally Singapore and Malaysia, they, the, the tax system is based on uk. So they, they shared almost the same principles, but I would think, I would think Singapore is a lot easier. So in terms of foreign source income, there are three categories that are, that you can have tax exemption as a dividend, foreign source, dividend service income, and also branch profits.
Right? So what happened is obviously you have to satisfy criteria. So there are three criteria that you have to satisfy. So being taxed already in the o c jurisdiction, and of course the headline tax must be 15% and also the controller has to be satisfied that, that, that is, is not at the expense of the Singapore tax. Right? So the taxpayer, I mean, so these are the main criteria, the three main criteria that you have to meet all of them in order to have those income exempted from tax.
I think it’s fair and equitable because if, if you look at the basis of Singapore is they always say that you, you wouldn’t be taxed twice, right? So say for instance, dividend is always first year, so you will not tax you another time unless the dividend has not suffered any tax in overseas. So, which is why you must first suffer the tax and the headline tax has to be 15% and nowadays I think 15% you would hit all jurisdiction except tax haven, right?
So I think it is, this part is very clear in Singapore, but there’s a great area. So I mean I personally feel that often. I had an inquiry from clients back then, I think two weeks ago I had one, they were asking if I set up a company in Singapore, but all my trades, all my, the management control, everything else is Offshore. So nothing except Singapore company.
Even the bank account is not in Singapore. So do I exempt from tax? The answer is no. Okay. No, because they are intrigued. So actually it is a real company. So what happened is this, this crew of people, they are from Australia, so they’re thinking to do some restructuring. Obviously they are not thinking to evade tax or what, primarily it’s just to consider Singapore jurisdiction, but they heard about if you have a Singapore company with everything else, Offshore means you, you, you don’t have to suffer any tax. But that’s not true.
DERREN JOSEPH:
That’s not true and that’s an important point. I’m glad you raised it because I mean, I don’t wanna call their name, but there’s a, another big service provider with a, a heavy, a very strong online presence based in Singapore that has been selling that online. So what they, what they have advocated is if there’s no bank, there’s no economic substance in Singapore, then the company is zero that they’ve said this online and but you, but you’re saying that this may not be technically true sometimes
BOON YIP YEE:
Yes, as long as they are in trade. Okay. So it’s definitely subject to tax, but they, there may be a, somehow a twist, so depending on how they sell it. So it could be service income, they were in service industry and it’s foreign source. Yes, probably yes. You may not subject to tax in Singapore, so I don’t know how they sell it, but if you are in trade Singapore company, definitely you suffer a corporate tax.
DERREN JOSEPH:
Okay. Understood. Understood. So, so just to kinda summarize you correct, so the regime, so both as, as correctly pointed out in terms of the heritage both derived from UK company law company act, so the both have the principle of management and control first and foremost. Yes. And in terms, and they all have the idea of the remittance basis of, of taxation, except that there are fewer exceptions for Singapore and they’re pro perhaps more exceptions from Malaysia.
So in Singapore it’s absolutely saan dividends tax free, provided they’ve been taxed elsewhere, minimum 15%. But again, other remittances, they will be free attacks provided they’ve been taxed somewhere else. Right. And of course, proper transfer pricing if it’s a related party transaction as well. Yeah, right.
BOON YIP YEE:
Irrespective of whether you remit, but if you are intrigued, it’s subject to tax.
DERREN JOSEPH:
Okay. Yeah. Okay. Right. Gotcha. Okay, thank you very much for that. Let’s move on to the next one. Oh, the, the corporate tax rate. Yes. So what, what, what, again, this might be a straightforward question, but I know that there tends to be, you know, a little bits of exceptions to, so what is the corporate tax rate in Singapore, but how could it be modified? What are opportunities are there for reducing that rate?
BOON YIP YEE:
Okay, so the headline taxes 70%. So I, I don’t think that would get any lower. It’s considered quite low in the region, so I don’t think the government will get any lower, but in Singapore you have something called the tax exemption. So effectively I would say most of the companies, most of the SME would not hit 17%.
Okay. Would not hit 70%. So it can be as low as, I think it’s, let me check, it’s as low as effectively, it’s 4.25%. Yeah. So it’s really low. So you’re talking about if you have a hundred thousand of chargeable income, you’re talking about four 5% of tax effectively.
DERREN JOSEPH:
How does that work? I mean, not, not in details, but how is it that it has come all the way down from 17 to four? Just,
BOON YIP YEE:
Yeah, so they, they have something like relief. Okay. So if you had that relief taken away, so effectively you are paying a smaller amount of tax, so that up to be four, 4.5%.
DERREN JOSEPH:
Right. And is there threshold, so you mentioned SM e, so your turnover has to be below what income?
BOON YIP YEE:
Oh, no, it doesn’t track by turnover. So as long as you have chargeable income, you, you get tax exempt on a certain level.
DERREN JOSEPH:
Right. So chargeable income up to a hundred thousand.
BOON YIP YEE:
Yes. Lemme see if I’m not mistaken, hundred thousand, you get some, you get 50% off, hundred thousand, something like that. But I, I don’t remember quite correctly.
DERREN JOSEPH:
Okay. So, and, and just to be clear again, for those who may be listing, when we say chargeable income, we mean taxable income. So yes. Earnings after expenses. Correct. That that is okay. Gotcha, gotcha. Okay. So 4% sounds pretty attractive. Malaysia, Ravi.
RAVI NARAYANASAMY:
Yeah. Okay. For Malaysia, the corporate tech, there are two tiers. One is for the non SME companies. Non-SME companies, basically their paid up capital is less than 2.5 million. Okay. For the less than 2.5 million. For the first 600 K, their tax rate is 17%. The rest of it will hold 24%. For non SME that is paid up capital above 2.5 million or whatever income they receive is at flat. 24% technically so, I’m not sure.
DERREN JOSEPH:
I’m waiting but there’s lab one, right?
RAVI NARAYANASAMY:
Yeah, yeah, there’s lab one, lab one is getting more stricter. That means the, the rules are more tighter because of the lips conditions they put in Malaysia lab one also, there’s two things. One is lab, one business activity lab, one business activity, you comply to the substance. If you comply to the substance, actually the substance depends on the what kind of industry. Certain industry, they have a different substance. In this industry, they maybe say your substance, you must have one, you must have office, so much of expenses, you have one staff, you operating expenditure so much, then different nature business, different requirement.
So it’s based on the substance. If you fulfill the substance means, then you’ll be taxed 3% on the, on the net profit. Okay. On the accounts that that is it. Okay. If you don’t comply with the substance, then you go for 24%. Okay. Last time there was, before this act changes, they’re saying they told that those LA one company didn’t comply to the substance, they must report the income tax under the income tax act, not the lab one.
Yes. There was a lot of against on this because the business committee didn’t agree because they have a physically the arrangement has been done. All these things, you cannot overnight change this. That’s why they have this flexibility. They say you still can be one text, but you pay 24% tax. So, so since they’re still in lab one, there are still benefit for them because they don’t still submit the tax estimate form. Few of the condition that apply under the income tax that they no need to follow. They still follow the lab. One tax rule, we, I see a big relaxed, but the thing is <unk> although the tax is low, but the penalties are quite high compared to income tax.
A no, one of our clients, I think at three years base, we are not doing that company oul because they have many companies under the group. The, the tax agent is a different tax agent. So they was rushing and they couldn’t make the deadline and submitted. I think that just the submission, the blade submission fee come around half a million. It’s, it’s quite, and and it’s very difficult, we heard is a difficult task to go and with Lab one, although that’s why I see they’re, they’re giving this kind of concession, but they’re catching you with this.
So you, you must really see whether the company, some of them are moving already from lab one because of this, they couldn’t comply with the this requirements. You see Then, okay, the other one is la non-business activity lab, one non-business activity, like investment holding. Same thing also. That’s the second tier. If they comply with the substance zero tax.
DERREN JOSEPH:
Wow.
RAVI NARAYANASAMY:
Zero tax. Yeah. Yeah. If it doesn’t comply with the substance, same problem. 24% tax.
DERREN JOSEPH:
Okay. So it’s super important to get advice from reputable qualified tax teams to make sure that whatever it is you’re doing is in compliance with the loved one act, assuming that that that’s super good route. Yes, yes. Okay. Yes. Whereas in Singapore, the 4% there, there are a few caveats for 4%. And, and if I understood what you said earlier, there may not even be a substance requirement. You just, the private limited, does it, is there a requirement for companies to have economic substance in
BOON YIP YEE:
Singapore? Oh yeah. Yeah. I think probably the, the lowest, I mean it’s 4.25%, but we have conditions. So what happened is to enjoy that kind of tax exemption, there’s a shareholder’s requirement, I think. Okay. I think it’s 3% has to be individual need, not be local. It can be from, so if you have those hundred percent owner, corporate corporate shareholders, you may not enjoy 4.5%, but you still enjoy a lower effective tax.
I couldn’t remember how much, but definitely it’s not much. I think probably six, five, 6%. So it’s not a far away.
DERREN JOSEPH:
Hmm. Okay. So the requirement is for individual shareholders, but what about economic substance? Is there any substance requirements for Singapore?
BOON YIP YEE:
Okay, basically these are traits. Okay? So companies that are involved in traits. So traits as in you, you, you provide service is considered trade. So you sell goods, right? So as long as you are in trace, they, they allow you these exemptions,
DERREN JOSEPH:
Right? So in other words, no holding companies, no investment companies.
BOON YIP YEE:
Yes, is correct. Correct. So holding companies, not entitled, but they, they get, they don’t get the full tax exemptions, which gets to as low as 4.25%, but they still get the partial, which is I think probably seven, 8%.
DERREN JOSEPH:
Okay. Gotcha. Thank you very much for that. Next question, right? Some com some jurisdictions, for example, the United States, right? They, you, you do get double tax in the sense that the company pays Taxes at whatever, well the corporate tax rate for the C corp right now is 21% and then when the shareholder receives the dividends, that’s gonna be taxed at whatever the ordinary tax rates are. Well, if it’s qualified dividends it’s gonna be 15 or 20%. So then, so that’s what the individual will pay or the shareholder would pay.
Right. I think you made it clear that for Singapore there is no tax on dividends except where the dividends arise from outside and remitted into Singapore and they have not been taxed, at least the corporation that generated those dividends have not been taxed. Am I correct in saying that?
BOON YIP YEE:
Yeah, yeah. So if you, it has been taxed overseas, there’s, there isn’t any more tax in Singapore, but that is just provided is tax besides cooperation. So I think that’s kind some kind of cooperate in Singapore, like the union, they do give up dividend. So I’m a union member, so they give up dividend, but his tax in Singapore I can text
DERREN JOSEPH:
From. So, okay, so just to be clear, it’s not just the corporation generated the dividend, but the dividend itself must have been taxed from whatever jurisdiction owes are in before it comes back to Singapore.
BOON YIP YEE:
Yeah.
DERREN JOSEPH:
Be tax free to Singapore. Yeah. Understood. Understood. So there is double tax on dividends that arises from outside of Singapore, but not domestic dividends.
BOON YIP YEE:
Domestic dividend, you don’t get tax. Most of the domestic dividend you don’t get tax except the union, as I said, there, there isn’t many union here in Singapore.
DERREN JOSEPH:
So union as in what, what type of union? Like the trade
BOON YIP YEE:
Union, the one that I had was, is trade union, it’s called cooperative, something like that. So I get dividend every year being a member. Yeah. But I have to pay tax for,
DERREN JOSEPH:
Okay. So, okay. That’s a special entity. Yeah. So it’s not a a private limited, it’s something else.
BOON YIP YEE:
It’s not.
DERREN JOSEPH:
Cooperative. Right. And, and, and Ravi Malaysia, yes. It sounds like it’s, it’s more yes than no, is it?
RAVI NARAYANASAMY:
Yeah. Now I can say simply can say most of the dividend relationship, dividend tax exempted because it, we go on single tier basis, as long as the corporate has been taxed that they pay from the single tier account then is exempted or it’s from their exam account, it’s exempted. But, but companies must be careful whether they’re receiving dividends from B V I company from lab. Yeah, because Lab one, as I told you, is tax free. Okay. But some of the VVI company, they pay to Lab One, then Lab one distribute the dividend back to Malaysia, that one will be accessible.
DERREN JOSEPH:
Hmm. Because, okay, so it’s seized through the lab one and looks at the
RAVI NARAYANASAMY:
No, it’s a shelf company technically.
DERREN JOSEPH:
Oh, right. Went back to the Shell company rule. Yeah. So, okay, so the company, just so I understand it, so the company that generates the dividend must have been taxed?
RAVI NARAYANASAMY:
Yes. Yes.
DERREN JOSEPH:
It, it’s not necessarily necessary that a dividend has been taxed, but the company must have borne a tax burden. Yes. Wherever it’s,
RAVI NARAYANASAMY:
Yes. Yeah.
DERREN JOSEPH:
So is there any minimum tax? So for example, 3%, there are other,
RAVI NARAYANASAMY:
At the moment, lab one from Lab one, there’s no, no, I don’t see any conditions coming in from Lab one because as long as Lab one pay, it says the other side IT tax means is okay because they have a different jurisdiction totally from the income tax Act over here.
DERREN JOSEPH:
Right. And there are other jurisdictions that will give you 1% corporate tax. So if it’s been taxed 1% somewhere else, the dividends will still be tax free to Malaysia, right? Yes. Right. So in that,
RAVI NARAYANASAMY:
Sorry, they just want to ensure it’s not a shelf company means they’re not shipping the profit here, that’s all. So at least this tax, any any percentage I think this, this, this for lab.
DERREN JOSEPH:
Okay. So that, that could be quite interesting. So if it is someone has some sort of interest in a company outside of Singapore Malaysia and the company is in a low tax jurisdiction, it’s not a shell company in their substance, right? Then it would be perhaps to someone’s advantage to be in Malaysia as opposed to be Singapore because Singapore will want the dividends to have been taxed elsewhere. Whereas Malaysian saying it’s fine once the company has been taxed and is real substance, you can get the dividends tax free. Am I correct in saying that?
RAVI NARAYANASAMY:
No, that one is, as I told you, that one is applied for Lab One only if Oh for Lab one, that means the dividend is coming through, they’re using Lab one as a inter intermediate company to pay to Malaysia company here if, if normal from overseas coming back to here. Same as what? Say the same thing. Ah, it’ll be tax. It’ll be tax if doesn’t qualify for the headline tax 15%.
DERREN JOSEPH:
Right, okay. Right. Okay. So the company must have been taxed at 15% minimum and it must have been, there must be substance as well,
RAVI NARAYANASAMY:
Right? Yes, correct. Correct,
DERREN JOSEPH:
Correct. Right. But the difference from what Bunya was saying, if I’m understanding it correctly, is that Singapore is saying the company should have been taxed and the dividends should have been taxed elsewhere to come in. Whereas Malaysia saying the company should
RAVI NARAYANASAMY:
It’s saying.
DERREN JOSEPH:
Yeah
RAVI NARAYANASAMY:
The dividend must be taxed. The company must have a substance. It didn’t say the company must be taxed.
DERREN JOSEPH:
Oh, I see. The dividend must be taxed. Right. Okay.
RAVI NARAYANASAMY:
Yeah. Okay. The company must have a substance,
DEREN JOSEPH:
Dividend has been taxed in minimum of 15%. Okay.
RAVI NARAYANASAMY:
Anyway, if you’re talking about that also you still get the unilateral and bilateral credit. When you calculate the tax, you can still not copy that. Yes.
DERREN JOSEPH:
Oay, so you get tax credits for the tax that have been paid outside.
RAVI NARAYANASAMY:
Yes.
DERREN JOSEPH:
That’ll be deductible against ordinary income or, or passive income as well. How would you, what benefit is that to you as a Malaysian tax resident? If you get credits for Taxes paid on those dividends outside,
RAVI NARAYANASAMY:
You don’t pay double tax.
DERREN JOSEPH:
Right. Okay. Well, don’t but, but then dividends are tax free in Malaysia anyway, right?
RAVI NARAYANASAMY:
Ah, for Malaysia, no. Yeah, correct. That means the dividend paid by Malaysian company is tax free. Yes. Yes, correct. Sorry. Yeah.
DERREN JOSEPH:
Okay. All right. So in other words, okay, so then I’llrevise my confusion. Singapore and Malaysia probably the same. Yeah, yeah. In terms of, yeah. Okay, gotcha.
BOON YIP YEE:
But remember the last time Malaysia still have the non first year dividend, right? So do they still have currently no more? Okay. No. Right.
RAVI NARAYANASAMY:
Then that one, that time is the SEC when we have the section 108.
BOON YIP YEE:
Oh okay.
RAVI NARAYANASAMY:
Declaring that time. But now it’s all consistent single care, the rule change there, there’s no more,
BOON YIP YEE:
No, no more. Alright. Yeah. Okay,
DERREN JOSEPH:
Great. So we can move from corporate to personal. So question is, what are the personal income tax rates? Generally speaking, I guess obviously the, the tiers, but I, I guess we’re looking for opportunities, planning opportunities when it comes to receiving income from outside. So personal income tax. Ravi, what are the, the ranges and what opportunities there are there?
RAVI NARAYANASAMY:
Personal income tax at the moment, the minimum is of course starts from 1% for the first after the first 5,000. Okay. Technically then the maximum is 30% for the double 2 million. So it is quite high. You can say that that is for tax resident is based on scale rate tax resident, you have, you need to be under 82 days in Malaysia to qualify. Then that, that’s the minimum requirement. Then there are a few act that you can check also whether you’re qualified or not, because you can see two, three years or so, there’s a calculation to be seen.
But in basic you must be 182 days in Malaysia to qualify. If you’re nonresident, then you’ll be taxed at 30% flat rate without any relief, no tax relief.
DERREN JOSEPH:
Okay. So one to 30% per Malaysian resident. Now we spoke about dividends, so we don’t need to talk about that. What about other remittances? So if somebody has royalties, interest income, would all that be taxable as well? Unless it was taxed somewhere else?
RAVI NARAYANASAMY:
No, because we have a, under the, the detail also you have this, we also have it, we call it special classes of income. Okay. That goes under withholding tax interest at the moment is 15% withholding tax. Like Singapore and Malaysia, they have a dta. We, Singapore Malaysia is 10%. Okay, so they give reduced rate. Right. Then you, you have to,
DERREN JOSEPH:
Right. if it is that the income is being remitted or received from a jurisdiction without a dt with Malaysia,
RAVI NARAYANASAMY:
Then you go 15%.
DERREN JOSEPH:
That’ll be 15% across
RAVI NARAYANASAMY:
The border. 15%. You follow that, you fall back to the Malaysia income tax act. If the DTA giving a lower rate means you’ll fall back to the dta.
DERREN JOSEPH:
Okay, understood.
RAVI NARAYANASAMY:
Okay. And then you have technical fees. Technical fees is normally is 10%. Okay. Then you have royalties. Royalties also you have 10%. Then you have, what do you say, contractors, consultant and contractor. That means you, you are in Malaysia more than six months, you’re doing some projects or what. Then that will be on 10 plus three. 10 plus three means 10 for the company.
Another three for the employees that you are, that you are bringing outside Malaysia to work here because this, this money, normally they have 10 plus three because they, they assume this company will ha need to do a tax return at end of the project. Cause their, their presence, fee presence is more than six months. Okay. So when they do the return, if there is any making laws or anything, they can give the refund. If they making more profit, then they have to pay a higher tax based on that corporate property.
BOON YIP YEE:
Singapore. So are you saying referring tax or personal
DERREN JOSEPH:
Tax? Personal Taxes individual. Yeah.
BOON YIP YEE:
Right. So personal tax in Singapore, I think it’s quite a big spread. So talking about the lowest at 2% up to the highest of 24%. So they really tax the, the rich one. So if you are earning like 200, 2, 200, 200 40,000 a year, you could be end up paying close to 20%. So it’s quite high. So 20% is quite high. Okay. Normal mid income, we, we will end up like between six to 12%, something like that.
So most of us would, would hit that bracket. Right. So, but unfortunately Singapore government gives a lot support, a lot sme, I corporate in terms of corporate, very little to the, the personnel. So there isn’t a lot of incentives for personnel. So whatever you earn, most of them get tax.
DERREN JOSEPH:
Yeah. Okay. And what about income arising outside? We spoke about dividends already, but what about someone getting interest, royalties, some sort of passive income, maybe rental income from outside.
BOON YIP YEE:
So interest is not taxable. So like what Ravi say, so if you receive royalty, everything else, you’ll probably get tax out outside. Right. Okay.
DERREN JOSEPH:
But not by Singapore.
BOON YIP YEE:
Yeah, you’re not in, you are not a trade. So you, you probably suffer tax and you will not be considered.
DERREN JOSEPH:
Okay. Where’s Malaysia is gonna tax you on that passive income that you receive from outside. Okay, understood. And, and Ravi, does it apply to rental income? So like if I’m living in Cale and I have lots of rental properties in Hong Kong and Singapore and that the rent comes into me in, in Cale, am I gonna be taxed on that as well?
RAVI NARAYANASAMY:
No, because income tax fall on you are talking about individuals, not
DERREN JOSEPH:
Individuals. Yeah,
RAVI NARAYANASAMY:
Individuals. Correct. Okay. Individuals, because you see income tax, normally you have to fall under the section four of the income tax. Section four you have eight, a, B, C, D, E, F. Okay, you must fall rental is one of it, but the rental, it says that it must be territorial basics. I told you the rental from Malaysia, okay, yeah. O’S income remitted back to Malaysia is taxable as I told you. But you want tax, the OACs Malaysia remitted back to tax.
The income must fall, still must fall under the four A must be within four A, so right. Correct. We have one under withholding tax clause, say income of mobile properties. Okay, maybe you ran a ship means yes, that means they’ll be taxable. Beholding tax you’re receiving it, you have to receive withholding tax when you make the payment. But for this properties there’s no tax technically for overseas that means the me see you remit the money, it won’t fall under the section or a
DERREN JOSEPH:
Right. Okay. So that’s good. But other classes of income,
RAVI NARAYANASAMY:
Technically you have separate tax also in ocs.
DERREN JOSEPH:
Yeah.
RAVI NARAYANASAMY:
Yeah.
DERREN JOSEPH:
Okay. But the others that we discussed, so royalties, interests, that’ll all be still taxable even though it’s coming from overseas.
RAVI NARAYANASAMY:
Gotcha. Yes.
DERREN JOSEPH:
Yeah. Okay.
BOON YIP YEE:
So in Singapore, if you have OCS income that is suffered tax in let’s say Australia, when you receive it in Singapore, you, you don’t even need to declare. So that’s the, so it’s quite clear. So whatever taxable they are like rental, yes, it’s taxable trades property investment. Yes. Yeah, okay. Stock options. So the other one that is taxable.
DERREN JOSEPH:
Okay, thank you. So we’ll actually let that takes us. Next question. Let’s talk about stock options, right? I’ve seen, well I’ve seen in, in some spaces it’s discussed and termed in exit tax for Singapore. If it is you working in Singapore and you had options with whatever companies popular with technology companies especially, and then your, your employment pass is surrendered and you are leaving Singapore permanently, there’s a deemed exercise rules, you’re deemed exercise those options even though you have not. And so that, that’s considered an exit tax of sorts. Are there any other exit tax of that nature that applies to Singapore?
BOON YIP YEE:
Oh yeah,yeah. So Singapore has this deem exercise rule. So generally store option is only taxable when you exercise. So this exception when the is where deem exercise rule applies. So when you see employment and there are essentially four types, okay, we split in two. One is store options, one is shares. So shares are normally given to you free, as in like the company gives you shares options, you definitely have to exercise.
So an exercise stock options, okay. The four types are an exercise, stock options, restricted stock options, which are those shares under moratorium. Okay. And invested share what? And also restricted share what under moratorium. So these are the four types, right? So it’s deep accessible.
DERREN JOSEPH:
Okay. Any other exit Taxes that may apply when someone is leaving Singapore or is that that about it?
BOON YIP YEE:
Yes, for stock auctions, that is essentially the four types of stocks that I mean attracted the, the deep exercise pool.
DERREN JOSEPH:
Understood. Understood. Ravi, what about Malaysia? Are there any other Taxes that are, that happen or that are triggered when someone is leaving Malaysia permanently? Like when they give up their ep?
RAVI NARAYANASAMY:
Okay, before I answer this question, I just strike my mind before the question. Going back again the individual Thanks you are asking, right? Actually we don’t need to worry about individual text related back to from overseas because I told you from the beginning because it’s exempted until 2026,
DERREN JOSEPH:
Right? Yeah. The
RAVI NARAYANASAMY:
Transition. So we we expecting it, they should extend it. I think so because the, the thing is a lot of people like Malaysia working in Singapore. So you see they’re going every day come back. So there are a lot of technical issues. I think they wanna sort out iron on all this issue before they want to make it. So at this moment I can say it’s more tax not to say rentable or whatever individual make back from overseas, it should be tax exempt.
DERREN JOSEPH:
Okay, understood.
RAVI NARAYANASAMY:
Six. Okay. Exit tax, you’re talking about exit tax. There’s no such exit tax in Malaysia, but you’re talking about exit means the, like a company is exiting from Malaysia or the individual is from exiting from Malaysia, you’re referring for that kind of thing, right?
DERREN JOSEPH:
Oh, in this case an individual. So we’re playing the scenario with
RAVI NARAYANASAMY:
Individual, okay
DERREN JOSEPH:
Individuals, they’re giving up the employment pass and they’re leaving. Yeah.
RAVI NARAYANASAMY:
Ah, they only need to do a tax clearance, right? Means okay, they need to do tax clearance. That’s all them means get, they have to upfront submit to the income tax within 30 days from your resignation date. Actually, let’s say you are resigning in 30 January means you must submit by December before that month, one month earlier. Then you must clear before you leave Malaysia, you get the clearance, then only you leave Malaysia. That’s
DERREN JOSEPH:
Right. So then no like deemed exercise rules when it comes to restricted stock or options, nothing like that? No. Okay.
RAVI NARAYANASAMY:
No, no, no such thing if the, in the event the employee failed to pay or clear the tax, the employer will have take the risk paying the Taxes go employee because it’s in the act. Yeah,
DERREN JOSEPH:
Yeah. Gotcha. Gotcha. Okay. That’s good to know. Moving on to the next question, right? The next question is about indirect Taxes or what peop some people, because when people think about do I move to one jurisdiction or the other, they always focus on the direct Taxes, the corporate tax person income tax. But sometimes they don’t forget the indirect Taxes can be also very important. So the gst, the V t sales tax service tax. So in terms of gst, how much is it in Singapore and what is the threshold?
BOON YIP YEE:
Oh, okay. Singapore bad news. So from this year race J from seven to 8% and from 1st of January, 2024, it will be at 9%. So yes, it’s 9% upcoming and currently it’s at 8%. So trash hole. Okay, so a million is a threshold. So if you are in trade, so if you don’t have a million of revenue, you need not register for gst.
But generally speaking, given the rise in GST and upcoming 9%, there’s an incentive to register for gst even if your revenue doesn’t hit the mandatory level. Right. So reason being, because you may input tax, so right.
DERREN JOSEPH:
To get refunds. Yeah.
BOON YIP YEE:
Yeah. Right, right. Exactly. So you’re talking about rent has all raised, right, so JT could be very high on the rental, so it makes sense for you to register for jt.
DERREN JOSEPH:
Okay, so seven going to 8%, 1 million threshold. Yeah,
BOON YIP YEE:
1 million, sorry.
DERREN JOSEPH:
1 million
BOON YIP YEE:
Singapore dollars.
DERREN JOSEPH:
Yeah, Singapore. Yeah. Yeah. And Ravi were Malaysia.
RAVI NARAYANASAMY:
Oh, Malaysia GST is history at the moment. So we, we came back to SST sales and tax. Yeah. Generally the trash is 500. Sorry. Generally trash show is 500 key. Key.
DERREN JOSEPH:
Okay. And how much is that? What is the amount?
RAVI NARAYANASAMY:
6%.
DERREN JOSEPH:
6%.
RAVI NARAYANASAMY:
6%. So we wait and see next week whether they’re increasing or not.
DERREN JOSEPH:
Right. Budget next week.
RAVI NARAYANASAMY:
Okay. Yeah. Budget
DERREN JOSEPH:
6%. Okay. And what about is there the equivalent of a Netflix tax and digital services? So basically if it is that you, a technology company presumably with no permanent establishment in in Malaysia, stavo, Malaysia, but they are providing services to customers or clients in Malaysia, would they be taxed? If so, how and how much?
RAVI NARAYANASAMY:
Okay, this is called as digital tax, right? Okay. As I told you, GST is not coming back. So they have to look on SST and expand it where they can to make more revenue. Okay. So one, what you say is recently, I think it’s 20, no mistaken, 2020, not mistaken, there was they, they implemented this foreign service provider, F ssp, foreign service, digital foreign service provider need to register for S S T for any digital services provider in Malaysia. If your threshold reaches 500K.
DERREN JOSEPH:
Hmmmm
RAVI NARAYANASAMY:
Okay. It’s compulsory. That means they’re not, the company is not registered in Malaysia, but you are from overseas, you’re doing business with Malaysia, you need to register. So this Netflix all all hundred category and they have to and the three still same 6%.
DERREN JOSEPH:
Okay. Now, so that’s with a technology company, like a streaming platform. But what about a service provider? There’s a consultant sitting in Singapore and providing consulting services online to clients in KL or penan. Okay. Would that, would that SST apply to them as
RAVI NARAYANASAMY:
Well? Yeah, because they, we have another class or so imported services tax.
DERREN JOSEPH:
Ahhhhh
RAVI NARAYANASAMY:
Because you see if initially there was no, when they initial, when they introduced the service tank, there is no such thing. Then they find out that a lot of companies are getting advice from overseas further from Malaysia because they have to pay this 6% extra. Okay? Because you go for Singapore elsewhere means you don’t pay the 6%. So, so they say based on that they amend the act. They say if you are getting the services from overseas, it’s related to your business in Malaysia or anything to do your sales, your good related in Malaysia you have to top up 6% and you pay to that customs.
Okay? That means you pay a hundred percent there, but you top up analysis percent, that means they will have to take it out from their own pocket, the 6% and pay to the customs. So their own responsibility falls on the payer.
DERREN JOSEPH:
Yes.
RAVI NARAYANASAMY:
Rather than the service provider because the service provider is not registered. That’s why they haven’t come out such a rule.
DERREN JOSEPH:
You’re right. And so that, so I imagine that’ll be easy to police if it’s a corporate customer because then they want to deduct the expenses on their income statement, right? So then, you know, so there’ll, there’s an built-in incentive to comply, whereas if suppose the, the service provider in Singapore, wherever is providing it to individuals in Malaysia, not to companies in Malaysia here.
RAVI NARAYANASAMY:
Yeah.
DERREN JOSEPH:
How does it work there?
RAVI NARAYANASAMY:
Individual? No, it’s for business only service tax
DERREN JOSEPH:
Technically. Okay. Right. Okay, gotcha. Perfect. Understood. And let’s switch over to Singapore.
BOON YIP YEE:
Okay. Singapore has some security in terms of legal text and obviously since 2020 I think. Okay. Singapore started the digital text. So I still remember in the past I subscribe something from the web, the domain. Yeah, like that. I don’t see the GST thing coming up, but I mean, since then, since 2020 I, I saw, right? J could I answer the, the question for ooc vendor?
Like I remember subscribing from an o Australian vendor, so they don’t have any establishment here. So, but the invoice that I get is now jt. So what happened is that means they, they actually register what j in fact we did. What happened, A very good case to showcase is one of university, in fact we have a few universities client. So what happens is during Covid they do a lot of online process and also university courses over on the web.
So Yep. They, they just get us to register just the, because they are OC vendor that provides service in Singapore, right? So this is a very good example. So yes, for there, there’s one more rule just applying just in effect this year, 2023. So what happened is this, this, I think it’s the o c vendors scheme, something like that.
Okay. So what happened is, if you are not a register, essentially if you are, if let’s say I’m a company, but I’m not JS registered, I procure service from overseas. So import service, like what Ravi says. So I have to actually do a, a reverse charge JS to say, let’s say I buy a 10,000 goods, I will have to add 8%, $800 on top of that and I pay to the government. But if I’m a JS D registrant, so there is no meaning to do that because eventually I will claim back my input tax.
So there’s no do that. So this will affect those non-register, which is why I said it makes sense to register for.
DERREN JOSEPH:
Is there any minimums? Is there any minimum or the first
BOON YIP YEE:
Yes, yes. The, the threshold is still the same, but I think for the vendor pieces is down to 10 100,000, something like that. Yeah.
DERREN JOSEPH:
Okay. So if you procure services from outside of Singapore, that is 100,000 single more, you need to add GST to that?
BOON YIP YEE:
No, you have to charge GST for now. Yeah, but I think the, the o c vendor scheme is the threshold is if you do make a B2C supplies
And remote services such, such like digital services, then to Singapore exceeding 100,000. Okay? The threshold is 1000. And obviously your global turnover is what a million then you have, right? Get yourself registered there is the O V R regime.
DERREN JOSEPH:
Okay. So it’ll be so, so the, the 1 million threshold still applies. So if you over, if your turnover is less than a million, you don’t need to worry about the overseas registration.
BOON YIP YEE:
Yes. So if you are always vendor, let’s say I vendor, my turnover globally is a million. Yes. And I do supplies to Singapore.
DERREN JOSEPH:
Singapore
BOON YIP YEE:
Yeah. Let’s say Singapore domain for exceeding 100,000, then I have to
DERREN JOSEPH:
Do that. Right? Okay, crystal clear. Gotcha. Thank you, you very much. So next question is about mandatory audits. So I think Hong Kong is kind of popular in our neighborhood where any company at all needs to have an audit every year. But in Malaysia and Singapore I think there would be thresholds. Ravi, what is a threshold for requiring an audit for a company in Malaysia?
RAVI NARAYANASAMY:
Generally all corporation need to be audited.
DERREN JOSEPH:
Oh, it’s all, okay, okay.
RAVI NARAYANASAMY:
All but only they have given three categories exemption. Other than this category, all companies need to be audited, right? All is do company domen seems incorporation and currently also is do okay. But for some reason, from my experience, the company is still auditing this companies. Okay? They want to get some exemption. They want, because you see like banks or certain companies, they ask for all financial statement.
They prefer to have a auditor report rather than just giving them a PNL or management account. That’s, I can see that. The other category is zero revenue company. Zero revenue company means that the company does not have any revenue current, let’s say currently we’re going to audit for the past two years or so, they have no revenue at same time they, they, their asset, current asset doesn’t exceed 300 K for all the three years. Okay. That was the second category. Then
DERREN JOSEPH:
The, so that be like, should I be like an investment holding company?
RAVI NARAYANASAMY:
Investment holding companies?
DERREN JOSEPH:
Oh, or just
RAVI NARAYANASAMY:
The treasurer will go both that.
DERREN JOSEPH:
Okay. So
RAVI NARAYANASAMY:
Depends
DERREN JOSEPH:
Right. Okay.
RAVI NARAYANASAMY:
You can say small, it’s a small family. Family company means yes, maybe. Yes. If a big subsid holding company with their subsidiaries is normally from my experience, you will go both that some of the companies, most of the do companies, they only have assets in the balance sheet. But the bns, you know, they have investment over there. Over here that’s, you can see because they’d like to park the properties in these companies for future use technically.
DERREN JOSEPH:
Okay. Understood. Understood.
RAVI NARAYANASAMY:
Okay. For the third category is threshold qualified companies, we call it the revenue not exceeding hundred thousand in current or two preceding years. And the same thing, the asset not going above 300 K for the past current year in the past two years.
DERREN JOSEPH:
Okay, so basically very small companies then. Yeah, it’s a hundred thousand ring it. Okay. Yes. Right. So then you can say they, it’s, I mean the lowest one will be a hundred thousand ring it. So if you’re more than a hundred thousand, you’re probably gonna have to think about audits, right?
RAVI NARAYANASAMY:
Yeah, correct.
DERREN JOSEPH:
Okay, gotcha and Singapore.
BOON YIP YEE:
Okay. Singapore is quite straightforward. So you go by threshold. So essentially all companies can have all these exemptions besides the public interest company where you meet two hour three of the threshold being 50 accounts as in staff, 10 million Singapore dollars of total assets and 10 million Singapore dollars of revenue. So if you hit two of three over the two financial year, consecutive financial year, you have to do all the meaning you don’t get exemptions.
DERREN JOSEPH:
Okay. Okay. 10 million. So definitely Malaysia’s a much lower audit threshold than Singapore. Yeah. Okay. Yes. Understood. I wanna talk about employment passes. And this is quite interesting because I know Singapore has had some changes recently, but generally speaking for someone, you know, you started your company and you wanna bring in professional staff from outside of the jurisdiction. What is the threshold in Singapore generally speaking? I know it’s unique to industry and stuff like that, but generally speaking,
BOON YIP YEE:
Okay, Singapore has few passes. So, the post popular being the EPA and the S pass and problem pass and s pass. So employment pass is a lot for, for professionals. So for PET, they name it PET that is at least $5,000 a month Singapore dollars to get employment pass. But also it also depends on nationality.
So it doesn’t mean that if you pay someone $5,000, you’ll get an employment pass straightaway. So it very much depends on the nationality, obviously. Right. So Spass on the other hand,
DERREN JOSEPH:
Sorry. And just to clarify, professionals, managers, executives, and technicians?
BOON YIP YEE:
Technicians, yeah.
DERREN JOSEPH:
Yes. Oh, okay. Okay. Right, right.
BOON YIP YEE:
Okay, next. So on the other hand, PAC is for skill workers skill and semi skill worker a lot lower. So the requirement is at least 3000 a month you can get a s pass. So as pass definitely that, that works on quota. So quota, so if you have a lot, let’s say if you recruit local citizens, being PR or Singapore citizens, it goes by quota. So far, industry like accountancy, if I’m not mistaken, I think it’s seven to one. So every seven locals that are hire, I get to hire one,
DERREN JOSEPH:
One part
BOON YIP YEE:
One, sorry, one work
DERREN JOSEPH:
For pass one
BOON YIP YEE:
One work pass. Yeah. But pass, you can hire, you can hire, but it’s subject to levy. Subject to levy, yes.
DERREN JOSEPH:
Okay, great. Ravi?
RAVI NARAYANASAMY:
Yeah. As what Singapore has, so we have for professionals employment pass, we have for employment pass category, we have two categories here. One is the basic minimum salary is 10,000. That’s the first year. Okay. The employment contract can be up to five years. Okay. The maximum then you under this category dependent passes allowed. Okay. So the minimum, let’s say is a foreign own company, means the paid up capital must be at least 500 K. That is the paid up minimum paid up capital 500 K.
DERREN JOSEPH:
And it must be, it must be in a Malaysian bank. Yes. Liquid 500 k liquid in, okay. Right?
RAVI NARAYANASAMY:
Yes. So they say paid up 500k, it, it’s not to say a liquid cash 500, they can have asset or so technically they audience know how to work out this 500, but Okay. Or technically speaking, technically speaking, if a new company means, of course it’s going to be based on the liquid. If a long-term company means maybe they already have a asset or something, it can be part of the paid up capital. It’s not issue as long, it’s, it’s part of the paid up. Okay.
DERREN JOSEPH:
Okay. Okay.
RAVI NARAYANASAMY:
Then the second category is minimum salary is five 5,000 maximum to 9 9 9. That’s the second category there. Second category, the employment pass you have for two years, you can do a contract after to two years, you can get a dependent pass on this. So same paid up capital 500. The other question, if let’s say the directors, the company directors himself is a foreigner, even they apply for the, his thing, him, the paid up capital must be at 1 billion.
So that is a bit, a bit more, you must have a 1 million capital there. So the other thing is now all these are under online. We have to apply online. That means you have to register before you apply the EP itself, you must register the company first. The company who’s applying the EP will apply themself online. It’s not through the agent nowadays. Maybe what the agent will do, the agent will register the company there, then they will use the companies logging to apply the function. That’s how the system runs at the moment.
DERREN JOSEPH:
Just like Singapore. Okay, understood. Right. Okay, gotcha. And Singapore also has the dependent pass, which is attached to the employment pass. But one change that has been recent, well recently in the past few years is that the dependent pass used to be able to work once there’s a, a letter of consent, but I believe that’s no longer the case. So if someone is an independent pass and the need to work, they need to get an EP themselves. What about in Malaysia? If someone is on a dependent pass attached to Employment Pass, can they work or would they need to? No, couldn’t pass. Okay.
RAVI NARAYANASAMY:
They have to surrender and apply for it.
DERREN JOSEPH:
Okay. Same, same. I, I could see in many ways Singapore Malaysia move and lockstep with each other. Okay. Connected to the idea of unemployment pass. It used to be relatively common for an entrepreneur to create a company and have that company apply for their employment path. You know, at least when I arrived in Singapore like 10 years ago, it was, it was not easy, but it was possible.
But progressively it’s becoming more and more difficult for, for that to, to happen in Singapore. Am I correct in saying that Bunyip or how does it work for that entrepreneur? They won’t have a startup. They have an idea. Are they able to create a company on their own and then that company give them an ep?
BOON YIP YEE:
Yeah, yeah. I mean, you’re absolutely right. So definitely yes. But it’s getting a lot harder these days. Okay. Reason being is they, the government tried to avoid Phantom ep. Okay. Yes. So in a way, you take up the quota, you don’t really belong in Singapore and it is not fair to others. Right. So that’s, that’s the whole idea. Okay. That I see. But obviously now, if a foreigner would really start a company and stay in Singapore to work, have to submit a, a business plan, right, the recruitment plan, things like that. What I mean, short-term plan, three to five years plan, where you plan to do in Singapore with the company, will you bring your family, things like that. So, oh no. This important characteristic for the government as in for the manpower ministry to consider whether to grant you an important path.
DERREN JOSEPH:
Okay. And what about Malaysia? Is that possible?
RAVI NARAYANASAMY:
Yes, it’s possible as as what I told earlier. Just what also say you must incorporate the company first to apply, then your payout capital must be 1 million. Okay. Then as what bunyip say, you must get the government’s approval is it’s not, they simply won’t give you apply. Also they won’t give is first certain, certain industries like trade industries you’re doing trading all this. They want to protect the local industry. So they want to see whether you, which one you can enter, which one you cannot enter. They, they will design. So there’s conditions, license to apply. You must fulfill all these things before you can cross it for the ep.
DERREN JOSEPH:
Okay, great. Okay. So those are the questions that, that we have now, you know, if we step back, I mean obviously we, you know, I’ve been in the neighborhood for, for 10 years and you guys have lived there all your lives, right? So what are your thoughts like for what is the ideal type of entrepreneur that Singapore is more appropriate for versus Malaysia? Where’s the right fit? Ravi, let’s, let’s start with you. Who, who do you think would be better suited to Malaysia as opposed to Singapore? Generally speaking?
RAVI NARAYANASAMY:
Generally speaking, Malaysia is, I think Malaysia is still the labor, not to say cheaper, it’s quite compatible Okay. In this region. So it’s, it’s more doable for manufacturing companies to open up here. Okay. The contract manufacturing, these kind of things. Okay. So because it, it, the cost will be more effective. They do it here because we have a good infrastructure only the problem this few years we are seeing the government is not stable as you understand, because there’s changes a lot of, yeah.
Investment more. Other than that, I don’t see any issues on this going forward. I, I think they’re doing something to bring more, more on this as actually recently, also before the pandemic, all these things pandemic. Also, one of the reason we see some of the factories are pinning also a lot of factories pull out from pinning early stage during the pandemic. But I heard new companies a lot of new companies is coming, even my state in Greece and we have a big industries area, also big investment also coming in. So, it’s more on, I can, I can see it’s more on labor, still on labor incentive economics. It’s more suitable to Malaysia at the moment. Although, although we are diversifying other things like talents professionals, but at the moment it’s, it’s there I can say Malaysia.
DERREN JOSEPH:
Understood. What about you Bunya? What, what, what is the ideal type of entrepreneurial business model for which Singapore is a more appropriate jurisdiction?
BOON YIP YEE:
Okay, Singapore, first of all, leverages very much on international context. So the reason why Singapore is one of the popular countries to set up for Entrepreneurs to set up their business or to come here to work. Reason being first of all is, is a, is a few, is an international field. So you have a lot of ihq, international headquarter down in Singapore, banking hub, I mean finance hub, things like that.
So they’re all happening in Singapore. So logistic wise is still one of the logistic hub in Singapore. So you have all the transit shipment happening in Singapore back in the British days. So it’s not nothing new. So what Singapore is doing is still leveraging on all these incentives and to further work on the branding on the international arena. So, but they have to work with partners like Singapore, and very closely with Malaysia, even for us.
So the, the government actually encouraged us to work very closely with neighboring countries. Like recently I think Singapore’sgreement with Vietnam right trades Malaysia many years ago happened is now we see the international economy has been very different from before, very isolated, very divided. So Singapore and the region, I would say Asia-Pacific or, or at least Southeast Asia would be very interesting in terms of coming to work together.
So the model is like you set up the structure in Singapore and you would put all the the activities outside Singapore, right? So I mean lately we have a lot like coming down from China. So what happens is Chinese is coming down from, but setting up the base in Singapore, but they have to put the plan somewhere else. So that’s where Malaysia, Vietnam, and nesia, are all equally important.
Yeah. Depending on your industry. So if you’re doing mining, mining industry, so probably you are not in some eastern state in Malaysia or Indonesia perhaps, right? So yes, if you’re doing like, like what Ravi say, contract manufacturing, you end up in southern Malaysia or northern Malaysia could be, right. So these are the, landscape that I see. Yeah.
DERREN JOSEPH:
Okay. So, so kind of summaryysia’s well suited for someone who is on the manufacturing side, because of course there’s more space. The the cost of getting things done is probably gonna be a, a bit more attractive and you have a, you know, a well-educated workforce that Yeah, that is at a price that is not as high as let’s say Singapore, Hong Kong, right? But Singapore is very tiny and very expensive. So, it’s also positioned itself as an international, at least a regional, but definitely an international hub.
So it’ll be part of a wider strategic plan to, you know, so you, you position yourself in Singapore, but you’re taking advantage of the neighboring jurisdictions and so on because Singapore has the banking, Singapore has the, you know, the, the financial services infrastructure and so on and so forth. So, okay. Thank you very much,gentlemen. Appreciate your time. So for those who are not aware, please visit our website, HTJ Tax.
We are part of Moores Roland, Asia Pacific and Boon Yiph the team in Singapore, Ravi’sam in Malaysia. And we have offices across 18, 14 countries. Tokyo, Beijing, all the way down to Sydney, Melbourne across India as well. So whatever you need, we are ably the right place to start that conversation. Thank you very much. Have a good evening and we’ll see you next time. Bye. Thank
RAVI NARAYANASAMY:
Okay, thank you,Derren. Bye.
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