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Thinking of Starting a Business in Singapore? EP vs LOC – FAQs
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What is the difference between Employment Pass (EP) and Letter of Consent (LOC)?
An Employment Pass (EP) allows a foreigner to live and work in Singapore independently, including running their own business. A Letter of Consent (LOC) is issued to Dependant’s Pass holders and allows them to operate a business, but their stay remains tied to the main pass holder.
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Can a foreigner start a business in Singapore with an EP?
Yes, a foreigner can start and run a business in Singapore under an EP, provided they meet the eligibility criteria such as salary requirements, qualifications, and business viability.
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Can a Dependant’s Pass holder run a business in Singapore?
Yes, a Dependant’s Pass holder can run a business by obtaining a Letter of Consent (LOC), subject to meeting the eligibility requirements.
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Which is easier to obtain: EP or LOC?
LOC is generally easier to obtain as it does not require meeting salary thresholds or COMPASS criteria, unlike the EP.
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Is an EP better than LOC for business owners?
For long-term business growth, an EP is generally more suitable as it provides independence, stability, and better credibility with banks and business partners.
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What happens to LOC if the main pass holder loses their job?
If the main pass holder’s Employment Pass is cancelled, the Dependant’s Pass and LOC will also be cancelled, affecting the ability to continue the business.
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Is there any hiring requirement for LOC holders?
Yes, to renew an LOC for business purposes, the business must employ at least one Singapore Citizen or Permanent Resident who meets the Local Qualifying Salary requirement.
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Does EP require hiring local employees?
There is no mandatory requirement to hire local employees for EP, but doing so can support renewal and demonstrate business sustainability.
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Can I switch from LOC to EP later?
Yes, many business owners start with an LOC and later apply for an EP once their business becomes stable and meets the required criteria.
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Which option is suitable for starting a small or trial business?
LOC is generally more suitable for testing business ideas or running small-scale operations due to its lower entry requirements.
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Which option is better for scaling a business in Singapore?
EP is more suitable for scaling a business as it offers greater control, flexibility, and long-term stability.
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How do I decide whether to apply for EP or LOC?
The choice depends on your goals. If you want to test a business idea with lower commitment, LOC may be suitable. If you are planning long-term growth and independence, EP is the better option.
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Can Achibiz assist with EP or LOC applications?
Yes, Achibiz provides guidance and support for both EP and LOC applications, including business setup and compliance requirements in Singapore.
