Singapore is one the most developed economies among the South-East Asian countries. So it doesn't come as a surprise when we see many Singapore citizens driven in large numbers to become independent workers or entrepreneurs. As a result, the gig economy is witnessing a surge in Singapore in the last few years.
According to Ministry of Manpower reports of 2019, more than 211,000 (about 8.8% of the workforce) Singaporeans and permanent residents are freelancers. Considering this trend, freelance jobs in Singapore are bound to grow from strength to strength.
Here are some valuable facts and information that will entice the full-time workers to switch and become freelancers and help our existing moonlighters with their compliance & marketing.
Why is freelancing the future?
Freelancing seems to be the new trend in Singapore’s employment dynamics. Companies, both big and small, have experienced the benefits of freelancing. They enable firms to be more agile and responsive to work exigencies. Hiring freelancers for specialized tasks allows employers to venture outside their domain of expertise for new businesses and opportunities or expand their footprint in new territories. The benefits of hiring freelancers magnify in cases where a company is trying to troubleshoot underlying commerce challenges.
Today, even full-time professionals are jumping on the bandwagon of the rising gig economy. Be it millennials looking to make quick money or parents trying to balance work with familial responsibilities, freelancing is a proven boon to all. Further, the high cost of living in Singapore abstains professionals from enjoying the desired lifestyle with one source of income.
Bearing these pointers in mind, freelance in Singapore is most likely to increase as a career option in the near future. Now that we have given you enough reasons to join the gig economy, we will further hand you all the necessary information that you need before you start as a freelancer. So here are all probable legal binding & marketing mantras to help you ace this ever-rising gig culture.
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How to freelance in Singapore?
First, to take up freelancing legally in Singapore, one needs to be either a permanent resident or a Singapore citizen. This means that Dependent Pass (DP) or Long Term Visit Pass holders cannot freelance unless they obtain an employment pass.
Registering for an EntrePass (through which a foreigner can operate a business) would require one to raise at least S$100000, collaborate with a Singapore-based research institute, or have a track record as an entrepreneur or investor. Thus, EntrePass is not suitable for freelancers.
There are no freelance Singapore laws as such. But yes, these are a few things you could keep in mind, such as eligibility and requisites.
What are the eligibility & requisites for becoming a freelancer?
Freelancing work in Singapore requires the fulfillment of the following conditions:
- Above 17 years of age
- Citizen or permanent resident of Singapore or holds an Employment Pass
- Person is not barred from rendering or receiving services under the law
- An email ID
- Deck/Freelancer portfolio (where applicable such as a designer)
- Additional IDs proofs such as Passport, National Identity Card (NRIC), and Work Permit
- Photo (for profile)
Pro Tip: While building your portfolio, make sure you stock it with testimonials, quantifiable results, and KPIs accomplished. If you’re a creative professional, you should include the ways your services have improved your clients’ businesses. Always maintain a web portfolio online because it keeps the companies updated on the new bases you're touching with your upcoming projects and might pique their interest.
Do you need a business license to freelance in Singapore?
In legal terms, specific business licenses are a requisite for freelance work in Singapore, primarily when professionals engaged in trades like ride-sharing, food, etc. Engaging in creative services, such as writing, graphic designing, web development, and so on, does not require registration if the freelancer runs the business under his/her full name. However, it is generally recommended to register as a business owner because it gives the onlookers a validation that the company is legit. You may also benefit from government tenders, if applicable, for your industry.
So the answer to the question "do freelancers need to register a company Singapore?" is that while it is not mandatory, most freelancers register their businesses as Sole Proprietorship and Private Limited Company. Sole proprietors receive taxes on their income tax rates, which can be anywhere from 0 to 22%, depending on how much you're earning. To not fall into the pit of this drawback, individuals tend to register themselves as a Private Limited Company, which stands as a separate legal entity from the owner.
How to get freelance work in Singapore?
From traditional word-of-mouth to cold emails to using online platforms such as Facebook & LinkedIn, freelancers can bag opportunities & build a good reputation in the industry. Finding freelance jobs in Singapore can be hectic as it requires you to engage in marketing, which can sometimes be cumbersome when handled besides tough projects.
This is where professional portals and freelancing websites come in! Hitting online platforms and job boards like Skuad, Wantedly, People Per Hour, Hiremotely, and CROWDspring can be a good call. It significantly increases your visibility to companies across regions & help you become a successful freelancer. The procedure for most of these portals is easy and a one-time effort. Further, many of these portals even consult talent on the best skills to learn for freelancing, contract working, etc. Since companies, especially in today’s time, are looking for freelancers to outsource work and these online portals are a must for every freelance professional.
How to receive payment for freelance work in Singapore?
Most companies in Singapore follow a project-based or half-and-half payment cycle for freelancers. They have to submit their invoice for the work done post completion of the assignment. In the invoice, the freelancer must supply companies with the following information:
- Business Name
- Business Address
- Invoice number
- Invoice Date
- Due date
- Value of service & tax rate (if applicable)
- Expenses done (if any)
- Required transaction details, e.g., bank details in case of bank payments
Once the freelancer submits the invoice, companies make payments via channel feasible to both.
Payment options for freelancers working for an oversea organization.
Note: If your work area requires you to make additional expenses like frequent travels for client meetings or any other expenses, make sure you sort that out before you agree to the assignment because claims are usually less straightforward. Work out a system with your clients and make sure you add all costs in your service & take a claim for the same.
How can freelancers plan financially & save taxes?
Taxable Income & Tax Liabilities
Unlike many beliefs, freelancers' income is not exempted from tax, and it is no different for Singaporean freelancers. If the income exceeds S$22000 in a year, freelancers need to pay taxes to IRAS. However, tax rates may vary depending on your tax residency. Check out the IRAS notice here.
Tax for Residents
If you have stayed for more than 183 days in Singapore and worked for all those days, you become a tax resident wherein you are taxed based on the progressive tax rate of 2% to 22% depending on how much you earn.
Tax for Non-residents
Non-residents have usually taxed a flat withholding tax rate, which varies depending on their type of income. For freelancers working on professional jobs (trainers, consultants, and coaches), 15% of their gross income or 22% of their net income will tax.
Earnings from investments, pension, royalty, supplementary retirement scheme, and NSman are also subject to tax payments.
Paying tax in Singapore involves:
- Determining tax obligations.
- Deciding on the accounting period (January-December/April-March).
- Preparing a four-liner statement (as shown in the figure below).
- Filing income tax to IRAS.
Pro Tip: Make sure to file your Medisave as it is mandatory for Freelancers/ Self Employed Personnel
Can Singapore freelancers be exempt from taxes?
Freelancers can claim certain deductions such as capital allowances, regular business expenses, medical expenses, R&D expenses, Productivity and Innovation Credit (PIC), and Double tax deduction for Internationalization schemes. In addition to this, there are few tax exemptions available to all taxpayers:
To avoid double taxation on both domestic and foreign income, freelancers can apply for double taxation relief. However, freelancers need to check if there is a DTA agreement between Singapore and the country from where they receive income.
Freelancers can also avoid double taxation in the absence of DTA under the following conditions:
- The headline tax rate (highest corporate tax rate of a foreign country) is at least 15%
- If the foreign income was subject to tax in that country even when actual tax paid is different from the headline tax rate.
Central Provident Fund Contributions
Freelancers earning yearly net trade income of more than S$6,000 have to, by law, contribute to their Medisave account. (Contributions to Ordinary & Special Accounts are optional for freelancers)
Medisave contribution is calculated basis the age and earning for that year. It will be convenient to use the Self-Employed Medisave Contribution Calculator. Medisave contributions must be made within 30 days from the day you receive a notice from the IRAS. In case of no notice, the contributions must be made by May 31 of the following year.
What if you stop freelancing in Singapore?
If you decide to stop freelancing, you will have to deregister yourself as a self-employed person with the CPF Board.
What is the frequency of tax liabilities for a freelancer?
Income tax is filed every year when the Inland Revenue Authority of Singapore sends a notification or an invitation to E-file to report your income and tax return by March 15. The deadline for filing returns is April 15 and April 18 in case of e-filing.
Income Tax Return (ITR)
Income Tax returns can be filed either via mail to IRAS or online on the myTax portal. Filing returns online is easier and faster and requires few basic details such as income, due tax, and PIN.
Self-employed residents have to fill Form B or form B1, whereas non-residents have to fill Form M. Signature should be put on Page 1 of the form.
A Notice of Assessment is also sent to raise disagreement on your tax amount and inform authorities within 30 states with the reason of objection. The tax amount needs to be paid within 30 days of receiving Notice of Assessment regardless of telling about the objection.
IRAS allows you to stagger your income tax over 12 months without interest if you cannot pay your tax in one lump sum. Evasion of tax could lead to fines up to 300% of the tax amount (up to S$10000) or three years of imprisonment.
Do freelancers have to pay GST?
GST is kind of like a self-assessed tax, so you need to monitor your registration for it. Registering for GST is mandatory when your business turnover is approx. More than S$1 Million in the last 12 months (retrospective basis) or if you are expecting such a turnover in the coming 12 months and have signed contracts/deals that prove this revenue (prospective basis). GST registration is voluntary in case of a turnover lesser than the amount mentioned.
However, once registered, you cannot deregister for the next two years. GST taxes the self-employed workers and wage earners only when they consume, not when they earn. To learn more, click here.
As many companies are shifting their preference to on-demand or short-term contracts, freelancers play an essential role in Singapore's workforce and contribute greatly to the economy. Freelancing has its advantages and disadvantages, but it is truly a one-man army. Delivering quality work speedily can be key to becoming an effective freelancer.
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