Business in Singapore: Tax Residence Status

Determining Tax Residency of a Company

As an individual, a company is either a tax resident or a non-resident of Singapore. Places that a principal of a company controls and manages the company is a factor in determining the tax residency of a company.

In general, if the business is controlled and managed in Singapore in the preceding calendar year, it will be considered as a Singapore tax resident for a particular Year of Assessment (YA). For instance, control and management of a company was exercised in Singapore for the whole of the year of 2017, the company is a tax resident for YA 2018.

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

Please note that the incorporated place of a company is not a key factor for determining of the company tax residence.

Foreign – Owned Investment Holding Companies

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

Foreign-owned investment holding companies that only receive “purely passive sources” of income or “foreign-sourced” income are considered as non-residents because these companies usually act on the instructions of its foreign companies/shareholders.

However, these companies can be treated as the tax residency in Singapore if they are able to satisfy IRAS with certain conditions. Click here for more detail: Applying for COR for Foreign-Owned Investment Holding Companies.

Non-Singapore Incorporated Companies and Singapore branches of foreign companies

As mentioned above, companies that are not controlled and managed in Singapore are regarded as non-Singapore residency.

Besides, non-Singapore incorporated companies and Singapore branches of foreign companies are also non-residents because the control and management of their businesses is depended on their foreign parents.

However, these companies can be treated as the tax residency in Singapore if they are able to satisfy IRAS with certain conditions. Click here for more detail: Applying for COR for Non-Singapore Incorporated Companies.

Benefits of Singapore Tax Residency on Foreign Income

In fact, resident or non-resident companies in Singapore are taxed in the same manner but there is more benefits for resident companies. Here are some benefits related to income from foreign sources:

  • Tax benefits provided under Avoidance of Double Taxation Agreements (DTAs) Singapore has concluded with other jurisdictions;
  • Tax exemption on foreign-sourced dividends, foreign branch profits, and foreign-sourced service income under section 13(8) of the Income Tax Act; and
  • 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.

Click here to find out more information of Overview of COR and How to Apply for COR.

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