The Big Read in Brief: Working Abroad Remotely Is Not As Easy As It Seems
SINGAPORE – When Mr Jamin McKee found out that his father’s health was getting worse, the Singapore-based New Zealander asked his then-employer in September last year if he could return to his home country of originally to spend time with family and work remotely from there.
The Employment Pass (EP) holder, who has been trying to gain permanent resident (PR) status for a few years, said his request for remote work was rejected. The company wanted him to take unpaid leave instead.
“They didn’t want to let me (leave Singapore) for long periods of time, even though my work could be done entirely remotely,” said the 25-year-old account manager.
Taking unpaid leave was not an option for him as he would have to be in New Zealand for a medium to long term – too long for him to leave without earning a salary.
So he quit his job after a year to join a Singapore-based tech media company in November of last year. His new business is flexible by allowing him to travel and work from abroad, as long as he obtains his own health insurance in New Zealand.
Due to travel uncertainties at the start of the year due to the Covid-19 pandemic, it was not until May that he returned to New Zealand, where he remained four and a half months until that his father’s condition improved.
As borders reopen and families reunite, employees who have become accustomed to remote working in recent months are starting to consider the possibility of doing so overseas. TODAY reported earlier this week that some Singaporean companies are considering allowing their employees to work from abroad temporarily for up to six months.
This was made possible by accelerated digitization in almost every industry, which allowed employees to work away from the office during the pandemic.
For Singaporean investor Ray Chong, Thailand will be his “home base” starting next month, as he plans to travel there and work remotely for about three to four weeks.
Mr. Chong works for a China-based venture capital firm, which also has an entity in Singapore. However, his entire squad is based in China so it makes no difference where he works as he should meet them practically anyway, the 33-year-old said.
Indeed, as many countries agree to live with Covid-19 and begin to reopen their borders – despite the jolts as new viral strains emerge – the world is once again becoming their oyster for people like Mr. McKee and M. Chong.
The pandemic, now in its second year, has radically altered the work landscape, breaking down traditional office-centric structures and making working from home – in fact, working from anywhere – an increasingly privileged arrangement. for white collar workers and employers.
“Technically, it doesn’t make any difference, I can just (do my job) anywhere I want,” Mr. Chong said.
COVID-19 A CHANGE IN THE GAME
Mr. Chong is half right.
On paper at least, many employees can uproot themselves and move anywhere in the world with an Internet connection, while doing the same job for their business. However, such an arrangement, especially if it is longer term, can be complex for business and policy makers.
Given that remote working for employees abroad is still a work in progress, some questions remain unanswered: To what extent is remote working abroad a viable option? Would it be possible to work remotely abroad not only for a few months, but indefinitely?
Speaking to TODAY, several human resources (HR) experts reiterated that while remote work abroad can be done by employees for short periods without too many obstacles, there are some important issues that need to be addressed if a such long-term arrangement should be current.
Factors such as taxation and employment law mean that extending the time one works remotely overseas for a Singaporean company will lead to complications.
Mr. Chris Woo, Tax Manager at accounting firm PwC Singapore, stressed that one cannot be expected to stay indefinitely in a foreign country without resident obligations, such as paying taxes and respecting employment law. , come into play sooner or later.
He added that this is why visitors to a certain country are usually only allowed to be there for a limited period of time and must be issued with work or employment passes, or visas if they wish. extend their stay.
The idea of remote working is not new: for years companies have been hiring freelancers based abroad or outsourcing certain functions, including call centers and technology support services, to workers abroad.
However, Covid-19 was a game-changer as it forced industries to digitize most, if not all, of their operations. As a result, remote working is now viable for many more work functions, prompting more workers to adopt it for a variety of reasons.
For those who plan to work remotely abroad in the longer term, Singapore Human Resources Institute President Low Peck Kem said it was “wise for both employer and employee to be clear on terms of employment.”
These extend to issues such as tax and labor laws, employment benefits and contributions to the Central Provident Fund (CPF).
On a broader front, countries will also need to grapple with the implications for their foreign labor policies, among others.
TAX AND LABOR LAWS
Staying in a country for an extended period of time would invariably lead a person to be subject to its tax and labor laws, tax and employment experts have said.
However, the lines are not always clearly drawn and depend on many different factors, for example whether the employee still has to pay taxes in Singapore while working remotely abroad.
Mr. Mark Addy, partner at KPMG here, said that in general, any time a Singaporean company has employees working in foreign countries, it “runs the risk of being liable for corporate tax in these countries due to the creation of a “permanent establishment” or a taxable presence there “.
Mr Woo of PwC Singapore said that there are various factors that determine whether a Singaporean who works remotely is considered to be “legally working” in another country and therefore, under the tax and labor laws of the jurisdiction.
For example, it is important that a country has a tax treaty with Singapore, which generally sets out rules as to whether they will be subject to personal income tax.
The number of days that people can stay in the country before being taxed varies from country to country and depends on treaties.
One of these treaties is the Double Taxation Avoidance Agreement (DTA), which, according to the Ministry of Finance website, helps minimize double taxation of income from cross-border business activities.
According to the Inland Revenue Authority of Singapore (Iras) website, Singapore has DTAs with nearly 100 jurisdictions.
Mr Vikna Rajah, who heads the tax, trusts and private clients department at the Rajah & Tann law firm, said the agreements help “establish the distribution of tax rights to the income he earns. Between Singapore and the country the person works remotely.
Nonetheless, these treaties have an “exemption threshold,” said Ms. Dion Thai, Ms. Dion Thai, a global employer services tax partner at Deloitte Singapore. Beyond the threshold, which differs depending on the country, the person will have to pay taxes to both jurisdictions.
“An employee who undertakes remote work may find himself in a situation where he is subject to tax both in the country of employment and in the country where he works remotely, and there will be situations where double taxation cannot be mitigated or avoided, ”she said.
While exceptions were granted at the height of the Covid-19 pandemic, most countries have stopped or reduced tax breaks for these remote working arrangements.