The prospect of relocating to a new country should be an exciting and adventurous one, particularly if it presents a world of opportunities and career advancement for your spouse or family member. Many expatriate families relocate to Singapore for this very reason.
However, once you have settled in and enjoyed the sights, an idle life may not be a prospect that you fancy. We guide you on how a Letter of Consent (“LOC”) can open many doorways of opportunities for you when relocating to Singapore as an expat.
What is a Letter of Consent?
A LOC is a document issued by the Ministry of Manpower (“MOM”), which will allow qualified Dependent Pass (“DP”) or Long Term Visit Pass (“LTVP”) or Long Term Visit Pass Plus (“LTVP+) holders to either seek employment or run his or her own business in Singapore.
For those who choose to seek employment, the application for LOC is typically done after he or she has secured a job offer. The prospective employer will submit the application for the LOC. For those who choose to run their own business, they should set up the company in Singapore before applying for the LOC.
On average, the processing time for a LOC application is approximately one week.
LTVP, LTVP+ holders, as well as those who hold a DP, can apply for a LOC with the MOM. Upon approval of the LOC, the LTVP, LTVP+ or DP holder can commence work.
What is a Dependant’s Pass?
A Dependant’s Pass (DP) has a much broader definition than that of an LTVP or LTVP+, as it covers not only the spouse, but also the immediate family members of a person who holds a work visa (e.g. Employment Pass / EntrePass / PEP) and has a minimum monthly salary of S$5,000.
It should be noted that if your immediate family member is an S Pass holder, one would not qualify for a DP. Hence, it would be advisable to apply for your own Work Permit, S Pass or Employment Pass instead. Learn more about our Dependant’s Pass/LOC application services.
To apply for a DP, one would need to qualify under the following criteria:
- Is the legally married spouse
- Is the unmarried child who is below 21 years of age
- Is the legally adopted child who is below 21 years of age
What is a Long-Term Visit Pass?
To obtain a Long-Term Visit Pass (LTVP), one would need to be married to a Singapore Citizen or Permanent Resident. Generally, married couples with a Singaporean child are considered more favourably. For couples with no children, the duration of marriage may be taken into account. Besides being able to work in Singapore, LTVP holders can enjoy the following benefits:
- Certainty of stay in Singapore
- Eligibility for healthcare
- Employers will not need to pay foreign workers’ levy when employing an LTVP holder
An LTVP is granted for three years and can be renewed for up to five years at each subsequent renewal.
What is Long-Term Visit Pass+?
The Long-Term Visit Pass+ (LTVP+) is a new scheme introduced by the Immigration and Checkpoints Authority (“ICA”) since April 2012. This allows a longer period of stay for foreign spouses of Singapore citizens, as well as healthcare and employment benefits.
To qualify, the married couple should have at least one Singaporean child. For those without a Singaporean child or no children, the ICA may take into consideration other facts, such as the duration of the marriage.
Applying for DP / LTVP / LTVP+
The application for a LTVP, LTVP+ and DP can be arranged by a professional employment agency. The advantage of engaging a professional is that he or she would have access to the MOM’s online electronic portal, known as the EPOL. In addition, a professional would have familiarity with the processes and procedures and can pre-empt you on what documentation needs to be prepared. Particularly for individuals whose country from origin does not issue certifications in English, a translated copy may need to be provided, certified by either a Notary Public or a translator who is certified by MOM.
What Opportunities can I Look Forward to with an LOC?
There are three great opportunities that an LOC presents:
Option (A) is typically for those who choose to leverage off their existing skill set and wish to enjoy the assurance of a stable income. Particularly since Singapore is now actively pushing employers to adopt more flexi-hour or work-from-home arrangements, the current job market is full of opportunities for those who want to work whilst juggling their commitments to the home.
The great thing about gaining employment is that it exposes one to a whole new group of friends and fellow colleagues, who can share with you the hidden gems around the island. Moreover, the practice of having live-in domestic help is the norm in Singapore; and many expatriate wives find that having domestic help frees up their time to pursue their other interests or career ambitions.
B. Sole Proprietorship
As the term implies, a sole proprietorship is the simplest business structure, where it has only one owner who is responsible for all decisions, assets and liabilities. Given its simplicity, a sole proprietorship is easy to set up, easier to manage administratively and has fewer compliance requirements to adhere to, as compared to any other company.
Examples of those who choose option (B) would be those who want to set up a simple e-commerce business leveraging off popular platforms such as Etsy, or those who want to provide tutoring to local students in a foreign language that they have expertise in, or music teachers, where income is irregular and of a small scale.
C. Setting up a Private Limited Company
While it also offers LOC holders the route to entrepreneurship, option (C) is significantly different from option (B). For a better understanding, a comparative table juxtaposing the two options is set out below:
|Sole Proprietorship||Private Limited Company|
|Requirements||At least one manager who is a Singapore resident||At least one director who is ordinarily resident in Singapore|
|Singapore registered address||Singapore registered address|
|One Owner||At least one shareholder|
|Minimum issued and paid up share capital is S$1.00|
|Legal Status||Not a separate legal entity||Separate legal entity|
|Owner has unlimited liability||Members have limited liability|
|Can be sued in individual’s name or business name||Can be sued in company’s name|
|Owner is personally liable for debts and losses of business||Members not personally liable for debts and losses of company|
|Tax rates||Taxed at personal income tax rates||Taxed at flat 17% corporate tax|
|Will not qualify for tax exemptions targeted at companies as it is not considered a corporate entity||Qualifies for tax exemptions targeted at companies, if it fulfils the criteria|
|Loans and Financing||More difficult to obtain loans from financial institutions, unless the sole proprietor can mortgage assets or has proof that he or she has sufficient capital||Can enjoy concessions such as the Micro-Loan scheme, which allows new companies to obtain loans of up to S$100,000 without the need to provide significant documentation|
|Ongoing statutory compliance||Accounts need not be audited||Accounts may need to be audited, depending on revenue and shareholders|
|No need to hold Annual General Meeting||Will need to hold Annual General Meeting|
|No need to file Annual Returns||Filing of Annual Returns within one month from the date of AGM|
|Will need to renew registration annually||Does not need to renew registration|
|Will cease upon death of the Sole Proprietor||Perpetual succession, can continue business operations|
Given the above, it is evident that the choice between option (B) and (C) would then be largely dependent on the nature of the business that one wishes to engage in. Generally, it is advisable to go for option (C) for its flexibility and limited liability, unless one can foresee that:
- The business will not be entering into contracts or deals that create liability for the business; and
- The business will not be entering into situations whereby it could potentially be sued.
Another key consideration that potential business owners may wish to consider is that a sole proprietorship will be taxed at personal income tax rates. For LOC holders, this will be at the non-resident rate of 15%, which is significantly higher than the corporate tax rate, after taking into account all incentives etc.
What else should I know about a LOC?
It is important to note that approval of a LOC is subject to the discretion of MOM; and while the process and application procedures are much simpler than applying for a work visa (such as the Employment Pass / EntrePass / PEP / S Pass), it is also dependent and contingent on the approval and renewal of your sponsor’s work visa, which could be your spouse or family member. In the event that your sponsor’s work visa is cancelled, your LOC will be automatically cancelled as well.
While this automatic cancellation may be cause for concern among some employers, the current tight labour market in Singapore has resulted in employers becoming increasingly willing to take on LOC holders as employees, mainly due to the increased restrictions on foreign labour implemented by MOM in the recent years.
Under MOM’s new foreign labour policy, companies are required to comply with a quota to ensure competitive job packages and adequate job opportunities for locals. Hence, the number of foreign employees (who generally have different skill sets, or seek a lower compensation package) that a company can employ is restricted. LOC holders however, will not be considered as foreign employees and prospective employees will therefore save on government levies and will not need to worry about their company’s quota.
Need help with your Letter of Consent application?
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