Guide to Remote
Working in APAC
DLAPIPER.COM
Introduction
With COVID-19 continuing to cause travel disruption in
many locations, employers are increasingly having to
respond to scenarios where employees are stranded
or unwilling to return from overseas as planned and
therefore are working overseas for extended periods of
time. The migration to remote working has also become
a worldwide response to the COVID-19 pandemic,
prompting increasing numbers of employees to request
working overseas for extended periods to allow an
escape from COVID-related restrictions within their
work location and/or so they can travel and visit families.
While employers are keen to support wellbeing and
explore new ways of working, this has also come with
challenges as allowing employees to work outside their
place of employment may lead to various
risks and issues and trigger compliance obligations for
employers. Knowing the relevant risks and issues and
accordingly dening parameters of remote working
arrangements will enable employers to appropriately
scope and address the risks and issues.
In our Guide to Remote Working in APAC, we discuss
some key common issues across 7 jurisdictions in APAC
related to employees working remotely outside their
normal place of employment on a non-permanent basis.
Before examining the legal landscape in specic
jurisdictions, we have outlined below some general high
level considerations and risks for employers.
Key considerations
• Determine eligibility: Establish clear objective
eligibility criteria for remote working outside the place
of employment and the duration for which remote
working applications will normally be considered in
order to ensure consistency and minimise the risk
of claims of discriminatory treatment. Criteria may
include the nature of the employee’s position,
whether the employee holds a visa or right to work
in the requested location, whether job duties can
be performed remotely, the employee’s seniority or
tenure, how many days the employee has spent in
that location in the applicable tax year, how many
other employees have requested to work from that
location, whether the employer has a corporate
presence in that location, the availability of supporting
technology, whether data privacy and cybersecurity
issues can be addressed, performance issues,
whether any regulatory or licensing issues apply etc.
Employers should plan a process for receiving and
considering such remote working applications to
ensure consistency of approach and response.
• Set expectations: Another key issue is setting
expectations. It is prudent to make clear in writing to
employees that, even when they are working abroad,
their employment remains with the home employing
entity and there are no changes to their original
employment terms and conditions unless otherwise
specied or agreed. It is also advisable to remind
employees what the expectations are, including but
not limited to the ways of working (e.g. working hours,
work deliverables, availability during business hours,
response time, working time tracking requirements).
It should generally be made clear to employees that
the remote working arrangements are temporary
or subject to a xed period and that the company
reserves a right to terminate such arrangements
at its sole discretion to the extent permitted under
applicable law. It is also prudent to agree upfront
what will apply if the employee does not, for any
reason, return on the agreed date e.g. will the
employee be required to go on unpaid leave,
which party will bear any expenses or costs
relating to ight bans etc.
• Know where your employees are located and put
guardrails in place: It will be critical for the business
to monitor headcount in locations where employees
are permitted to work. Various employment
obligations could be triggered based on the number
of employees, from discrimination laws and leave
protections to collective representation, termination
protections and information reporting. Further, as a
general rule of thumb, in many locations the higher
the number of employees working in a jurisdiction
the higher the risk of permanent establishment
(“PE”), triggering potential corporate tax issues
and/or payroll obligations. The risk of employees
accruing local statutory rights will also generally
increase with the duration of the overseas stay.
Employers should also familiarise themselves with the
local COVID-19 rules and restrictions as those may
impede employees from coming back to the place of
employment at the agreed time.
GUIDE TO REMOTE WORKING IN APAC
• Revise policies as needed: As the prevalence of
remote working increases, it is recommended that
employers consider how their current workplace
policies apply to remote working outside the
normal place of employment, including but not
limited to supervision, performance management,
time recording, privacy, condentiality, IT and
document management, insurance, etc. It is prudent
to have a remote working policy that specically
covers the eligibility criteria, expectations and
guardrails as summarised above.
• Be familiar with local obligations: Employers
should assess whether local laws will apply to them
when they have employees working there and at
what stage these may apply. It is prudent to be aware
of employer obligations under applicable local law,
such as immigration requirements, employment
rights, employee benets, ling requirements, health
and safety, equal employment opportunity
and human rights.
Overview of key risks for employers
• General employment risks: Where an employee
performs services abroad – even for a short period
– local employment laws such as working time rules,
overtime and leave entitlements, or termination
rights may be deemed to apply. Whether or not local
laws apply is a fact specic analysis that can depend
on factors such as the duration of time spent in the
jurisdiction, whether there is local corporate presence,
nature of work, where payroll is paid, and what work
permits are held. Generally speaking, local authority
enforcement is unlikely for a one-o short-term case
where an individual is stranded, for instance. But the
risk is greater where the employee has stayed and
worked abroad for a long period of time or on a
regular repeated basis. Where a dispute arises –
such as over termination of the employee while
abroad – the employee is likely to try to claim “the
best of both worlds”: the more favourable of the laws
of their home country and the overseas country.
• Intellectual property (“IP”) assignment issues,
data privacy and export controls: If an individual
creates IP, employers should consider whether
local IP assignment laws might apply that have
dierent requirements than the employee’s ultimate
jurisdiction (e.g. compensation requirements for
creation of IP). Additional data privacy issues may also
arise as data is likely to be transferred abroad.
If the employee needs access to controlled
technology, the employer is encouraged to
review the application of export control laws and
ensure compliance.
• Payroll tax risk: Another risk is the failure to
withhold income tax and social charges. Again,
there is unfortunately no bright line rule as to
when withholding obligations are triggered and
case-by-case analysis is required based on the
home working location and proposed overseas
working location. Double-taxation treaties (“DTT”) or
Double-taxation agreements (“DTA”) often provide
that an employee temporarily located in another
jurisdiction is not subject to taxes if (i) that individual
is paid by the original location; (ii) resides in the other
location for no longer than 183 days – the rule used
by most jurisdictions to determine if someone should
be considered a resident for tax purposes (although
this can vary); and (iii) the compensation paid to
the individual is not borne by a PE of the original
location abroad. However, requirements can vary by
jurisdiction, and there may still be risk if an employee
works abroad for less than six months. For instance,
there may be no DTT or DTA between the home
jurisdiction and the jurisdiction where employees are
working abroad, the DTT or DTA may have dierent
requirements, or the company may simply not fulll
all of the treaty or agreement requirements.
Social security treaties are also less common and
often do not provide protection from triggering local
social charges. Payroll tax risk often poses higher
nancial exposure than other employment risks.
This is especially true as claims vis-à-vis the
government usually cannot be released.
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• Permanent establishment tax and “doing
business” risk: A company with an employee located
in a jurisdiction where it does not have operations
may trigger a taxable presence for income tax
purposes, risking corporate tax obligations abroad.
This risk tends to be higher where the individual is
engaged in sales activities and generating revenue
for the company, but non-sales employees can also
create risk. Similarly, rules usually require a company
that is engaged in “business” in a jurisdiction to set up
a corporate presence.
• Immigration risk: If an employee is working in a
jurisdiction where she or he does not have the right
to work, both the employee and/or the company may
face penalties, nes or expulsion from the jurisdiction
due to immigration violations. While there may be
exibility for individuals who are unable to leave the
jurisdiction in time due to an emergency,
immigration issues may arise if individuals do not
return to the jurisdiction of their regular work when
feasible to do so.
Accordingly, employers should review carefully any
employee requests to work in a jurisdiction outside their
place of employment even where the arrangement is
intended to be temporary. Staying longer than originally
planned has become a key risk that needs to be
considered at the planning and approval stage.
Below we have elaborated some risks on a
jurisdiction-by-jurisdiction high level basis.
Employers, however, should seek legal advice for
detailed analysis.
GUIDE TO REMOTE WORKING IN APAC
Helen Colquhoun
Partner and Head of
Employment, Hong Kong
Hong Kong
+852 2103 0840
helen.colquhoun@dlapiper.com
Johnny Choi
Partner and Head of
Employment, China
Beijing
+86 10 8520 0709
johnny.choi@dlapiper.com
Keiji Nasuda
Partner and Head of
Employment, Japan
Tokyo
+81 3 4550 6417
keiji.nasuda@dlapiper.com
Laura Scampion
Country Managing Partner and
Head of Employment, New Zealand
Auckland
+64 9 916 3779
laura.scampion@dlapiper.com
Komson Suntheeraporn
Partner and Head of
Employment, Thailand
Bangkok
+66 2 686 8557
komson.suntheeraporn@dlapiper.com
Nicholas Turner
Partner and Head of Employment,
Australia
Sydney
+61 2 9286 8522
nicholas.turner@dlapiper.com
David Smail
Of Counsel
Singapore
+65 6512 9564
david.smail@dlapiper.com
Key contacts
EMPLOYMENT
Anderson Lam
Co-Head of Tax, Asia
Head of Tax, Hong Kong
Hong Kong
+852 2103 0722
anderson.lam@dlapiper.com
Tina Xia
Partner
Hong Kong
+852 2103 0440
tina.xia@dlapiper.com
Keitaro Uzawa
Of Counsel
Tokyo
+81 3 4550 2833
keitaro.uzawa@dlapiper.com
David Johnston
Partner
Auckland
+64 21 911 146
david.johnson@dlapiper.com
Eddie Ahn
Partner
Sydney
+61 2 9286 8268
eddie.ahn@dlapiper.com
TAX
Acknowledgements
We would like to express our gratitude towards Pioneer Associates, a local law rm in Singapore, for making important contributions
to this Guide by sharing their insights in relation to the tax aspects for Singapore.
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Australia
Employment-Related considerations
1. Would an employee, whose normal place of
work and employer is in another jurisdiction,
who chooses to spend 1-90 days in a 12-month
rolling period working remotely in Australia be
likely to acquire local employment rights during
their stay?
On balance, we would not expect an employee to
acquire Australian employment rights during a
limited stay of between 1 and 90 days in Australia in
any 12-month rolling period. It will be fact specic in
each case and will depend on whether the court or
the Fair Work Commission considers there to be a
suciently strong connection with Australia.
To minimise the risk, we recommend informing the
employees in writing that their existing terms and
conditions of employment will continue to apply to
them while they are working remotely in Australia.
2. At what point during the stay are any local
employment law rights likely to accrue?
The longer the stay in Australia, the more likely
that an employee will successfully argue that they
have acquired Australian employment law rights.
Broadly, such risk starts to increase after
90 consecutive days, and after 6 consecutive months,
it will be very dicult for an employer to argue that
Australian employment law does not apply.
The look back period is likely to extend back to
the date on which the employee started to
work in Australia.
3. Which key non-termination rights will apply?
The below rights have been identied for
completeness in the event that the employee
acquires Australian employment law rights
(though it is not an exhaustive list):
• Minimum Wage
• Modern award coverage
• Statutory leave (e.g. paid annual leave,
paid personal/carer’s (sick) leave etc.)
• Long service leave (which is a type of extended
vacation leave and the relevant period of service
on which this entitlement is calculated can include
service outside Australia)
• Statutory redundancy pay
• Anti-discrimination, harassment and bullying
• Whistleblowing protections
Some of the above rights will depend on the length
of an employee’s service in Australia, or for long
service leave, outside Australia.
4. How onerous is it for an employer to comply
with these non-termination rights?
Medium
5. What are the key termination rights
that will apply and what are the potential
termination remedies?
Protection against unfair dismissal (employees need
6 months’ continuous service to bring a claim).
The cap on compensation is generally 6 months
of base salary.
Ability to bring a general protections claim in
connection with the employment, including but not
limited to termination.
6. How onerous/expensive is it for an employer
to terminate lawfully?
Medium
There are requirements relating to both the process
of termination and the reason for the termination.
7. Overall risk for employer?
Medium
8. Is the type of work and/or seniority of the
employee relevant to the analysis and if so how?
No.
GUIDE TO REMOTE WORKING IN APAC
1. What is the duration (e.g. 6 months or
otherwise) relevant for determining the
existence of PE in Australia when an employee
from an overseas company is working remotely
in Australia?
There is no xed duration threshold to determine
whether PE of an overseas company exists when
its employee is working in Australia, as it depends
on factors including the nature of the business of
the overseas company, the seniority level of the
employee and the activities carried out in Australia
by the employee (see Question 4).
For instance, whilst generally the duration threshold
is 6 months, business activities of a recurrent nature
can constitute a PE even if any continuous presence
lasts less than 6 months.
In this regard, Australia and its DTT generally follow
the approach of the Organisation for Economic
Co-operation and Development (“OECD”) in
identifying PE (see Question 4).
double taxation treaty between Australia and the
jurisdiction of the overseas company
Yes.
If there is no DTT, Australian income tax liability
arises to the extent the relevant income is Australian
sourced regardless of PE.
If there is a DTT, Australian income tax liability arises
to the extent the net prots is attributable to a PE.
3. During this pandemic, are there exceptions
relating to PE?
No.
The Australian Taxation Oce had once provided
some administrative concessions relating to
COVID-19 and PE, but such concessions only
applied until 31 December 2021 and have not been
extended further.
types, without or without authority to sign or
otherwise act on behalf of the overseas company
in Australia?
Yes.
Generally, the risk of a PE is higher where the
employee is at a higher level of hierarchy or where
his or her activities represent the core business
activities of the overseas company.
Further, under Australia’s DTTs (which generally
follow the OECD’s approach in identifying PE):
• A place of management (i.e. comprising individuals
making high-level decisions relating to the
taxpayer’s business and aairs) would likely
constitute a PE.
• A person who has, and habitually exercises in
Australia, an authority to conclude contracts
on behalf of the overseas company would also
likely constitute a PE, although there are certain
exclusions (e.g. for independent agents or for the
purchase of goods or merchandise only etc).
5. When is an employee of an overseas company
who is working remotely in Australia required to
pay salary tax in Australia?
When the employee is present in Australia for a
period of or periods totaling 183 days or more in
an income year.
6. If the employee refuses to pay tax to the
return (if required), will the liability be extended
to employer?
Generally, an employer is liable to withhold
Pay-As-You-Go (“PAYG”) withholding tax from taxable
salary and wages payable to its employees.
An overseas company that has employees in Australia
may also be liable for PAYG withholding regardless of
whether it has a PE in Australia.
7. Further Remarks/Comments
In particular, apart from PAYG withholding,
an overseas company which has employees in
Australia may also be liable for superannuation
contributions, payroll tax and other employer tax
related obligations, regardless of whether it has a
PE in Australia.
Tax-Related considerations
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People’s Republic of China (“PRC”)
Employment-Related considerations
1. Would an employee, whose normal place of
work and employer is in another jurisdiction,
who chooses to spend 1-90 days in a 12-month
rolling period working remotely in the PRC be
likely to acquire local employment rights during
their stay?
This will depend on the specic circumstances of
each case.
Generally, there will be a risk for an individual to
acquire PRC employment law rights if he or she is a
Chinese citizen (including Hong Kong, Macau and
Taiwan residents) and there is a PRC subsidiary,
aliate or corporate entity which can be regarded as
his or her PRC employer. The longer the duration of
stay in the PRC, the risk will increase.
On the other hand, it is not likely for an individual to
acquire PRC employment law rights if he or she is a
foreign citizen who does not have a PRC work permit,
or if there is no PRC subsidiary, aliate or corporate
entity which can be regarded as his or
her PRC employer.
However, if the individual stays and works beyond
90 days in the PRC, the risk of not obtaining a PRC
work permit will increase.
2. At what point during the stay are any local
employment law rights likely to accrue?
The look back period may extend to the date on
which the employee began working in the PRC in
the event the employee successfully argues that
PRC employment law rights apply to his or her
employment. Such rights will not necessarily take
eect from a particular date.
3. Which key non-termination rights will apply?
The below rights have been identied in the event
that the individual acquires PRC employment law
rights (though it is not an exhaustive list):
• Double salary for being employed without a
written local labour contract
• Overtime pay (including during public holidays)
and compensation for entitled but unused annual
leave and other types of statutory leave
• Social insurance and housing fund
Note that some of the above rights will be subject to
certain qualifying criteria or conditions.
4. How onerous is it for an employer to comply
with these non-termination rights?
Medium
5. What are the key termination rights
that will apply and what are the potential
termination remedies?
An employer is only permitted to terminate the
employee unilaterally in limited circumstances
for which the conditions are dicult to satisfy
or prove. An employee can be reinstated if
terminated wrongfully.
6. How onerous/expensive is it for an employer
to terminate lawfully?
High
7. Overall risk for employer?
High
8. Is the type of work and/or seniority of the
employee relevant to the analysis and if so how?
Only relevant to a certain extent. For example,
in order to ascertain whether the individual has a
PRC employment relationship with a PRC subsidiary
or aliate, facts related to the nature of his or her
work would be relevant.
GUIDE TO REMOTE WORKING IN APAC
1. What is the duration (e.g. 6 months or
otherwise) relevant for determining the existence
of PE in the PRC when an employee from an
overseas company is working remotely in
the PRC?
PRC tax law does not provide for PE. An overseas
company will be subject to PRC income tax if it has an
“establishment” in the PRC.
Without a DTT, an overseas company sending
employees to work in the PRC will be deemed to
have a taxable “establishment” in the PRC even if the
employees only spent one day in the PRC.
On the other hand, where there is a DTT between the
jurisdiction of the overseas company and the PRC,
the provision of such treaty shall apply.
double taxation treaty between the PRC and the
jurisdiction of the overseas company?
The PE article in most of the DTTs to which the PRC
is a party sets a 6-month or 183-day threshold for
PE assessment.
If an employee of an overseas company continues
to work from home in the PRC (say for more than
6 months), the home oce, as an extension of
business of the overseas company, will be considered
to have certain degree of permanence, and will give
rise to a “xed place of business” and thus a PE of the
overseas company.
3. During this pandemic, are there exceptions
relating to PE?
Yes. Based on the “Q&A on the Implementation of Tax
Treaty Provisions during the Pandemic” published by
the State Taxation Administration on 14 August 2020
(“Q&A”), which applies to the implementation of
DTTs, the “exceptional and temporary change” of the
location where employees perform their employment
because of the COVID-19 pandemic, such as
working from home, should not create new PEs for
the employer.
However, there is no further guidance under the Q&A
as to what constitutes an “exceptional and temporary
change”, which shall be interpreted reasonably by
the taxpayers taking into account the public health
measures of the relevant jurisdictions.
without or without authority to sign or otherwise
act on behalf of the overseas company in
the PRC?
Yes. PRC tax law deems an overseas company
whose “place eective management“ is in the PRC
to be a PRC resident company. Such “place eective
management” is determined as, among others, the
place where senior executives perform their day
to day duties, and where the directors or senior
executives habitually reside.
In addition, many DTTs have the “place of eective
management” as a tie-breaker rule for situations of
dual tax residency.
Notwithstanding the above, for DTTs, the Q&A
provides that, the temporary change to the
location of directors or other senior executives is
an extraordinary and temporary situation due to
the COVID-19 pandemic, and should not trigger a
change in treaty residence of a company.
Therefore, the temporary change of work location of
senior executives generally will not result in changes
in corporate residence of an overseas company.
5. When is an employee of an overseas company
who is working remotely in the PRC required to
pay salary tax in the PRC?
According to the Q&A, the tax residence status of
an employee will not change purely because of
the temporary change of the work location due to
the COVID-19 pandemic.
Tax-Related considerations
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However, if an overseas company has constituted a
PE in the PRC due to its employee’s remote working
in the PRC (taking into account the guidance and
administrative relief on the impact of COVID-19
provided under the Q&A), its employees working in
the PRC will be liable to PRC individual income tax
regardless of the days spent in the PRC.
6. If the employee refuses to pay tax to the
return (if required), will the liability be extended
to employer?
No. The individual income tax liability remains
with the employee.
However, if the employee is liable to PRC individual
income tax because his or her employer (i.e. an
overseas company) has constituted a PE in the PRC,
the PE of his or her employer shall perform tax
registration in the PRC and act as the withholding
agent of the individual income tax of the employee.
7. Further Remarks/Comments
There are other types of PEs that might be created
by an overseas company due to its employees’
working remotely in the PRC, such as furnishing
services for third parties, or habitually signing or
negotiating sales contracts with third parties, for
and on behalf of the overseas company. The analysis
of such PE will be subject to the facts and
circumstances of each situation.
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Hong Kong
Employment-Related considerations
1. Would an employee, whose normal place of
work and employer is in another jurisdiction,
who chooses to spend 1-90 days in a 12-month
rolling period working remotely in Hong Kong be
likely to acquire local employment rights during
their stay?
On balance, we would not expect an employee to
acquire Hong Kong employment law rights during a
limited stay of between 1 and 90 days in Hong Kong in
any 12-month rolling period. Whether the Hong Kong
tribunals would take the view that Hong Kong law and
thus statutory rights should apply will be fact specic in
each case and will depend on various factors such as
the intention of the parties and how close a connection
there is to the overseas original location.
To minimize the risk, we recommend that the employer
imposes a limit on the time that employees can work
in Hong Kong and avoids assigning work to employees
which is connected to Hong Kong or its establishment
in Hong Kong (if any). The employer should continue
to pay remuneration and manage the employment
relationship from the home country, such as handle
payroll, dismissal, grievance, disciplinary matter etc. as a
local process in the home country.
We also recommend to make clear to the employees
that all of their employment terms and conditions
as stipulated in the employment contract will remain
unchanged (including the governing law) during their
stay in Hong Kong.
2. At what point during the stay are any local
employment law rights likely to accrue?
The longer the stay in Hong Kong the higher the risk
that an employee will successfully argue that they have
acquired Hong Kong employment law rights. While the
case law in Hong Kong is unsettled on this point,
generally speaking, it is prudent to take the view that
the risk can become more signicant when the stay
lasts for more than 6 consecutive months. However,
it will be fact specic in each case and will depend on
various factors, including the intention of the parties
and the level of connection that remains with the
overseas location.
The longer the stay and the more regular any repeat
annual stays in Hong Kong are, or the closer the
relationship with the Hong Kong oce (if any) during
the period of stay, the more likely that an employee
will successfully argue that he or she has acquired
Hong Kong employment law rights. The risk will be
higher if the parties have not expressly agreed that
the overseas governing law continues to apply to
the relationship.
3. Which key non-termination rights will apply?
The below rights have been identied for completeness
in the event that the employee acquires Hong Kong
employment law rights (though it is not an
exhaustive list):
• Statutory leave (e.g. annual leave, maternity leave,
paternity leave etc.)
• Statutory holidays
• Rest day per week
• Statutory sickness allowance
• Statutory severance/long service payment
• Minimum Wage
• Unlawful discrimination and harassment
• Employees’ compensation insurance
• Mandatory Provident Fund
Note that some of the above rights will be
subject to certain qualifying criteria or conditions.
Further, an employee who does not work for at least
18 hours per week for 4 consecutive weeks will receive
fewer statutory rights.
4. How onerous is it for an employer to comply
with these non-termination rights?
Medium
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1. What is the duration (e.g. 6 months or otherwise)
relevant for determining the existence of PE in
Hong Kong when an employee from an overseas
company is working remotely in Hong Kong?
For an overseas company which is not a tax resident of
a jurisdiction having a DTA with Hong Kong,
the Inland Revenue Ordinance (Cap. 112) (“IRO”)
will apply to determine whether it has a PE
in Hong Kong.
There is no clear guideline as to the duration that
constitutes a PE if an overseas company has an
employee who works remotely in Hong Kong.
It depends on the facts and circumstances
of each case.
In essence, a non-DTA territory resident person (i.e. to
whom no DTA is applicable) has a PE in Hong Kong if it
has a “xed place of business” in Hong Kong through
which the business of the enterprise is wholly or partly
carried on. Even if there is no “xed place of business”,
a person acting in Hong Kong on behalf of the overseas
company to habitually conclude contracts, or habitually
plays the principal role leading to the conclusion of
contracts that are routinely concluded without material
modication by the overseas company, can be seen as
having a PE in Hong Kong.
For an overseas company which has employees
temporarily relocated to Hong Kong and delivers work
here, it is not likely that a PE will be created by reason of
the employees’ transitory presence unless they perform
work or habitually conclude contracts on behalf of the
businesses even prior to the COVID-19 pandemic.
double taxation treaty between Hong Kong and the
jurisdiction of the overseas company?
Yes, for an overseas company which is a DTA territory
resident person (i.e. to whom Hong Kong’s DTA is
applicable), whether it has a PE in Hong Kong is to be
determined in accordance with the relevant provisions
under the DTA (not the IRO).
The denition of PE is the same as that under the IRO,
i.e. a DTA territory resident has a PE in Hong Kong if
it has a “xed place of business” through which the
business of the enterprise is wholly or partly carried on.
However, the DTA indicates the duration in determining
a PE. If the furnishing of services by an overseas
company, directly or through employees or other
personnel engaged by such overseas company, within
any 12-month period the cumulative number of days
during which services have been provided by such
overseas company in Hong Kong exceeds 183 days,
then it will be regarded as having a PE in Hong Kong.
Tax-Related considerations
5. What are the key termination rights
that will apply and what are the potential
termination remedies?
Statutory right to terminate employment with notice or
wages in lieu of notice (except for gross misconduct).
Statutory right for employee to terminate employment
without notice in certain circumstances, such as
reasonably fear for physical danger by violence or
disease which are not contemplated under contract,
employed for at least 5 years and certied as being
permanently unt for the type of work engaged to do,
or subject to ill treatment by employer etc.
Dismissal of a “protected” employee is unlawful, such
as those in receipt of statutory sickness allowance,
who are pregnant, who are on statutory maternity
leave, or who are suering work injury entitling them
to compensation under the Employees’ Compensation
Ordinance (Cap. 282) etc. It is a criminal oence upon
conviction and there can be personal liability for
directors and ocers in certain circumstances.
Dismissal must have a valid statutory reason if the
employees have been continuously employed for at
least 24 months. Otherwise, employees can bring an
“unreasonable dismissal claim”.
6. How onerous/ expensive is it for an employer
to terminate lawfully?
Low
7. Overall risk for employer?
Low
8. Is the type of work and /or seniority of the
employee relevant to the analysis and if so how?
No.
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3. During this pandemic, are there exceptions
relating to PE?
There are no specic exception relating to PE during
the COVID-19 pandemic by way of legislation stipulated
by the Hong Kong Inland Revenue Department (“IRD”).
However, the IRD provided general information through
a publication issued in July 2021:
• The IRD is prepared to adopt a exible approach
in determining PE related issues, aligning with the
“Updated guidance on tax treaties and the impact of
the COVID-19 crisis” released by the Organisation
for Economic Co-operation and Development
(“OECD Guidance”) in January 2021. It will examine
all the relevant facts and circumstances of a case,
including the international travel disruption caused
by public health measures imposed by governments
in response to the COVID-19 pandemic, to assess
whether a non-Hong Kong resident person has
a PE in Hong Kong under DTAs (for DTA territory
resident) or relevant sections of the IRO (for non-DTA
territory resident).
• For instance, the OECD Guidance explained that
the exceptional and temporary change of locations
where employees exercise their employment due to
the COVID-19 pandemic should not create a new PE
for their employers.
• The IRD emphasises that such views are relevant
only to circumstances arising during the COVID-19
pandemic when public health measures are in eect.
without or without authority to sign or otherwise act
on behalf of the overseas company in Hong Kong?
There is no detailed guideline on whether the IRD will
adopt a dierent assessment in determining PE when
employees remotely working in Hong Kong are at
dierent levels of hierarchy and/or with dierent level of
responsibilities, authorities, job types.
However, the IRD recognises that certain activities that
a person undertakes for an enterprise could give rise to
sucient taxable nexus.
Even if there is no “xed place of business”, a person
acting in Hong Kong on behalf of an overseas company
to (a) habitually conclude contracts, or (b) habitually
plays the principal role leading to the conclusion of
contracts that are routinely concluded without material
modication by the overseas company, can be seen as
having a PE in Hong Kong.
If the activities of the employees in Hong Kong are
limited to preparatory or auxiliary activities,
even if exercised through a “xed place of business”,
it would not make that “xed place of business” a PE.
It depends on the facts and circumstances of each case.
5. When is an employee of an overseas company who
is working remotely in Hong Kong required to pay
salary tax in Hong Kong?
An employee of an overseas company who renders
services in Hong Kong during visits for not more
than a total of 60 days in the basis period of a year of
assessment will have no liability to salaries tax.
If the employee’s visits in Hong Kong exceed 60 days
and the source of employment is outside Hong Kong
(i.e. a non-Hong Kong employment), he or she
will be assessed on the income attributable to the
services rendered in Hong Kong (including leave pay
attributable to such services), and generally according
to the number of days (days-in-days-out basis) in a year
of assessment.
6. If the employee refuses to pay tax to the local
required), will the liability be extended to employer?
No. It is the employee’s obligation to pay tax and le tax
returns to the IRD. The liability applies to the individual
and will not be extended to the employer.
A prudent approach is for the overseas company to
make lings in relation to the employee’s employment
in Hong Kong.
If the stay of the employee creates a presence of the
overseas company (which is subject to analysis of
the facts), it must make lings for business registration
as a non-Hong Kong company under Part 16 of
the Companies Ordinance (Cap. 622) and fulll its
employer’s obligation (e.g. ling timely and accurate
returns, keeping and retention of records, etc.).
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Japan
Employment-Related considerations
1. Would an employee, whose normal place of
work and employer is in another jurisdiction,
who chooses to spend 1-90 days in a 12-month
rolling period working remotely in Japan be likely
to acquire local employment rights during their
stay?
As long as the employment contract clearly states the
governing law and the employee continues to report
to the original employer in the home country while
working remotely in Japan, it is unlikely that a court
would nd that the employee has acquired Japanese
employment law rights if he or she stays and works
in Japan for between 1 and 90 days in any 12-month
rolling period.
If an employee temporarily reports to the Japan
oce (if any) while working remotely in Japan,
we recommend the home country employer to
ensure that all terms and conditions under the
existing employment contract (such as work hours,
performance reviews and disciplinary procedures)
are determined by the home country employer in
order to minimize the risk of the employee claiming
that Japanese employment law rights apply to them.
2. At what point during the stay are any local
employment law rights likely to accrue?
The look back period may extend to the date on
which the employee began working in Japan in
the event the employee successfully argues that
Japanese employment law rights apply to his or her
employment. Such rights will not necessarily take
eect from a particular date.
The longer the stay and the more regular any
repeat annual stays in Japan are, or the closer the
relationship with the Japan oce (if any) during the
period of stay, the more likely that an employee
will successfully argue that he or she has acquired
Japanese employment law rights.
3. Which key non-termination rights will apply?
The below rights have been identied for
completeness in the event that the employee
acquires Japanese employment law rights (though it
is not an exhaustive list):
• Minimum wage
• Annual paid leave
• Statutory working hours of 8 hours per day/40
hours per week
• Overtime allowance for overtime work exceeding
statutory working hours
• Restrictions on harassment and
unlawful discrimination
• Whistleblowing protection
• Statutory unpaid leaves (e.g. maternity,
childcare and family care leave etc.)
Note that some of the above rights will be subject to
certain qualifying criteria or conditions.
4. How onerous is it for an employer to comply
with these non-termination rights?
High
5. What are the key termination rights
that will apply and what are the potential
termination remedies?
If an employee acquires rights under labour
laws in Japan, dismissal will be very dicult.
While employers do have the right to dismiss
employees, a dismissal will be regarded as an
“abuse of rights” under Japanese law and therefore
invalid, if a court determines that the dismissal lacks
“reasonable” grounds and is not “socially acceptable”.
This is a very high standard to meet. While there are
no statutory grounds for dismissal, the following
grounds may possibly be considered reasonable and
socially acceptable:
• Very serious misconduct (e.g. theft or violence
in workplace);
• Serious insubordination and failure to correct the
action after clear warnings are given;
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• Serious and on-going poor performance, after
formal warnings have been given, signicant
training has been provided through performance
improvement plans and other positions have been
explored, and it is determined that the training is
ineectual and no other suitable positions exist;
• Provision of material false information about one’s
background that impacts performance; and
• A loss of or signicant and continuous lack in
ability/capability to perform work duties.
There is no statutory “remedy” for dismissal, and the
employer is required to continue employment unless
the dismissal is justied.
Therefore, the most common approach is to
negotiate a mutual resignation. When an employee
refuses to resign, and a dispute over the validity of
the termination leads to labour tribunal proceedings
or a lawsuit, a settlement is often reached in a
package of about 6 months to 1 year of base salary,
though it depends on the specic case.
6. How onerous/expensive is it for an employer
to terminate lawfully?
High
Generally, labour tribunal proceedings will take
3-4 months and a lawsuit takes about 1 year or more.
7. Overall risk for employer?
Low
8. Is the type of work and/or seniority of the
employee relevant to the analysis and if so how?
No.
Tax-Related considerations
1. What is the duration (e.g. 6 months or otherwise)
relevant for determining the existence of PE in Japan
when an employee from an overseas company is
working remotely in Japan?
There is no duration threshold for determining
whether a PE for an overseas company exists
when its employee is working in Japan. Instead,
it should be determined subject to the totality of the
circumstances test.
Generally speaking, the PE recognition rules
under the Japanese tax law are mostly in line with
the Organisation for Economic Co-operation and
Development (“OECD”) standards, and there are three
types of PEs, which are so-called as follows: “xed place
PE”, “construction PE” and “agent PE”.
• For “construction PE”, an overseas company is
deemed to have a PE in Japan if it carries out,
for a period exceeding one year, a construction,
installation or assembly project or similar activity,
or performs services in supervising or
superintending such projects or activities in Japan.
• However, there is no such duration requirement
for “xed place PE” or “agent PE”. Rather, actual
activities performed by or authorisation granted
to the employee in Japan will be considered when
determining the existence of PE in Japan by an
overseas company.
double taxation treaty between Japan and the
jurisdiction of the overseas company?
Japan has DTTs with over 70 nations, and the PE
concepts under most of the DTTs are generally
the same as the ones under Japanese tax law or
OECD standards.
However, some DTTs contain wider exceptions to
the PE categories. For example, with regard to the
concept of xed place PE, the qualifying preparatory,
ancillary and auxiliary activities under the DTT are
more expansive than the ones under the domestic
tax law.
Further, in many DTTs, a shorter period is provided
for the duration requirements for “construction PE”.
3. During this pandemic, are there exceptions
relating to PE?
No guidance or announcement on exceptions relating
to PE during the COVID-19 pandemic has been issued
by the National Tax Agency or any other governmental
bodies of Japan.
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However, the denition of “PE” under Japanese tax
law is basically in line with the ones under the latest
version of the OECD Model Tax Convention.
Even though the commentaries or guidance by the
OECD are not binding in Japan, in general, they are
highly respected in practice.
Therefore, treatments addressed in the OECD’s
“Updated guidance on tax treaties and the impact
of the COVID-19 pandemic” would be taken into
consideration when analysing exceptions relating to
PE in Japan.
without or without authority to sign or otherwise
act on behalf of the overseas company in Japan?
In general, “xed place PE” is recognised based on
the substance of a xed place of business rather than
the nature of the person working in such place.
On the other hand, “an agent PE” will be recognised
based on various factors, such as the person’s actual
activities performed, roles and responsibilities,
job titles, and authorities granted:
• If an employee of an overseas company has high
level of responsibilities and, in Japan, he or she has
the authority to execute contracts on behalf of the
overseas company repeatedly, the employee is
likely to be deemed as an agent PE.
• In other words, to the extent that an employee of
the overseas company has no authority to execute
contracts on behalf of the overseas company and
does not conduct any material acts in negotiation
of the transaction, the employee is unlikely to be
deemed as an “agent PE”.
There are no dierent approaches for “construction
PE” based on the construction workers’ levels,
responsibilities, or authorities.
5. When is an employee of an overseas company
who is working remotely in Japan required to pay
salary tax in Japan?
Generally speaking, an employee of an overseas
company who is working remotely in Japan could
be treated as a tax resident in Japan and subject
to Japanese individual income tax for his or her
worldwide income, regardless of the type and
source of such income, if he is domiciled in Japan
(which is normally determined by his or her resident
registration at the city hall).
Even if the employee is not treated as a tax resident
in Japan, he or she will still be subject to Japanese
individual income tax for the salary income paid for
his or her work in Japan. In such cases, the employee
is supposed to le a tax return to the Japanese tax
authorities and pay individual income tax in March
of the following year depending on his or her
employment status and the taxable income amount
of the previous year.
However, a large number of Japan’s DTTs include
an exemption for salary income earned by a non-
resident, which is commonly known as the 183-days
rule, which applies if all of the following conditions
are satised:
• the employee is present in Japan for a period of
or periods not exceeding in the aggregate of
183 days in any 12 month period commencing or
ending in the taxable year concerned;
• the remuneration is paid by, or on behalf of, an
employer who is not a resident of Japan; and
• the remuneration is not borne by a PE which the
employer has in Japan.
Please note, however, the requirements above may
vary depending on each DTT.
6. If the employee refuses to pay tax to the
return (if required), will the liability be extended
to employer?
Under Japanese tax law, the tax liability of an
employee would not be extended to its employer.
Salary receivables (i.e. unpaid salary) acquired by an
employee who refuses to pay tax may be subject
to seizure by the Japanese tax authorities, but this
does not mean that tax liability is extended to the
employer. Furthermore, it is rare for Japanese tax
authorities to seize overseas receivables.
Apart from the tax liability of an employee, if an
overseas company has, for example, a branch oce
in Japan, such branch oce is obliged to withhold tax
when salary payment is made to an employee who is
working remotely in Japan even though the payment is
made outside of Japan.
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New Zealand
Employment-Related considerations
1. Would an employee, whose normal place of
work and employer is in another jurisdiction,
who chooses to spend 1-90 days in a 12-month
rolling period working remotely in New Zealand
be likely to acquire local employment rights
during their stay?
We would not expect an employee to acquire
New Zealand (“NZ”) employment law rights during
a limited stay of between 1 and 90 days in NZ in
any 12-month rolling period. However, if the stay is
longer or loses its temporary nature, it can become
increasingly likely that an employee can successfully
argue that NZ employment law attaches to their
employment. It will be fact specic in each case.
To minimise (but not eliminate) this risk,
we recommend that the employment agreement
(or any variation) stipulates what law applies,
the location of work being overseas, and the
temporary nature of any NZ based work.
2. At what point during the stay are any local
employment law rights likely to accrue?
The longer the stay and the more regular any repeat
annual stays in NZ are, the more likely that an
employee will successfully argue that he or she has
acquired NZ employment law rights.
Any potential liability may extend back to the date
on which the employee began working in NZ in
the event the employee successfully argues that
NZ employment law rights apply to his or her
employment. Such rights will not necessarily take
eect from a particular date.
3. Which key non-termination rights will apply?
The below rights have been identied for
completeness in the event that the employee
acquires NZ employment law rights (though it is not
an exhaustive list):
• Minimum Wage
• Wages Protection
• Statutory leave (e.g. annual leave, sick leave,
bereavement leave and domestic violence
leave etc.)
• Public holidays
• Parental leave benets
• Unlawful discrimination
• Rest and meal breaks
• Whistleblowing protection
• Health and Safety
• Privacy
Note that some of the above rights will be subject to
certain qualifying criteria or conditions.
4. How onerous is it for an employer to comply
with these non-termination rights?
Medium
5. What are the key termination rights
that will apply and what are the potential
termination remedies?
Protection against unjustied dismissal.
Dismissal must be for cause (e.g. poor performance,
redundancy, misconduct, medical incapacity etc.) and
a fair process must also be followed.
Potential remedies include:
• Lost remuneration for the length of time that
the employee is out of work (the employee must
attempt to mitigate his or her loss);
• Hurt and humiliation compensation which is
tax-free and can reach NZD30,000 –
NZD40,000 depending on the nature of the
employer’s conduct;
• Costs which are set at a daily tari for hearing time
of NZD4,500 for the rst day and NZD3,500 each
day after in the Employment Relations Authority
(i.e. the rst body to determine these cases);
• Lost benets (i.e. any benets that the employee
would have otherwise been entitled to receive
e.g. redundancy compensation etc.) may be
awarded; and
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• Penalties of between NZD2,000 – NZD20,000
may be awarded which are usually payable to
the Crown.
6. How onerous/expensive is it for an employer
to terminate lawfully?
Medium/High
7. Overall risk for employer?
Medium
8. Is the type of work and/or seniority of the
employee relevant to the analysis and if so how?
No.
1. What is the duration (e.g. 6 months or
otherwise) relevant for determining the existence
of PE in NZ when an employee from an overseas
company is working remotely in NZ?
PE is widely dened under NZ legislation and
means any “xed place of business” through which
the business of a non-NZ resident is wholly or
partly carried on, and this includes a place of
management, a branch or an oce (which can
include a home oce).
A PE can arise where there is an employee (or
dependent contractor) in NZ for an aggregate
period exceeding 183 days or more in any 12-month
period, or a person (other than an independent
agent) who has, and habitually exercises, authority
to substantially negotiate or conclude contracts
in NZ on behalf of a non-NZ resident company.
Generally, the COVID-19 pandemic should not cause
non-NZ resident companies to have a PE in NZ simply
because their employees are conned or stranded in
NZ if the above is not met.
For completeness, NZ recently introduced a PE
anti-avoidance rule. Under such rule, a PE can
arise where an independent NZ person (such as an
independent corporate contractor or independent
individual) carries out sales-related activities in
NZ and that person is “commercially dependent”
on a non-NZ resident company, and certain other
requirements are satised. A NZ person will be
regarded as “commercially dependent” on a non-NZ
resident company if 80% or more of its assessable
income relates to the sale of such non-NZ resident
company’s products.
a double taxation treaty between NZ and the
jurisdiction of the overseas company?
Yes. Where a DTA signed with NZ is applicable and
contains its own denition of “PE”, then PE will have
the meaning given by such DTA.
3. During this pandemic, are there exceptions
relating to PE?
For a PE to be present, the business must be carried
out on a regular basis, and it must be undertaken
wholly or partly through a “xed place of business”.
Whether there is a PE is determined by having
regard to the facts and circumstances of each case,
which include the COVID-19 pandemic. It would
be a relevant consideration that the non-resident
company did not have a PE in NZ prior to COVID-19
and the presence of employees in NZ is short-term
because of current travel restrictions.
Please note that NZ’s Inland Revenue is expected
to review the abovementioned position on or after
30 June 2022.
without or without authority to sign or otherwise
act on behalf of the overseas company in NZ?
Under NZ law, and where there is no applicable
DTA, a PE may exist if there is a person who has,
and habitually exercises, authority to substantially
negotiate or conclude contracts in NZ on behalf
of the non-NZ resident. There is an exception if
the person is an independent agent acting in the
ordinary course of the agent’s business and is
not closely related to the non-resident (tested on
the basis of common benecial ownership of at
least 50%).
Tax-Related considerations
GUIDE TO REMOTE WORKING IN APAC
On the other hand, under some DTAs, a PE may
exist where a person in NZ is acting on behalf of
a non-NZ resident (e.g. an agent) and, in doing
so, habitually exercises, authority to substantially
negotiate or conclude contracts on behalf of such
non-NZ resident.
5. When is an employee of an overseas company
who is working remotely in NZ required to pay
salary tax in NZ?
An employee will have an obligation to account for
and pay their own tax if his or her employer has no
obligation to (i.e. because the employer does not
have sucient presence in NZ – see Question 6),
or does not for any reason, deduct pay-as-you-earn
(“PAYE”), such as salary tax.
Generally, this is an obligation of the employee
(unless the non-resident employer has sucient
presence in NZ), to deduct and return PAYE, such as
salary tax, where an employee performs services for
a non-NZ resident (e.g. overseas company) and is
present in NZ for 93 days or more in any 12-month
period. This obligation can arise from the rst day of
which the employee is in NZ.
6. If the employee refuses to pay tax to the
return (if required), will the liability be extended
to employer?
If an overseas company is a non-resident employer,
it has an obligation to withhold PAYE from a PAYE
income payment made to an employee if:
• it has made itself subject to NZ tax law by having a
sucient presence in NZ; and
• the services performed by the employee are
properly attributable to its presence in NZ.
The nature and extent of the required presence
may vary depending on the facts in each case.
For example, a sucient presence could range from
a non-NZ resident employer having a permanent
oce or site in NZ where trading operations are
performed, or a non-NZ resident employer having
a single employee in NZ working from home
and performing contracts in NZ on its behalf
utilising labour and resources in NZ to perform
such contracts.
It is considered that merely having employees in
NZ would not, of itself, constitute a presence that is
sucient to subject the non-NZ resident employer to
NZ’s jurisdiction.
For completeness, a non-NZ resident employer can
also register voluntarily to be a NZ employer and
therefore, make the deductions and payments for
their employees in NZ. PAYE is generally required to
be deducted at source from the employees’ salary
and paid to the Inland Revenue via the PAYE system.
7. Further Remarks/Comments
For completeness, if the overseas company is a
non-NZ resident and is providing services to NZ
customers and on a cumulative basis has employees
in NZ for 93 days or more in a 12-month period,
then the NZ customers can be under an obligation
to deduct withholding tax, referred to as
non-resident contractors tax, from payments made
to the overseas company.
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1. Would an employee, whose normal place of
work and employer is in another jurisdiction,
who chooses to spend 1-90 days in a 12-month
rolling period working remotely in Singapore be
likely to acquire local employment rights during
their stay?
Generally speaking, it is unlikely for an employee to
acquire Singapore employment law rights.
However, if the stay becomes a regular annual stay,
it may become increasingly likely that an employee
can successfully argue that Singapore employment
law attaches to his or her employment. It will be fact
specic in each case and will depend on whether the
Employment Claims Tribunal considers there to be a
suciently strong connection with Singapore.
2. At what point during the stay are any local
employment law rights likely to accrue?
The longer the stay and the more regular any repeat
annual stays in Singapore are, the more likely that
an employee will successfully argue that he or she
has acquired Singapore employment law rights.
Such rights will not necessarily take eect from a
particular date.
Most of the key Singapore statutory employment
entitlements accrue after 3 months’ service and this
is often used as a benchmark (although there are
some entitlements that accrue from day 1).
3. Which key non-termination rights will apply?
The below rights have been identied for
completeness in the event that the employee
acquires Singapore employment law rights (though it
is not an exhaustive list).
For employees covered by the Employment Act (“EA”)
(i.e. all employees except seafarers, domestic
workers, statutory board employees or civil servants):
• Paid annual leave
• Paid public holidays
• Sick leave
• Paid maternity leave
• Paid paternity leave
• Shared parental leave
• Paid childcare leave
• Paid adoption leave
• Paid extended childcare leave
• Unpaid infant care leave
• Retirement and re-employment rights
• Right to be provided Key Employment Terms
• Health and safety
• Work injury compensation
For employees covered by Part IV of the EA*:
• Maximum working hours
• Overtime
• Rest days
• Break times
• Accrual and forfeiture of annual leave
• Consideration for retrenchment payment (though
no xed amount)
There are also various sets of non-binding
guidelines and advisories issued by the tripartite
partners (Ministry of Manpower, National Trade
Unions Congress and Singapore National
Employers Federation) where employers are
encouraged to follow in a number of areas including
(e.g. retrenchment, discrimination, workplace
harassment, mental health, COVID-19 etc.).
While these are not legally binding per se, there
can be administrative penalties for failure to comply
including curtailment of future work pass privileges
and being placed on a discrimination “watchlist”.
*Employees are covered by Part IV of the EA if they are:
(i) workmen (doing manual labour) earning a basic
monthly salary of not more than SGD4,500;
or (ii) non-workmen earning a basic monthly salary of
not more than SGD2,600 – but in each case who are
not managers or executives.
Singapore
Employment-Related considerations
GUIDE TO REMOTE WORKING IN APAC
4. How onerous is it for an employer to comply
with these non-termination rights?
Medium
5. What are the key termination rights that
will apply and what are the potential
termination remedies?
Protection against wrongful dismissal (managers
or executives need 6 months’ continuous service to
bring a claim).
The normal remedy is compensation, subject to a
cap of SGD20,000 where there is no trade union
assistance, or SGD30,000 where there is trade union
assistance. Another remedy is reinstatement with
backpay which is rarely granted in practice.
Failure to pay or provide statutory employment
entitlements can also be a criminal oence, and there
can be personal liability for directors and ocers in
certain circumstances.
6. How onerous/expensive is it for an employer
to terminate lawfully?
Low
7. Overall risk for employer?
Low
8. Is the type of work and/or seniority of the
employee relevant to the analysis and if so how?
No.
1. What is the duration (e.g. 6 months or
otherwise) relevant for determining the existence
of Permanent Establishment in Singapore when
an employee from an overseas company is
working remotely in Singapore?
Generally, Singapore considers that where a business
renders services through the presence of employees,
the presence of the employees for such purpose
should constitute a PE if their period of stay in
Singapore is relatively long.
The Income Tax Act 1947 denes a PE as a xed
place where a business is wholly or partly carried
on (for example, a place of management, a branch,
an oce, a factory, a warehouse etc.).
A PE may also be construed if the business:
• carries on supervisory activities in connection with
a building, worksite, a construction, installation or
assembly project; or
• has another person acting on behalf of the
business in Singapore who:
i. has and habitually exercises an authority to
conclude contracts;
ii. maintains a stock of goods or merchandise
for the purpose of delivery on behalf of that
person; or
iii. habitually secures orders wholly or almost wholly
for that person or for such other enterprises as
are controlled by that person.
double taxation treaty between Singapore and
the jurisdiction of the overseas company?
Yes, DTAs between Singapore and certain foreign
jurisdictions provide safe harbour rules where they
clearly set out that the presence of the employees
of an overseas company will constitute a PE in
Singapore only if their employees’ stay in Singapore
exceeds a certain period of time. The period can
range from 90 to 183 days within a basis period or
any 12-month period.
3. During this pandemic, are there exceptions
relating to PE?
The Inland Revenue Authority of Singapore (“IRAS”)
had once provided some concessions relating
to COVID-19 and PE, but such concessions only
applied until 31 March 2022 and have not been
extended further.
Tax-Related considerations
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types, without or without authority to sign or
otherwise act on behalf of the overseas company
in Singapore ?
Generally, services rendered through the presence
of any employees (i.e. regardless of their rank,
level of responsibilities, job types) of an overseas
company in Singapore may create a PE for that
company in Singapore if their presence constitutes a
xed place of business.
The levels of responsibilities (amongst other factors)
would be relevant to the determination of the prots
attributable to the Singapore PE, if any.
5. When is an employee of an overseas company
who is working remotely in Singapore required to
pay salary tax in Singapore?
All individuals deriving Singapore-sourced income
(including employment income) are required to
le their personal income tax returns by 15 April
(if paper-led) or 18 April (if e-led) each year.
Once their tax returns have been processed by
the IRAS, tax bills will be issued to them. The taxes
assessed as indicated in the tax bills are required to
be settled within one month from the tax bills.
However, non-resident employees who are on
short-term employment in Singapore (i.e. the total
period of the Singapore employment is not more
than 60 days in a calendar year) are not required to
le and pay Singapore taxes on their employment
income derived during such period as such
employment income is tax exempt in Singapore.
Where non-resident employees do not qualify for
tax exemptions, they may qualify for tax treaty relief
if the prescribed conditions as stated in the DTA are
met (e.g. they are present in Singapore for not more
than 183 days in any consecutive 12-month period).
To claim the DTA exemption, they will have to
complete and submit the Claim Form for DTA
Exemption and Certicate of Residence issued by tax
authorities of their country of residence to the IRAS.
Once the IRAS has approved their application for DTA
exemption, their Singapore employment income will
be tax exempt in Singapore.
6. If the employee refuses to pay tax to the
return (if required), will the liability be extended
to employer?
This applies if the employee does not fall within the
COVID-19 exemptions and has to pay Singapore tax.
Filing personal tax returns and paying personal taxes
to the IRAS are obligations of the employee.
• The employer has a presence in Singapore
Such obligation will not be extended to the employer
except for cases that are under tax clearance (see
paragraph under “Tax clearance process” below).
However, the employer is required to prepare the
Form IR8A (i.e. Return of Employee’s Remuneration)
which contains information on the income received
by the employee. Such Form IR8A should be given
to the employee by 1 March each year so that the
employee can le their tax returns with the IRAS.
Tax clearance process
Generally, when a non-Singapore Citizen employee
(i.e. foreigner or Singapore Permanent Resident
employee) ceases employment in Singapore,
goes on an overseas posting or plans to leave
Singapore for more than three months, the employer
is required to seek tax clearance for the employee
by ling the Form IR 21 (Notication of a
Non-Citizen Employee’s Cessation Of Employment Or
Departure From Singapore) at least 1 month before
the date of cessation of employment or departure
from Singapore.
In addition, the employer is also required to withhold
all monies due to the non-Singapore Citizen
employee (such as salaries, bonus, allowances and
other cash remuneration), pending obtaining tax
clearance with the IRAS.
After the IRAS has processed Form IR21, the
employer will receive a Directive to Pay from the
IRAS. The employer is required to remit the amount
payable as stated in the directive to the IRAS. If the
monies withheld from the employee are insucient,
the employee will need to pay the amount of shortfall
to the IRAS. If the monies withheld are more than the
amount stated in the directive, the employer is then
authorised to release the balance to the employee.
GUIDE TO REMOTE WORKING IN APAC
If the employer fails to (i) le Form IR21 by the ling
deadline and (ii) withhold all monies due to the
employee, the IRAS may hold the employer liable for
the tax that is owed by the employee.
• The employer does not have a presence
inSingapore
The employee should ask the employer for the
statement of income and disclose such income
in their Singapore tax return and pay tax on such
income. For employees who are Singapore citizens,
their tax liabilities will not be extended to their
employer who does not have presence in Singapore.
However, these employees are required to le their
Singapore income tax return and disclose their
remuneration for the relevant period.
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1. Would an employee, whose normal place of
work and employer is in another jurisdiction,
who chooses to spend 1-90 days in a 12-month
rolling period working remotely in Thailand be
likely to acquire local employment rights during
their stay?
An employee is unlikely to acquire employment rights
under Thai law due to his or her temporary stay in
Thailand irrespective of duration of stay.
Whilst the factual circumstances of each case could
be dierent, to mitigate the risk, it is recommended
to clearly agree and document that the employee,
although working remotely from Thailand,
would still be entitled to receive remuneration and
employment-related entitlements from his or her
home country employer. It is also recommended
to make clear to the employees that all of their
employment terms and conditions as stipulated in
the employment contract governed by the laws of the
home country will remain unchanged and continue
to apply during their stay in Thailand.
However, if the employee is required to obtain a
work permit (e.g. there is an employment transfer
from the home country employer to Thailand or
the employee is to obtain a work visa due to the
intended period of stay in Thailand), Thai labour
law would automatically apply. This is because to
apply for a work permit, such employee would
have to be employed by an employer in Thailand.
Hence, the employee would be acquiring local labour
rights under Thai law in this scenario.
2. At what point during the stay are any local
employment law rights likely to accrue?
Whilst a temporary stay in Thailand is unlikely to
result in an employee obtaining mandatory labour
rights under Thai law, if the duration of stay gets
longer, then the said employee might later rely
on such longer stay (among other circumstances)
in proving him or her obtaining employment
status in Thailand. For example, if the employee is
consequently employed by an employer in Thailand,
the employee may claim that they started working
with the employer since the commencement of
his or her stay in Thailand. Such ground could
be made because Thai law does not require an
employment agreement to be made in writing
to establish an employer-employee relationship.
A verbal agreement is binding between the parties.
Therefore, if the employee could prove that he or
she was actually employed by or working for the Thai
employer since his or her stay in Thailand, he or she
may be entitled to employee’s rights under Thai law
since day one.
Whether the Thai Court will eventually view an
employee as being entitled to Thai labour rights
would depend on individual circumstances and be
decided on a case by case basis.
Therefore, documentation relating to the remote
working scheme, including but not limited to the
relevant remuneration and entitlements, should be
put in place prior to the commencement of remote
working in Thailand. Explicit documents would be
useful when there is a claim or dispute before any
regulatory or judicial body in Thailand.
3. Which key non-termination rights will apply?
For completeness, below are examples of the general
labour-related rights under Thai laws (though it is not
an exhaustive list):
• Minimum Wage (dierent rates would apply in
case of the employee being a non-Thai national)
• Working day and hours
• Rest breaks
• Overtime work and pay
• Holiday
• Leave entitlements (both paid and unpaid)
• Grievances
• Compensation for temporary business closure
Note that some of the above rights will be subject to
certain qualifying criteria or conditions.
Thailand
Employment-Related considerations
GUIDE TO REMOTE WORKING IN APAC
4. How onerous is it for an employer to comply
with these non-termination rights?
Medium
5. What are the key termination rights
that will apply and what are the potential
termination remedies?
Key termination rights are as follows:
• Termination notice/Payment in lieu of
advance notice
• Payment of (accrued) unused annual leave
• Severance pay
• Repatriation expense
• Unfair dismissal compensation
Severance pay is calculated based on the entire
period of employment of the terminated employee.
The rate is specied under Thai labour law, starting
from an amount equivalent to 30 days of wages if
being employed from 120 days but less than 1 year.
Unfair dismissal compensation is not codied under
Thai labour law but it has been derived from the
court’s practice under which this compensation will
be granted if the termination is viewed as unfair.
The severance pay and unfair dismissal
compensation are not legally required if the
employee resigns.
6. How onerous/expensive is it for an employer
to terminate lawfully?
Medium
Proper process and calculation must be carried out
to avoid risk of default interests/surcharges due to
non-payment or late payment (including a criminal
penalty) under Thai labour law.
Usual rights applicable to a direct employee would
also apply to the employee in this remote working
scenario.
7. Overall risk for employer?
Low
8. Is the type of work and/or seniority of the
employee relevant to the analysis and if so how?
No.
1. What is the duration (e.g. 6 months or
otherwise) relevant for determining the
existence of PE in Thailand when an employee
from an overseas company is working remotely
in Thailand?
For an overseas company which is not a tax resident
of a jurisdiction having a DTT with Thailand, the Thai
Revenue Code will apply to determine whether it has
a PE in Thailand.
Thai Revenue Code does not dene the criteria or
duration that would constitute a PE if an overseas
company has employee works remotely in
Thailand and there is no clear guideline on this.
It therefore depends on the facts and circumstances
of each case.
Please note that however, “place of business” for
the purpose of VAT obligations is a place where a
business person regularly carries on its business,
including places where manufacturing and storage
of goods regularly take place. A place of residence
of such person could be regarded as place of
business in case where the usual business place or
manufacture and storage place does not exist.
double taxation treaty between Thailand and the
jurisdiction of the overseas company?
Yes – if there is a DTT between Thailand and another
jurisdiction that could apply, the determination of PE
would be as specied in the relevant DTT.
Tax-Related considerations
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The DTT would also carve out certain scenarios that
would not be regarded as PE.
3. During this pandemic, are there exceptions
relating to PE?
No.
types, without or without authority to sign or
otherwise act on behalf of the overseas company
in Thailand?
No.
5. When is an employee of an overseas company
who is working remotely in Thailand required to
pay salary tax in Thailand?
In general, if an employee is considered as resident
of Thailand (i.e. having at least 180 days of staying
period in Thailand) and obtained an assessable
income (e.g. salary/compensation/other amount
received from employment), the employee would be
subject to tax payment under Thai tax law.
6. If the employee refuses to pay tax to the
return (if required), will the liability be extended
to employer?
If the employee is required to pay tax under Thai tax
law, the Thai employer as the paying party would
be required to withhold tax from the payment
made to the employee and submitted the deducted
amount to Thai Revenue Department. However,
this requirement is not applicable to employers that
are situated overseas.
The withholding obligations are required to be made
on a monthly basis. Non-compliance could lead to
penalties and/or surcharges under Thai tax law.
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