Author: George Mathew

If you run a Singapore tech company, check your last few payments from overseas customers. If 10–15% is missing, your customer has probably deducted withholding tax. In many cases, that tax was never due.

Singapore’s network of double tax agreements (DTAs) is one of the best reasons to base a regional business here. Used properly, it means many of your customers can pay you in full.

The cause is rarely the law. It is paperwork that was never sent. The right moment to fix this is before your first invoice goes out to a new overseas customer.

Why it happens: your customer carries the risk

In most of the region, the customer paying you is responsible for withholding tax. If they withhold too little, the shortfall and penalties are their problem, not yours. So without clear documents in hand, their finance team takes the safe route and deducts tax at the domestic rate.

Once the money is withheld, getting it back is slow. You may need to file a refund claim with a foreign tax authority, in its language and on its timetable. A Singapore foreign tax credit may not help either: it is limited, and generally only available where the tax was properly due under the treaty.

The lesson is simple. Give your customer the documents that let them pay you in full, before they pay you for the first time.

Business profits or royalties? It depends on what you sell

Under most DTAs, business profits earned by a Singapore company are taxable only in Singapore, unless the company has a permanent establishment (PE) in the customer’s country. Royalties are different: the customer’s country can usually still withhold tax, though often at a reduced treaty rate.

For tech companies, the question is which category your fees fall into. The answer depends on the source country’s view, and the region does not agree on one approach.

Thailand shows how this is changing. For years, the Thai Revenue Department treated payments for application software as royalties, subject to 15% withholding before treaty relief (Legal500). In March 2025, it issued ruling Gor.Kor.0702/1626, which looks at the rights actually granted. Paying for access to hosted software, without any right to exploit the copyright, was treated as service income. With no PE in Thailand, no Thai withholding applied (Forvis Mazars; Alvarez & Marsal).

In practice:

• SaaS and hosted access now has a strong case for business profits in Thailand.
• On-premise licences, or anything granting rights to exploit the software, may still be treated as royalties.
• Other countries in the region (India, Indonesia, Vietnam, the Philippines and others) each have their own position, so check before you invoice.

How your contract describes what you sell matters. A SaaS agreement that reads like a copyright licence invites a royalty classification.

What to send before your first invoice

Say your Singapore company has just signed its first Thai customer. Before the first invoice goes out, send the customer’s finance team:

1. A Certificate of Residence (COR) from IRAS, issued for the Singapore–Thailand treaty. A COR is issued for a specific treaty country and a specific year, so plan to renew it.
2. A declaration of no permanent establishment, signed by your company’s director, confirming you have no office, staff or dependent agent in Thailand.
3. Any country-specific forms. Thailand requires the documents to reach the Revenue Department through the Thai payer before payment, using its DTR form; otherwise the domestic rate applies even where a treaty exists (ASEAN Briefing). India, Indonesia and the Philippines have their own forms too.

The COR and the no-PE declaration are the core everywhere. Country-specific forms are what trip companies up, so check them for each new market.

Residency is about where you are really managed

None of this works without a COR, and IRAS issues one only when your company is controlled and managed in Singapore. That means where your board actually makes its strategic decisions. A Singapore address or a nominee director alone does not establish it.

Foreign tax authorities are asking the same question more often. Many modern treaties now include a principal purpose test, which can deny treaty benefits to companies that look like conduits. A Singapore company with a real director, real board meetings and real decisions made here is in a far stronger position.

In practice, that means:

• At least one active director based in Singapore
• Board meetings held in Singapore, with key decisions minuted
• Records that show the company is run from here, not just registered here

How Futurebooks helps

Futurebooks has supported companies in Singapore since 2010. For tech businesses selling across the region, we handle the full chain:

• Executive Directorship. An experienced Futurebooks director joins your board as an active, Singapore-based compliance director, employed and paid by your company. This is real substance, not a nominee arrangement.
• Board support. As your company secretary, we help you hold board meetings in Singapore and keep the minutes that show where decisions are made.
• Certificates of Residence. We apply to IRAS for your COR for each treaty country you sell into, and renew it every year.
• No-PE declarations and treaty forms. We draft the no-PE declaration for your director to sign for each customer country, and flag any country-specific forms your customers will need.

About to invoice your first overseas customer? Talk to us before you send it. Call 6221 2440 or get in touch.

This article is general information, not tax advice. Treaty treatment depends on your contracts, your customers’ countries and the facts of your business.

Updated November 2026. Originally published July 2014.

Stock options and share awards are a standard part of pay at venture-funded startups and at the Singapore subsidiaries of international tech groups. They’re also where employees most often get caught out on tax, because the tax bill can arrive before they have sold anything. Here’s how Singapore taxes them, and what employers need to do.

The two types of plan

Employee stock options (ESOPs) give an employee the right to buy shares at a fixed price, usually after a vesting period.

Share awards, including restricted stock units, give the employee shares outright, often after a vesting period. IRAS groups these, together with employee share purchase plans, as Employee Share Ownership (ESOW) plans.

Both count as employment income in Singapore. That applies whether the shares are in the Singapore company itself or in an overseas parent.

When the tax arises

The tax doesn’t arise when the option or award is granted.

• Stock options are taxed when the employee exercises them.
• Share awards with a vesting period are taxed when they vest.
• Share awards with no vesting period are taxed when they are granted.

How the gain is worked out

The taxable gain is the open market value of the shares on the taxable date, less what the employee paid for them.

Example: Peter holds options over 1,000 shares at an exercise price of S$1. He exercises them when the shares are worth S$5. His taxable gain is (S$5 − S$1) × 1,000 = S$4,000, added to his employment income for that year.

Any rise in value after that point is generally a capital gain, and Singapore doesn’t tax capital gains.

For a startup, the hard part is the “open market value”. Unlisted shares have no quoted price, so the company needs a defensible valuation at each exercise or vesting date. A recent funding round price is often the starting point.

The cash problem, and the deferral scheme

Exercising options in a private company can leave an employee owing tax on a gain they can’t yet sell. The Qualified Employee Equity-based Remuneration (QEEBR) scheme lets eligible employees defer paying that tax for up to five years, with interest charged on the deferred amount.

Foreign employees leaving Singapore: the “deemed exercise” rule

This is the rule that causes the most problems for growing teams.

When a foreign employee stops working in Singapore, IRAS treats their unexercised options and unvested awards as if they were exercised or vested at that point, and taxes the gain as part of their tax clearance. The same applies to permanent residents leaving Singapore permanently. The gain is generally valued one month before employment ends.

Example: Tom, a foreign engineer, has 500 unvested share awards when he relocates back to London. Under the deemed exercise rule, the gain on those 500 shares is taxed in his Singapore tax clearance, even though they haven’t vested yet.

If the actual gain turns out to be lower when the options are later exercised or the shares vest, the employee can ask IRAS to reassess it within the time limit.

Instead of applying the deemed exercise rule, an employer can apply to IRAS for the tracking option, which lets it report the actual gain when it happens. It has strict conditions and needs IRAS approval in advance.

What about grants made before moving to Singapore?

Options and awards granted for work done outside Singapore, before the Singapore employment started, are generally not taxed here, even if they’re exercised or vest while the employee lives here. Grants made for the Singapore employment are taxable wherever the employee is when they exercise or vest. Where a grant spans both, get advice on how the gain is split.

What employers must do

• Annual reporting: report ESOP and ESOW gains to IRAS each year on Appendix 8B, alongside the employee’s Form IR8A.
• Departing foreign employees: file Form IR21 tax clearance, including any deemed exercise gains, before they leave.
• Records: keep share valuations and plan records for every exercise and vesting date.

How Futurebooks can help

We set up ESOP plans for startups and Singapore subsidiaries: the plan rules, board and shareholder resolutions, share allotments and ACRA filings. We also handle the payroll side, including Appendix 8B reporting and IR21 tax clearance for departing employees. Talk to us about your ESOP.

This article is general information, not tax advice. Tax treatment depends on the facts of each case.

Founders and senior hires often join on a package that leans on equity: a modest salary, a meaningful ESOP grant, and a bonus tied to results. That makes sense for the business. But if the person is moving to Singapore on an Employment Pass, the package needs a little planning first, because the pass is assessed on a specific part of the pay.

Get the structure right before the offer letter goes out, and the application is straightforward.

What the Employment Pass looks at

The Ministry of Manpower (MOM) assesses an Employment Pass on the candidate’s fixed monthly salary: basic salary plus fixed monthly allowances. Bonuses, commission, variable allowances and equity such as ESOPs aren’t part of that figure.

Fixed salary matters in two places:

• The qualifying salary. This is a minimum that rises with age. As of November 2026 it starts at S$5,600 a month (S$6,200 in financial services) for younger candidates, rising to S$10,700 (S$11,800) for those aged 45 and above. MOM has announced increases for new applications from 1 January 2027.
• The COMPASS points test. One of its criteria compares the candidate’s fixed salary with local professionals of a similar age in the same sector. A higher fixed salary earns more points. Candidates on a fixed salary of S$22,500 a month or more are exempt from COMPASS.

How to structure the package

Set the fixed salary first. Work out the qualifying salary for the candidate’s age and sector, then aim comfortably above it rather than exactly at it. Then build the equity and bonus on top. Equity still does its job of aligning the person with the company. It just isn’t what carries the pass.

Keep fixed allowances genuine. Fixed monthly allowances do count, but MOM looks closely at packages where allowances make up an unusually large share of pay. A housing or transport allowance that the person really receives every month is fine. Reclassifying bonus as “allowance” to reach a number isn’t.

Make the paperwork match. The salary in the offer letter, the employment contract, the application and the monthly payroll should all agree. Inconsistencies are a common reason for delays and can cause problems at renewal.

Plan the tax side of the equity. Gains from employee share plans connected to Singapore employment are generally taxable in Singapore. Agreeing how the ESOP will be documented and reported at the outset avoids surprises when options vest or are exercised.

Think about renewal from day one. Qualifying salaries are reviewed regularly and rise with age. A package that only just qualifies today may not qualify at renewal, so build in room for that.

Why it helps to plan this with your accountants

A pass application touches the offer letter, payroll, tax and sometimes the ESOP documents, and these are usually handled by different people. At Futurebooks, the same team looks after all of them. We check that the package meets the pass criteria, file the application through our licensed employment agency, and set the salary up correctly in payroll from the first month. Your hiring decisions stay with you; we make sure the package works on paper.

Moving someone to Singapore? Tell us who’s coming and when.

Pass criteria change often. Figures are as of November 2026; always check MOM’s current requirements before making an offer. This article is general information, not advice for your specific situation. Pass services are provided by Futurebooks People Management Pte. Ltd. (EA Licence No. 18S9104).

Most companies don’t think about their company secretary until something goes wrong: a filing deadline missed, an email that takes a week to answer, or a funding round held up because the registers aren’t in order. By then, many directors assume switching will be complicated.

It usually isn’t. Here’s what the law requires, how the switch works, and what to make sure you get from your outgoing provider.

What the law requires

Under section 171 of the Companies Act, every Singapore company must have a company secretary. The secretary must be an individual whose principal or only place of residence is in Singapore, and a company’s sole director can’t also act as its secretary. The position can’t be left vacant for more than six months.

Importantly, the secretary is appointed by the directors. You don’t need your current provider’s agreement to make a change.

How the switch works

1. Directors’ resolution. The board resolves to accept the outgoing secretary’s resignation (or remove them, depending on your constitution) and to appoint the new secretary. For most private companies, this can be done by written resolution without a meeting.
2. Consent to act. The incoming secretary signs a consent to act.
3. Lodge the change with ACRA. The cessation of the old secretary and the appointment of the new one are filed on Bizfile within 14 days of the change. Your new provider normally does this as your filing agent.
4. Move the registered office, if needed. If your registered office was your old provider’s address, update it too. That change also has to be filed within 14 days, and it matters: official letters from ACRA go to the registered office.

The paperwork typically takes a few business days. The filing itself is near-instant once submitted.

What to collect from your outgoing provider

This is the part that causes delays, so ask for everything at once:

• Statutory registers, including the registers of directors and secretaries, registrable controllers and nominee directors
• The minute book: past board and shareholder resolutions and AGM records
• Share certificates and records of past allotments and transfers
• Your constitution, and any shareholder agreements or ESOP documents they hold
• The company seal, if you have one
• A note of any filings in progress or due soon

A good incoming secretary will review these before taking over and tell you if anything is missing or out of date, so problems surface now rather than in the middle of your next funding round or due diligence.

When is a good time to switch?

Any time works legally. In practice, the smoothest moments are right after your annual return has been filed, or a few weeks before a planned funding round, so your new secretary has time to tidy the records first. Try to avoid switching in the final weeks before an AGM or annual return deadline.

Making the switch with Futurebooks

We handle the whole changeover: the resolution, the ACRA filings, moving your registered office if you need it, and collecting and reviewing your records. Most clients who switch to us stay for years, because once things are set up properly, they simply run.

Get in touch and tell us a little about your company.

This article is general information based on the rules as of November 2026, not legal advice for your specific situation.