From May 2021, the Ministry of Manpower (MOM) has changed their regulations for Dependant Pass (DP) holders who wishes to apply for a Letter of Consent (LOC) to legally generate income in Singapore. This has created a few misconceptions in many current DP holders that we have met – that they are not able to work in Singapore. Well, we have good news if you are in this predicament!
With this short article, we would like to clarify that the LOC is still very much available if DP holders can fulfil being a business owner criterion.
However, DP holders who are not business owners will still need to find employment to obtain an Employment Pass, S Pass or Work Permit to work in Singapore, which will cease your DP status, making you an independent Work Pass holder. Obtaining a work pass will be subjected to varying qualifying criteria from having a minimal qualifying salary based on age, educational qualifications, and experience, to the company’s local headcount quota, and most importantly, the newly introduced COMPASS framework for potential Employment Pass applicants.
Most expats that we met were operating on dual income, back in their home country prior to their relocation to Singapore, and the majority of these couples or families relocated here based only on a single opportunity for employment. A lot of these dependants (DP) i.e. the spouses, would prefer to run their own business to generate additional income to supplement the family, and enjoy the scheduling flexibility to spend quality time with their family without committing to a professional hierarchy and employment schedule.
Exploring the possibility to be your own business owner in Singapore not only provides a better quality of life, it may also most importantly offer a series of manifest and latent benefits (social engagement, financial independence, entrepreneur spirit, and self- fulfilment).
Below is an overview of the three qualifying options to be eligible for a LOC and the different company structures that you may consider to register your business. As the LOC is non-transferable, it is important for you to determine the best business structure, before you register your business with the Accounting and Corporate Regulatory Authority (ACRA).
Should you like to change your business structure later on, you would need to cease your existing business and LOC, and register a new business before reapplying for a new LOC.
Structure 1: Sole Proprietorship
A sole proprietorship is a type of business that is owned and controlled by one individual (i.e. you). If you have no intention of forming a partnership, this route may save you a lot of costs and hassle. Sole Proprietorships also have fewer compliance requirements compared to companies and need not engage a Corporate Secretary, Local Nominated Director, neither be subjected to annual AGM/AR filing etc. You can manage registering a business with ACRA and operate independently. Notwithstanding these advantages, there are certain liability issues using the Sole Proprietorship vehicle to operate your business, and you are advised to seek legal advice if you are keen to explore this route.
Structure 2: Partnership – Become a partner of an ACRA-registered business (LLP)
Becoming a partner of a business may not be the most common route we have seen over the years. A partnership is a business owned by at least two, but less than 20 partners. All of the partners registered will be regarded as a single entity and as a result, the partners will have unlimited liability for not just their own actions and debts of the partnership, but also the actions of the other partners in the business. Similar to a sole proprietorship structure, you will too have fewer compliance requirements compared to companies.
Structure 3: 30% shareholding – Company (PTE. LTD.)
Having a Company set up will combine the advantage of both a corporation and a partnership. Unlike the structures in sole proprietorship and partnership structures, the liability of the directors in a company will be limited i.e. the controllers of the company will be protected by limited liability. Company incorporation offers many benefits including limited liability, separate personality and various tax exemptions.
To form a company, you must engage a Corporate Secretarial Agency and be a director of the company with at least 30% shareholding to qualify for a LOC. You will also be subjected to hold annual general meetings and file annual returns.
Once you have identified the best structure for your business and successfully registered it with ACRA, you may engage an Employment Agent (EA) to assist you in the application for the Letter of Consent (LOC).
The duration of the first LOC will be for a year, or till the validity of your DP, whichever is shorter. On subsequent renewals, the LOC will match the validity period of your spouse’s Employment Pass, your DP must be valid for at least 3 months on the date of the LOC application. The processing time for the LOC application can take up to 4 weeks or longer.
To be eligible for the renewal of the LOC (for either Sole Proprietorship or Private Limited Company structures), you will need fulfil the requirement of hiring a local citizen or permanent resident (PR) who earns at least the prevailing Local Qualifying Salary (LQS) and receives CPF contributions for at least 3 months – the LQS is at least $1,400 per month.
The above offers an eye-opener of the complexities in this area. It is encouraged to appoint a specialist service provider to assist. If you have any questions or need assistance with your Dependant Pass or Letter of Consent (LOC), please feel free to reach out to us. We have notable experience in this field and can assist you to ensure the best chances of a successful application in your bespoke circumstances.
About Voyage Consultants
Securing a work visa, permanent resident, or citizenship involves navigating and understanding the complex criteria and regulations in Singapore. With a combined experience of over 10 years in the immigration industry, our team comprises of former expatriates who understand the process themselves and would love to help you by using their experience to lighten yours!
Contact: Canns Lim Hanna (Director)
Mobile: +65 8427 1729