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A company is a Singapore tax resident when the control and management of its business is exercised in Singapore. IRAS, the Inland Revenue Authority of Singapore, says the place of incorporation does not decide it. Checked . Residency matters most when you receive foreign income or want treaty benefits.
What does control and management mean?
IRAS defines it as making decisions on strategic matters, such as the company's policy and strategy. Where this happens is a question of fact. Usually the location of the board meetings where strategic decisions are made decides it. IRAS also looks at:
- Whether board meetings are held in Singapore.
- Whether strategic decisions are made at those meetings.
- Whether the directors are based in or outside Singapore.
- Whether strategic decisions are made by a local director.
- Whether key employees are based in Singapore.
Holding board meetings in Singapore may not be enough on its own. IRAS considers all the facts you give it.
Which year is tested?
A company is generally a tax resident for a year of assessment if control and management was exercised in Singapore in the preceding calendar year. So a company whose control was in Singapore for the whole of last calendar year is resident for the year of assessment that follows. Status can change from year to year, so keep board minutes and records for each year.
Do virtual meetings count?
IRAS treats strategic decisions at a virtual meeting as made in Singapore if either condition is met:
- At least 50% of the directors who have authority to make strategic decisions are physically in Singapore during the meeting.
- The chairman of the board, if there is one, is physically in Singapore.
Who is usually not resident?
| Company type | IRAS position |
|---|---|
| Foreign-owned investment holding company with only passive or foreign-sourced income | Generally not a tax resident, because it usually acts on instructions from its foreign owners |
| Non-Singapore incorporated company | Generally not a tax resident |
| Singapore branch of a foreign company | Generally not a tax resident, because the foreign parent controls it |
A foreign-owned company here means one where 50% or more of the shares are held by foreign companies or non-citizen individuals, applied at the ultimate holding company level. These companies may still be treated as residents if they meet certain conditions IRAS sets. A branch is a different case from a subsidiary, covered on branch vs subsidiary.
What do residents gain?
Resident and non-resident companies are generally taxed in the same way on Singapore income. Residents can also claim:
- Exemption or reduction of tax on specified foreign income from a country that has a double tax agreement with Singapore.
- Exemption of specified foreign dividends, branch profits and service income.
- A foreign tax credit.
See double tax agreements and Singapore company tax rates.
How do you get a Certificate of Residence?
The Certificate of Residence (COR) is IRAS's letter that the company is a Singapore tax resident for the purpose of claiming tax benefits abroad. It is what a foreign tax authority wants to see.
- Check that the company is a tax resident and not on the excluded list above. A VCC applies for the COR itself, not its sub-fund.
- Apply on mytax.iras.gov.sg. You can apply for the current calendar year, up to 4 back calendar years and 1 advance year from October.
- IRAS processes within 7 working days. The digital COR can be printed from mytax with no fee. Written applications, for specific cases, take 14 working days.
- Send the COR to the foreign tax authority.
Apply before claiming treaty benefits, or at the latest within 2 calendar years of the actual or expected receipt of the income. IRAS's example: a Singapore company receives royalties from an Australian tax resident and Australia would withhold 30%. With the COR, the rate is 10% under the Singapore-Australia agreement.
Can a provider help?
A tax agent can review where decisions are made, advise on board meeting practice and file the COR on your behalf. Residency is a question of fact about how you run the company, so get advice before a large foreign payment, not after.
Sources
- Tax residency of a company and Certificate of Residence from IRAS, used for the control and management test, virtual meetings, exclusions and benefits.
- Applying for a Certificate of Residence from IRAS, used for the application route, 7 working days, back years and the Australia example.
