Not for love of money, but of Humanity. "Greater is he who works for the good of all, then he who works for the good of himself only" ~ Matthew 25:40: "The King will reply, 'I tell you the truth, whatever you did for one of the least of these brothers of mine, you did for me.'"- (NIV). I live in Singapore where the Emperor must not be disturbed.

Monday, February 21, 2011

Inix: Do U hold private interest in supporting such harebrained MOF/ IRAS policies that allow the ..

Re:Tax loopholes in SG that allow the cunning to CHEAT on personal income taxes.
Inix: "I suggest you actually research or have a look at whats going on outside in the world ..."
Psst, you have misread my response as I have NOT touched upon the issue of capital gains from business mainly derived elsewhere (i.e. in another country).
This discussion pertains to the Singapore tax loophole of allowing zero personal income tax liabilities through the ('mis')use shell companies and the legitimate abuse of their associated generous corporate tax exemptions. A gaping loophole that at current, the Government of Singapore, in its blind pursuit of wealth through the celebration of such 'persona ficta(s)' has embarrassed itself with. Having elevated corporate rights and privileges to a stature in excess of what real human beings are accorded, the Singapore government now has the problem of individuals misusing such 'persona ficta(s)' for their own selfish gain.
cherry6, your logic is beyond comprehension. Only for the richest of rich will have a situation where their personal income text be more expensive than company tax. For these people, they could try but IRAS tracks their taxes carefully. Furthermore, corporate tax is a flat system while personal tax is progressive, which means for most people (even high fliers), personal income tax makes much more sense. To use your example again, someone who earns $650K PA will be paying $108K in personal income taxes, while companies will pay $110K in taxes.
"corporate tax is a flat system": as I've mentioned in my first post, there is "Zero tax for new Singapore companies on the first 100K annual profits for the first 3 years"- in that sense, corporate tax is even MORE progressive then personal income taxes. Tell me, where in our personal income tax regime does one enjoy ZERO taxes for the first $100k, not to mention discounted rates for all up to $300k of profits?!!!

In my example, Mr X should have paid $114.7k (YA2010) personal income tax had he not exploited the corporate 'multiple persona ficta' route to tax declaration- wherein he totally excused himself from taxes in respect of the $680k he 'earned' in say 2009.

His defense is in my post [#27] and excerpted as follows:
I thus stand by my assertion that in my original example, IRAS would have difficulty prosecuting Mr X even if they had picked him up for investigation.
He may very well claim that his intention of creating so many companies is bonafide- to distinguish between nuances in his consultancy services, as well as (ridiculous as it might sound) in preparation for his eventual demise- for the convenience of estate division purposes amongst his harem of wives and mistresses.
PS: for consistency of discussion, kindly use tax rates for YA2010 (i.e. income earned 2009).
Even if its the other way around what is the savings of $2K to someone who earns $60+K a month? If it is their own company, most people won't pay themselves that much. They would rather live off their company. If they work for some MNCs, they don't do these things.
"They would rather live off their company": I believe that beside the personal example provided for by 'blacklotus' I have already replied to you about the dangers of "live off their company" in my post at 20-02-2011, 09:51 PM.
Ref blacklotus:
Yup. That's how my relatives got caught. Their lifestyle were too opulent. Can we say million dollar weekend (red plate) sports cars for the whole family and cars are just a cheapish top end BMW 7 series, a Merc 600SL and a Bentley. Their house has a service lift in it...4 stories, or is it 5 (is an attic considered a floor?)
Apparently, some business competitor/associate/enemy/friend with green eyes reported them to IRAS...
And instead of bitching here like a broken soundtrack, you can perhaps suggest on how to legislate this. On how I see it is very simple. The laws are designed for most law abiding companies who should make use of this taxation laws for valid reasons. It is not surprsing for people to have 4-5 companies. With valid reasons, and these might not be shell companies.
As I've mentioned, Mr X has managed to totally evade personal income taxes of $114.7k on an earned income of $680 p.a. with none much that IRAS can do, itself having provide such a gaping loophole- a result of myopic policy making.
Inix: Do U hold private interest in supporting such harebrained MOF/ IRAS policies that allow the rich to unjustly prosper?

- 'Legal personality': [wiki]: "Legal personality (also artificial personality, juridical personalty, and juristic personality) is the characteristic of a non-human entity regarded by law to have the status of a person. A legal person (Latin: persona ficta), (also artificial person, juridical person, juristic person, and body corporate, also commonly called a vehicle) has a legal name and has rights, protections, privileges, responsibilities, and liabilities under law, just as natural persons (humans) do. The concept of legal personality is perhaps one of the most fundamental legal fictions. It is pertinent to the philosophy of law, as well as corporations law (the law of business associations)."

At/ related:
21Feb2011: Tax loopholes in SG that allow the cunning to CHEAT on personal income taxes.

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