What’s happening with Dependent Pass holders who want to work for themselves in Singapore?

First, I need to make sure you know – I am not a registered Employment Agent and have merely assembled this information from research from registered agents and the MOM and ACRA websites. Please do not take this information as gospel truth, please do your own research. Please also know these rules change.

Up to May this year, Dependent Pass holders who wanted to pursue freelance, consultant or other sole proprietorship businesses could go through a fairly simple process: First, set up a Sole Proprietorship business via the ACRA website (Accounting and Corporate Regulatory Authority – the Singapore regulator of all business entities) and then, apply to the MOM (Ministry of Manpower – regulator of employment permits, agencies, contracts and work safety) for a Letter of Consent to work for your own business. A Letter of Consent is like a stand-in for an Employment Pass and its what you would also apply for if you were taking a job at another company but were not going to earn enough to be eligible for an Employment Pass.  As with an EP, an LoC entitles you to work for one business or company only. Employment Passes are generally for positions with a salary of over $3500SGD per month.

As of May this year, MOM are no longer allowing LoC’s for Dependent Pass holders to work for an SP, where that DP holder is also the owner of that SP.  The SP must be owned by a Singaporean or PR, who could then apply for an LoC for the DP holder to work for them, however, MOM are only approving these applications on a case by case basis. 

 What is the different between a Sole Proprietorship and a Private Ltd Company?A sole-proprietorship is a business owned by one person or one company. There are no partners. The sole-proprietor has absolute say in the running of the business and the business is not a separate entity from the person.

A Private Ltd Company is an entity in it’s own right. It is governed by shareholders and by law needs to hold an annual AGM, and have a local director being a Singaporean, PR holder or EP holder and a Company Secretary.

ACRA has a nice video series outlining different company structures available through it’s You Tube Channel, called ‘Doing Business in Singapore’.

What Now for Dependent Pass holders wanting to work for themselves in Singapore?

It seems there are two options:

  1. A Singaporean or PR can act as a nominee registered owner of a Sole Proprietorship and can then apply for a Letter of Consent to employ the DP holder. Approval for this is not guaranteed.
  2. Incorporate a Pte Ltd Company subsidiary of a home country company that you may already have OR incorporate a new Pte Ltd Company with a Singaporean or PR acting as a nominee Director/ Shareholder. They can then apply for an Employment Pass or a Letter of Consent to work for that company.

If you wish to transfer your SP or incorporate a new company with a “nominee registered owner” who is a Singaporean or PR and you have concerns about their involvement in your business, you can always enter into an agreement with them to safe guard your interests.

What about the EntrePass?

 The EntrePass is earmarked as being for foreign entrepreneurs in Singapore but is fairly restrictive. Businesses must have a paid up capital of at least $50,000 and must met at least one of these requirements:

-       funding from a Govt-accredited VC or business angel

-       holds an intellectual property  registered with an approved national IP institution.

-       has an ongoing research collaboration with a recognised institution in Singapore.

-       is an incubatee at a Singapore Government-supported incubator.

 What about current Sole Proprietors operating on a Letter of Consent?

Its shaky ground, to be honest. Some renewals are being approved and some are not. I would take the time now to start assessing different options. Please remember though that things are very fluid. Employment Agents are sent the latest advice and legal changes directly from MOM so they will have the most up to date information.