In Singapore's taxation framework, a company's tax residency is based on the location of its business control and management. This status can vary annually.
Typically, a company is recognized as a tax resident of Singapore for a specific Year of Assessment (YA) if it conducted its business control and management within Singapore during the previous calendar year. For instance, for YA 2023, a company is deemed a tax resident if its business was managed from Singapore throughout 2022. Conversely, companies are non-residents when their business management does not take place in Singapore.
The term 'control and management' refers to making key strategic decisions, including those about company policy and strategy. The assessment of where a company's control and management is exercised is factual.
The location of the company’s Board of Directors meetings, where strategic decisions are made, usually indicates the site of control and management. However, in some instances, holding these meetings in Singapore may not suffice. The IRAS will examine all facts presented by the company to confirm if the business is truly managed from Singapore.
New requirements regarding Board of Directors meetings
A Board of Directors meeting which involves the use of virtual meeting technology will generally be regarded as having strategic decisions made in Singapore if either of the following conditions is met:
- Over half of the decision-making directors are physically present in Singapore during the meetings, or
- The Board's Chairman (if appointed) is physically in Singapore during the meeting.
Virtual meeting technology refers to any system that allows participation in meetings remotely.
Scenarios where a company's control and management might not be considered as being in Singapore include:
- No board meetings in Singapore, with resolutions passed by circulation.
- The presence of a nominee local director, while other directors are overseas.
- Absence of strategic decision-making by the local director in Singapore.
- Lack of key personnel in Singapore.
It's important to note that a company's place of incorporation does not automatically reflect its tax residency.
Foreign-Owned Investment Holding Companies
Regarding foreign-owned investment holding companies with passive or exclusively foreign-sourced income, they are often not seen as Singapore tax residents. This is because such companies typically operate under the guidance of foreign entities or shareholders. Yet, they may attain tax residency status under specific conditions.
Non-Singapore Incorporated Companies and Singapore Branches of Foreign Companies
Non-Singapore incorporated companies and local branches of foreign firms are generally managed by their overseas parent and are not considered Singapore tax residents, though exceptions apply if certain criteria are met.
The Impact of Tax Residency on Corporate Income Tax
Both resident and non-resident companies face similar tax treatment, but resident companies enjoy benefits like:
- Exemptions or reductions in tax on specific foreign income under a Double Taxation Agreement (DTA) with Singapore.
- Tax exemption on certain foreign incomes, such as dividends, foreign branch profits, and service income, as per Section 13(8) of the Income Tax Act 1947.
- Foreign tax credit against Singapore tax for taxes paid abroad on the same income.
- Tax exemptions for newly established companies.
Certificate of Residence
The Certificate of Residence (COR) is a document from IRAS certifying a company as a Singapore tax resident, which is often required by foreign tax authorities to confirm the company's tax residency under DTAs.
New criteria for COR applications in respect of calendar year 2025 and after, apart from demonstrating that decisions on strategic matters are made in Singapore, include that the company must also:
- Have at least 1 director based in Singapore who holds an executive position and is not a nominee director;
- Have at least 1 key employee (e.g. CEO, CFO, COO) based in Singapore; or
- Be managed by a related company based in Singapore (e.g. the related company makes the decisions relating to the operations of the foreign-owned investment holding company or reviews the performance of the investments of the company)
Read more about Certificate of Residence eligibility and how to apply for it here.
Fidinam can help
If the intricacies of tax residency and its implications on your business in Singapore seem challenging, Fidinam is here to help.
Our team of experienced professionals specializes in understanding and applying Singapore's tax laws to support companies like yours.
Whether you need assistance in determining your company’s tax residency status, understanding the specific benefits you’re eligible for, or obtaining a Certificate of Residence, we have the expertise to guide you through every step.
Contact us via the form below or email info@fidinamgw.com.
