One-man-show 'directors' say they're losing out in wage support for self-employed

Singapore

THE government announced this week its largest-ever cash support scheme for self-employed persons hit by the Covid-19 pandemic, but it may not help those who have fallen through the cracks. One such group comprises freelancers who have set up private limited companies, but are running these firms alone.

Many of these solo entrepreneurs hail from the creative arts and have incorporated companies to reduce liability when taking on gigs. As they are officially recognised as "company directors", they do not automatically qualify for the Self-Employed Person Income Relief Scheme (SIRS), which will dole out S$9,000 over the next seven months to eligible freelancers.

"We as creative entrepreneurs are very curious to find out why there isn't support laid out for us. Why aren't solo artists who own a private limited company not considered self-employed," asked photographer Ejun Low, who runs portrait photography studio Ejun Low Portraits.

The 38-year-old, who works primarily with other freelancers, incorporated his company in 2014. Following the supplementary budget on Monday, he posted about his plight on a Facebook group for creative freelancers.

At the time of writing, his post has drawn 250 comments from netizens sharing similar sentiments.

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Deputy Prime Minister Heng Swee Keat said on Monday, in his third Budget statement in less than two months, that the eligibility criteria for SIRS will be widened to include self-employed persons who earn a small income - up to S$2,300 monthly - from employment work. However, these solo company directors typically earn more than that.

Several are concerned about being saddled with overheads, such as rental fees, despite being out of jobs for at least the next month.

Samantha Lun, who runs gyrotonic studio IDO, said: "I already started feeling the heat in February when classes went down in numbers. I now teach only one or two online classes, but will still incur a lot of fixed expenses, so I'm a bit disappointed that I will not qualify for cash support."

The 25-year-old former dancer used to teach with other studios, but started her own last year. She decided to set up a company instead of a sole proprietorship to limit personal liability, lest the venture not work out.

Others, like guzheng instructor Sophy Tan, chose to start a one-woman company to boost her chances of being awarded projects.

Ms Tan, 29, who set up Multitone Music five years ago, said: "I think there are a lot of others in the same situation. We just want clarity on whether we can be considered employees to qualify for the Job Support Scheme, since we contribute to CPF (Central Provident Fund), or be eligible for the self-employed support."

(BT reached out to the authorities for clarifications, but they had yet to respond by the time of publication.)

Corporate lawyer Sandra Tsao said the move by individuals to set up private limited companies is "very much tax-driven". While sole proprietors have to fork out a personal income tax of up to 22 per cent, incorporated entities - such as private limited firms or limited liability companies - are subject to a lower corporate tax rate of up to 17 per cent.

Also, sole proprietors have unlimited liability - which means all personal assets will be at stake when something goes wrong - while a company's liability is limited to its assets.

"From a risk-averse standpoint, many freelancers will choose to set up companies. In Singapore, all you need is just a dollar in paid-up capital to do that," said Ms Tsao, a director at law firm Prolegis.