Under Singapore tax law, the tax residency of a company is determined by where the business is controlled and managed. The residency status of a company may change from year to year.
-
Control and Management
Generally, a company is considered 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 2025 if the control and management of its business was exercised in Singapore for the whole of 2024.
A company is a non-resident when the control and management of its business is not exercised in Singapore.
'Control and management' is defined as the making of decisions on strategic matters, such as those concerning the company’s policy and strategy. Where the control and management of a company is exercised is a question of fact.
-
Factors to be Considered by IRAS
Usually, the location of the company's Board of Directors meetings where strategic decisions are made determines where the control and management is exercised. Under certain scenarios, holding Board of Directors meetings in Singapore may not be sufficient and IRAS will consider all facts provided by the company to determine if the control and management of the business is indeed exercised in Singapore.
The following factors will be considered by IRAS:
(1)
|
Whether there is any board of directors' meetings held in Singapore.
|
(2)
|
Whether any strategic decisions are made at the board of directors' meetings held in Singapore.
|
(3)
|
Whether the directors are based in or outside Singapore.
|
(4)
|
Whether any strategic decisions are made by the local director in Singapore. And
|
(5)
|
Whether there are key employees based in Singapore.
|
The place of incorporation of a company is not necessarily indicative of the tax residency of a company. 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:
(6)
|
At least 50% of the directors (with the authority to make strategic decisions) are physically in Singapore during the meetings; or
|
(7)
|
Chairman of the Board of Directors (if the company has such an appointment) is physically in Singapore during the meeting.
|
-
Foreign-owned Investment Holding Companies
Foreign-owned investment holding companies, with purely passive sources of income or receiving only foreign-sourced income, are generally not considered tax residents of Singapore because these companies usually act on the instructions of its foreign companies/ shareholders.
However, IRAS may still issue a COR if these companies can show that:
(1)
|
The control and management of the company’s business is exercised in Singapore, and
|
(2)
|
The company has valid reasons for setting up an office in Singapore.
|
This includes demonstrating that decisions on strategic matters are made in Singapore (e.g. by showing IRAS that their Board of Directors' meetings are held in Singapore). The company must also:
(3)
|
Have related companies in Singapore that are tax residents of Singapore or have business activities in Singapore.
|
(4)
|
Receive support or administrative services from a related company in Singapore.
|
(5)
|
Have at least 1 director based in Singapore who holds an executive position and is not a nominee director; or
|
(6)
|
Have at least 1 key employee (e.g. CEO, CFO, COO) based in Singapore.
|
-
Certificate of Residency (COR) Application
For COR applications in respect of calendar year 2025 and after, apart from demonstrating that decisions on strategic matters are made in Singapore, the Company must also:
(1)
|
Have at least 1 director based in Singapore who holds an executive position and is not a nominee director.
|
(2)
|
Have at least 1 key employee (e.g. CEO, CFO, COO) based in Singapore; or
|
(3)
|
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)
|
-
Non-Singapore Incorporated Companies
Non-Singapore incorporated companies are not eligible for a COR as these companies are not controlled or managed in Singapore. This also applies to Singapore branches of foreign companies, as they are controlled and managed by their overseas parent company.
-
Variable Capital Companies (VCC)
For tax purposes, a VCC incorporated under the Variable Capital Companies Act 2018 is treated as a company.
To obtain a COR, a VCC must be a tax resident of Singapore. The tax residence of a VCC’s sub-funds is determined at the umbrella level of the VCC. To obtain a COR for its sub-fund, the VCC, and not the sub-fund, has to apply for the COR. The COR will show the details (tax reference number and name) of the VCC and sub-fund.
KNOWLEDGE
