Singapore Corporate Tax Residency

Singapore's robust tax framework makes it an attractive destination for global businesses. Understanding corporate tax residency is essential for compliance and strategic tax planning.

What is Corporate Tax Residency?

Corporate tax residency refers to the jurisdiction where a company is considered resident for tax purposes. In Singapore, residency status determines whether a company is taxed on foreign-sourced income.

How is Corporate Tax Residency Determined?

A company is a Singapore tax resident if its control and management are exercised in Singapore. This assessment is based on:

• Location of Board Meetings: Companies holding board meetings in Singapore are likely tax residents.
• Location of Key Decision-Makers: Strategic decisions made in Singapore contribute to tax residency.
• Operational Oversight: The presence of strategic oversight in Singapore influences tax residency.

Benefits of Being a Singapore Tax Resident

• Access to Double Tax Agreements (DTAs): Benefit from reduced withholding taxes on cross-border payments.
• Exemption of Foreign-Sourced Income: Qualify for tax exemptions on foreign income remitted to Singapore.
• Lower Corporate Tax: Enjoy Singapore's 17% corporate tax rate with additional incentives.
• Start-Up Tax Exemption (SUTE): Newly incorporated tax resident companies receive tax exemptions on initial earnings.

Steps to Establish Corporate Tax Residency

1. Incorporate Your Company: Establish a registered entity in Singapore.
2. Hold Board Meetings in Singapore: Ensure strategic decisions are made locally.
3. Appoint Local Directors: Engage directors residing in Singapore.
4. Maintain Proper Documentation: Keep records of board meetings and strategic decisions.
5. Obtain a Certificate of Residence (COR): Apply with IRAS to confirm tax residency.

Challenges in Determining Tax Residency

• Global Operations: Companies with operations across multiple countries may struggle to establish clear control in Singapore.
• Frequent Travel by Directors: Directors traveling extensively may impact residency claims.
• Inadequate Documentation: Lack of records can lead to disputes with tax authorities.

How to Apply for a Certificate of Residence (COR)

1. Log in to myTax Portal: Access the system using CorpPass.
2. Submit Required Documents: Include board meeting minutes and proof of decision-making in Singapore.
3. Await Approval: IRAS will review and may request additional details.

How Apexia Corporate Advisory Can Help

• Residency Assessment: Evaluate your company's tax residency eligibility.
• Corporate Structuring: Assist in aligning your company's structure with tax residency requirements.
• COR Application Support: Prepare and submit necessary documentation for IRAS approval.
• Ongoing Compliance: Ensure continued compliance with Singapore's tax laws.