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 Keep Business Working Capital in USD?

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Ramjade
post Oct 24 2021, 03:54 PM

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QUOTE(iammyself @ Oct 24 2021, 11:39 AM)
Yes it's an online business. It's almost 100% virtual so I don't think BNPL can help. But I'll definitely still look into it.
*
This method might take few steps but will save you quite a lot of money going into the future.
1. Do not use PayPal what so ever.
2. Fly into singaootre and undergo their quarantine if necessary. Now Malaysia can fly outside. Use this opportunity.
3. After finishing your quarantine, take MRT or bus to Marina bay financial center.
4. Go to DBS HQ and tell them you want to open DBS Multiplier account/My account (yes the name is called My account) together with DBS Vickers. Very important for you to mentioned DBS Vickers. This is the criteria for you to open account is Malaysian. Dbs vickers is their stock broker account. You don't need to use it or fund it also can. But if you want their account, you need a DBS Vickers account. Be prepared to wait 3-4 hours there. I waited 3-4 hours there.

What is this DBS multiplier/My account?
It's a Multicurrency account that you can hold yes 10 types of currency including USD. You can use it to received, hold and send USD. Tried and tested myself.
Best of all you only pay USD10.00 for all incoming USD. Yup that's it.

Why DBS My account?
Dbs multiplier need to you to maintain SGD3000 at all time or else if it drop below SGD 3k, you will be charged I believed SGD5.00/month.
Now with DBS My account I only keep SGD0.10 inside as there no minimum amount (stated in their T&C). True story. Didn't believed it until I tested it.
More info here.
https://www.dbs.com.sg/personal/deposits/sa...unts/my-account

What happen if they refuse to let you open My account?
No issue. Just take whatever account they give you. But I thought you said to get My account. Yes. That's right. But most important is get account with DBS bank.
After 6 months, you can open a DBS My account online and close your DBS multiplier and transfer all your SGD/USD into your new My account. I waited for 7 months before doing that. They mentioned in their terms and condition I believed need to wait 6 months before closing account biggrin.gif

Remember to ask for their DBS Debit visa card. This card lets you spend like a local. Which means if you have USD in your bank account, it will automatically use the USD account first before they use the SGD part. No additional charged. Alternative use Bigpay.

5. Now that's all set up, fly back to Malaysia.

6. Quarantine again in Malaysia if needed.

7. Once at home, open interactive broker account here.
https://www.interactivebrokers.com/en/home.php. Make sure to fund it with at least SGD7.00. You can use the DBS account to fund the interactive broker via FAST transfer (SG version of Duitnow/IBFT).
https://betterspider.com/funding-your-accou...ractivebrokers/

So that means you need about SGD3007 in total.

Why interactive broker? It doesn't make any sense.
Interactive broker give you the best exchange rate anywhere on the planet for all currency. It's spot rates (real time market rates without any markup) and best of all you only need to pay USD2.00/conversion up to USD 1,000,000. More than that you pay lesser.
https://www.interactivebrokers.com/en/index.php?f=1590&p=fx
My friend told me it's USD100,000 but interactive broker webpage mentioned USD1,000,000. Not sure who's right. Anyway don't have that kind of money. The rates you are getting will be way better that any money changer rate.

It will make sense down the road. Continue reading on.

Keep in mind interactive broker allow you one free withdrawal of currency in whatever currency you want to withdraw a month. More that that you pay.
https://www.interactivebrokers.com/en/index...8#cash-movement

8. Open CIMB sg account.
Full details here
https://ringgitfreedom.com/banking/opening-...for-malaysians/

For verification part to activate your CIMB Fastsaver you need to transfer SGD1k. So that means you need SGD4007 in total not SGD3007 as mentioned aboved.

There's two way to pass their eKyc
1. Use your new DBS account and send SGD1000 over via FAST (the original way I used and the way it's intended)
2. Use CIMB MY (yes you need CIMB MY account) and send SGD1.00 into your CIMB SG account.
Once you have SGD1.00 send use fintech like bigpay, TransferWise and Sunway money to transfer the remaining SGD999.00

Once account activated they will tell you via email and send over a bunch of codes for login via snail mail. Be patient. Wait like 2 weeks to 1 month.

Now that you have all uo and running, let's get to the fun part. How to get paid in USD and change it to Malasysin currency without losing like 4% eacv transaction and without losing additional money for intermediate bank agent transfer.

Paid in USD -> DBS Multiplier/My account (only pay USD10.00. That's all) -> Now that you have USD in your DBS bank account -> initiate a USD transfer into Interactive broker via DBS remit for free. Make sure to notify interactive broker of incoming USD with the bank account number that match your DBS Bank account without dash every time you want to send USD into interactive broker. Make sure under DBS Account select send USD and receiving side USD. Money takes few hours to enter Interactive broker account. -> once money enter into Interactive broker, convert into SGD using interactive broker. Do not use any banks. -> Initiate a withdrawal to CIMB Sg -> Use CIMB SG to send money back to CIMB MY at money changer rate.

Welcome. You have just successful dodge 4% PayPal fees and save some money.

So back to your original questions.

QUOTE
Currently, the cash flows from Revenue (USD) -> Local Bank Account (MYR) -> Expense (USD)

I'm losing like 5% from currency conversion and credit card transaction fees.

Paid in USD -> Deposit into DBS Multiplier/My account -> Hold USD at no interest -> 1) Expense (USD) 2) transfer back to Malaysia as shown above.

If you want to hack your USD to get some interest, I recommend researching pseudo bond stocks in US. Here are a few. Google, Amazon, apple, Microsoft and Canadian railway. By diverting USD into those stocks, you get paid to wait until you need to use the USD. Keep in mind this is not guaranteed. Hence you can lose your money.

Use the dbs visa debit card provided to fund your expenses. Remember to pay your tax to Malaysian govt if you don't want any problem

You are welcome.

This post has been edited by Ramjade: Oct 24 2021, 04:09 PM
MUM
post Oct 24 2021, 04:17 PM

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QUOTE(Ramjade @ Oct 24 2021, 03:54 PM)
This method might take few steps but will save you quite a lot of money going into the future.
............
..........
*
πŸ‘πŸ‘That is a very detailed instructions...
Did just saved those in a file in Yr pc?
Just hope you did, for next time if anyone seek similar solution, can refer to you. Then you can copy n paste it
πŸ‘πŸ‘
SUSyklooi
post Oct 24 2021, 04:34 PM

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Wondering, if the above steps can be applicable to business a/c, to receive n pay out as business related transactions details
πŸ€”πŸ€”
contagiouseddie
post Oct 24 2021, 05:00 PM

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QUOTE(iammyself @ Oct 23 2021, 06:45 PM)
In my small business, most of my revenue and expenses happen in USD.

Currently, the cash flows from Revenue (USD) -> Local Bank Account (MYR) -> Expense (USD)

I'm losing like 5% from currency conversion and credit card transaction fees.

So I'm thinking to hold the revenue in USD and use that as working capital:-

Revenue (USD) -> X (USD) -> Expenses (USD)

PayPal won't work I think, because not everyone accepts it and the fees are quite steep.

Anyone has any experience in this area?
*
I'm in the same boat as you, it has been 10 years now.
Everything is similar to your scenario except sometimes when an incoming transaction involved some purchase of raw material in USD through PayPal, I would use a portion of that USD before withdrawing into MYR.
I keep this transaction in record and do a daily currency conversion so it can be tracked in a single MYR expenses record.
There are also other USD revenue through credit card that automatically converted and push into the MYR account in by payment service provider, that is something we can't control.
I'm not sure whether having 2 bank accounts with one MYR and another USD would be the best.
But there are other issue then like paying yourself every month in MYR when all the income is in USD. Sooner or later, the MYR account would go empty if not refilled.
Ramjade
post Oct 24 2021, 05:11 PM

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QUOTE(yklooi @ Oct 24 2021, 04:34 PM)
Wondering, if the above steps can be applicable to business a/c, to receive n pay out as business related transactions details
πŸ€”πŸ€”
*
Lots of people in Singapore are getting paid in USD hence I think it's legal.
SUSyklooi
post Oct 24 2021, 06:35 PM

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QUOTE(Ramjade @ Oct 24 2021, 05:11 PM)
Lots of people in Singapore are getting paid in USD hence I think it's legal.
*
Using Malaysia resources do work, sell to overseas and hv customers pay to overseas account.... Malaysia no pay business tax as business can did not record the business sales n no record of incoming revenue...
with increase purchases, lesser profits for current business, pay less malaysia taxes
πŸ€”πŸ€”
TSiammyself
post Oct 24 2021, 06:42 PM

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QUOTE(Ramjade @ Oct 24 2021, 03:54 PM)

Paid in USD -> DBS Multiplier/My account (only pay USD10.00. That's all) -> Now that you have USD in your DBS bank account -> initiate a USD transfer into Interactive broker via DBS remit for free. Make sure to notify interactive broker of incoming USD with the bank account number that match your DBS Bank account without dash every time you want to send USD into interactive broker. Make sure under DBS Account select send USD and receiving side USD. Money takes few hours to enter Interactive broker account. -> once money enter into Interactive broker, convert into SGD using interactive broker. Do not use any banks. -> Initiate a withdrawal to CIMB Sg -> Use CIMB SG to send money back to CIMB MY at money changer rate.


*
I really appreciate that you've taken time out of your Sunday leisure time to share with us your knowledge.

The trick of using Interactive Broker to convert currency is really neat.

I have some questions though:-

1. For CIMB SG -> CIMB MY (SGD->MYR), wouldn't the rate be horrible?

2. The DBS account sounds like it's equivalent to the local multi-currency account?
TSiammyself
post Oct 24 2021, 06:57 PM

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QUOTE(yklooi @ Oct 24 2021, 06:35 PM)
Using Malaysia resources do work, sell to overseas and hv customers pay to overseas account.... Malaysia no pay business tax as business can did not record the business sales n no record of incoming revenue...
with increase purchases, lesser profits for current business, pay less malaysia taxes
πŸ€”πŸ€”
*
Tax evasion is illegal. But holding capital in foreign currency is 100% legal. Personally, I pay my taxes according to the law.

Tax is definitely one of my concerns here... that is why I probably won't route the cash through a broker like Interactive Broker.
Because too many steps and maybe even a little fishy in the eye of the law authorities (maybe)?
I try to keep the paper trail simple and straightforward. That also means that bookkeeping and record keeping are easier for me.

SUSyklooi
post Oct 24 2021, 07:16 PM

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QUOTE(iammyself @ Oct 24 2021, 06:57 PM)
Tax evasion is illegal. But holding capital in foreign currency is 100% legal......
..... .
*
If the business transactions can be directly input into overseas a/c.... That 100% reported can be actually 500% 😜 with the other 400% being not recorded in malaysia business accounting transaction.
Overseas govt will tell lhdn that company A has oversea a/c, tally with what company A tells lhdn too.
This is Just thinking n wondering... Maybe just a naive thought only
Ramjade
post Oct 24 2021, 07:51 PM

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QUOTE(iammyself @ Oct 24 2021, 06:42 PM)
I really appreciate that you've taken time out of your Sunday leisure time to share with us your knowledge.

The trick of using Interactive Broker to convert currency is really neat.

I have some questions though:-

1. For CIMB SG -> CIMB MY (SGD->MYR), wouldn't the rate be horrible?

2. The DBS account sounds like it's equivalent to the local multi-currency account?
*
1. Cimb sg is having good rates. It's sort of a never ending promo. It's not a feature. The only time I will actually reocemd using a bank to bring money back. Although I will never recommend Cimb MY -> SG. Cimb SG rates are sometimes money changer rate. And when I recoend things I stand behind what I say as I have used them before. I only recommend something that works for me and only if I like them .

2. Wrong. DBS account is way advance and better than our local bank Multicurrency account because
1) no incoming fees except USD10.00
2) Same day arrival for remittance in USD
3) no need to keep say USD1000. As mentioned I only keep SGD0.10 inside only
4) You get access to DBS Visa debit card where they automatically deudct your USD if you spend in USD without touching your other currency.

QUOTE(iammyself @ Oct 24 2021, 06:57 PM)
Tax evasion is illegal. But holding capital in foreign currency is 100% legal. Personally, I pay my taxes according to the law.

Tax is definitely one of my concerns here... that is why I probably won't route the cash through a broker like Interactive Broker.
Because too many steps and maybe even a little fishy in the eye of the law authorities (maybe)?
I try to keep the paper trail simple and straightforward. That also means that bookkeeping and record keeping are easier for me.
*
Don't worry. Lhdn will and already know how much you have in Interactive broker and your bank account. Cause Malaysia govt have sign up for CRS. So it's perfectly fine to use Interactive Broker to do your coversion. Highly recommend instaed of using banks. Unless you like to give banks free money then just totally ignore what I wrote above.

This post has been edited by Ramjade: Oct 24 2021, 07:52 PM
TSiammyself
post Oct 24 2021, 07:51 PM

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QUOTE(yklooi @ Oct 24 2021, 07:16 PM)
If the business transactions can be directly input into overseas a/c.... That 100% reported can be actually 500% 😜 with the other 400% being not recorded in malaysia business accounting transaction.
Overseas govt will tell lhdn that company A has oversea a/c, tally with what company A tells lhdn too.
This is Just thinking n wondering... Maybe just a naive thought only
*
Oh, well you're not naive. I'm sure there are people who under report (or not report) their foreign income / revenue.


TSiammyself
post Oct 24 2021, 07:58 PM

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QUOTE(Ramjade @ Oct 24 2021, 07:51 PM)
1. Cimb sg is having good rates. It's sort of a never ending promo. It's not a feature. The only time I will actually reocemd using a bank to bring money back. Although I will never recommend Cimb MY -> SG. Cimb SG rates are sometimes money changer rate. And when I recoend things I stand behind what I say as I have used them before. I only recommend something that works for me and only if I like them .

2. Wrong. DBS account is way advance and better than our local bank Multicurrency account because
1) no incoming fees except USD10.00
2) Same day arrival for remittance in USD
3) no need to keep say USD1000. As mentioned I only keep SGD0.10 inside only
4) You get access to DBS Visa debit card where they automatically deudct your USD if you spend in USD without touching your other currency.
Don't worry. Lhdn will and already know how much you have in Interactive broker and your bank account. Cause Malaysia govt have sign up for CRS. So it's perfectly fine to use Interactive Broker to do your coversion. Highly recommend instaed of using banks. Unless you like to give banks free money then just totally ignore what I wrote above.
*
Thanks for answering my questions. Notes were taken.
dwRK
post Oct 24 2021, 09:26 PM

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QUOTE(yklooi @ Oct 24 2021, 07:16 PM)
If the business transactions can be directly input into overseas a/c.... That 100% reported can be actually 500% 😜 with the other 400% being not recorded in malaysia business accounting transaction.
Overseas govt will tell lhdn that company A has oversea a/c, tally with what company A tells lhdn too.
This is Just thinking n wondering... Maybe just a naive thought only
*
for now foreign sourced income is tax exempted... but this will change soon
TSiammyself
post Oct 24 2021, 09:58 PM

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QUOTE(dwRK @ Oct 24 2021, 09:26 PM)
for now foreign sourced income is tax exempted... but this will change soon
*
Yes you don't have to pay taxes on foreign sourced income.

But like my case, even though I get paid by foreign clients, it is NOT considered foreign-sourced income.
I still have to pay taxes in Malaysia. This is because I live and operate the business in Malaysia.
"Foreign-source" or not is defined by LHDN.

This also applies to local freelancers who work with clients from different countries.
The money they make are not considered foreign-source. As such they need to pay income tax in Malaysia.

*Edited for clarity.

This post has been edited by iammyself: Oct 24 2021, 10:32 PM
SUSyklooi
post Oct 24 2021, 10:02 PM

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QUOTE(dwRK @ Oct 24 2021, 09:26 PM)
for now foreign sourced income is tax exempted... but this will change soon
*
You mean now,
Assuming simple arithmaric without input on other deductions or p/l calculation.
If my sales is 100k local, 300k foreign income, my taxable income is only on that 100k
no need to pay tax on that 300k.??


πŸ€”If I Don, t declare that 300k on my accounting record, my expenses due to need to make that 300k sales will be high,... Thus my company will make losses too.. So that 100k may not be taxable too?? πŸ€”πŸ€”

SUSxander83
post Oct 24 2021, 10:06 PM

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QUOTE(Ramjade @ Oct 24 2021, 05:11 PM)
Lots of people in Singapore are getting paid in USD hence I think it's legal.
*
Especially most expats are paid this way as package tied to their employment contract

Some employers even go through the length of even opening a bank account for their employees for these purpose because they still have to paid their taxes via country of birth
dwRK
post Oct 24 2021, 10:32 PM

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QUOTE(iammyself @ Oct 24 2021, 09:58 PM)
Yes you don't have to pay taxes on foreign sourced income.

But like my case, even though I get paid by foreign clients, I have to pay taxes in Malaysia.
This is because I live and operate the business in Malaysia.
This also applies to local freelancers who work with clients from different countries.
*
Yes because you are tax resident Malaysia... but also depends on the foreign work/income if withholding tax has been paid. you probably knows best your situation...

QUOTE(yklooi @ Oct 24 2021, 10:02 PM)
You mean now,
Assuming simple arithmaric without input on other deductions or p/l calculation.
If my sales is 100k local, 300k foreign income, my taxable income is only on that 100k
no need to pay tax on that 300k.??
πŸ€”If I Don, t declare that 300k on my accounting record, my expenses due to need to make that 300k sales will be high,... Thus my company will make losses too.. So that 100k may not be taxable too?? πŸ€”πŸ€”
*
is more complicated and also depends on company set up to handle the foreign work, income, double taxation, tax treaties, etc... safest approach is consider 300k taxable...

SUSyklooi
post Oct 24 2021, 10:37 PM

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QUOTE(dwRK @ Oct 24 2021, 10:32 PM)
Yes because you are tax resident Malaysia... but also depends on the foreign work/income if withholding tax has been paid. you probably knows best your situation...
is more complicated and also depends on company set up to handle the foreign work, income, double taxation, tax treaties, etc... safest approach is consider 300k taxable...
*
πŸ€” I thought you mentioned,....
for now foreign sourced income is tax exempted.
😭😭
So it has exception too,.... πŸ’”

This post has been edited by yklooi: Oct 24 2021, 10:38 PM
dwRK
post Oct 24 2021, 10:50 PM

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QUOTE(yklooi @ Oct 24 2021, 10:37 PM)
πŸ€” I thought you mentioned,....
for now foreign sourced income is tax exempted.
😭😭
So it has exception too,.... πŸ’”
*
foreign taxation can be very complicated oh, especially US with state & federal taxes... Malaysia tax is very simple by comparison... anyways new regulations coming soon...
dwRK
post Oct 24 2021, 10:56 PM

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QUOTE(Ramjade @ Oct 24 2021, 05:11 PM)
Lots of people in Singapore are getting paid in USD hence I think it's legal.
*
my friend got paid in USD and Bitcoin...

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