Tax Residence Status of a Company

Companies that are tax residents enjoy certain tax benefits including tax breaks on foreign income. A company is a tax resident in Singapore when the control and management of the company is exercised in Singapore.

Determining Tax Residency of a Company

A company is either a tax resident or a non-resident of Singapore. In Singapore, the tax residency of a company is determined by the place in which the business is controlled and managed

Generally, a company will be considered to be a Singapore tax resident for a particular Year of Assessment (YA) if the control and management of its business was exercised in Singapore in the preceding calendar year. For example, a company is a Singapore tax resident for YA 2017 if control and management of its business was exercised in Singapore for the whole of 2016.

"Control and management" is the making of decisions on strategic matters, such as those on company policy and strategy. Where the control and management of a company is exercised is a question of fact. Typically, the location of the company's Board of Directors meetings, during which strategic decisions are made, is a key factor in determining where the control and management is exercised.  

Conversely, a company is a non-resident when the control and management of the company is not exercised in Singapore.

Do note that the place of incorporation of a company is not necessarily indicative of the tax residence of a company

Foreign-owned investment holding companies1, with purely passive sources of income or receiving only foreign-sourced income are generally regarded as non-residents  because these companies usually act on the instructions of its foreign companies/shareholders.

However, they may still be treated as Singapore tax residents if they are able to satisfy IRAS that certain conditions have been met. For details on the conditions, refer to Applying for COR for Foreign-Owned Investment Holding Companies.

1 A foreign-owned company is a company where 50% or more of its shares are held by foreign companies/shareholders.

Non-Singapore incorporated companies and Singapore branches of foreign companies are controlled and managed by their foreign parent and are, therefore, regarded as non-residents.

However, they may still be treated as Singapore tax residents if they are able to satisfy IRAS that certain conditions have been met. For details on the conditions, refer to Applying for COR for Non-Singapore Incorporated Companies.

Impact of Tax Residency on Foreign Income

While resident and non-resident companies are generally taxed in the same manner, resident companies enjoy certain benefits. Some of these benefits relate to income from foreign sources.

Some benefits tax resident companies enjoy include:

  1. tax benefits provided under Avoidance of Double Taxation Agreements (DTAs) Singapore has concluded with other jurisdictions;
  2. tax exemption on foreign-sourced dividends, foreign branch profits, and foreign-sourced service income under section 13(8) of the Income Tax Act; and
  3. tax exemption for new start-up companies.

Certificate of Residence (COR)

Singapore tax residents that derive income from other countries may apply to IRAS for a Certificate of Residence (COR). The COR is a letter certifying that the company is a tax resident in Singapore. Tax residents need this certificate to claim benefits under the Avoidance of Double Taxation Agreements (DTAs) Singapore has concluded with other jurisdictions.

In line with Government's direction to harness technology for enhanced productivity, all COR applications have to be e-Filed via myTax Portal from Jun 2017. Paper applications will no longer be accepted.

For details, please refer to How to Apply for COR.

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