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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.
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 2022 if the control and management of its business was exercised in Singapore for the whole of 2021.
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.
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.
Some examples of scenarios where the control and management of a company may be considered not exercised in Singapore include:
The place of incorporation of a company is not necessarily indicative of the tax residency of a company.
Foreign-owned investment holding companies1, 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, they may still be treated as Singapore tax residents if they can satisfy certain conditions.
1A foreign-owned company is a company with 50% or more of its shares held by:
The ownership is to be applied at the ultimate holding company level.
Non-Singapore incorporated companies and Singapore branches of foreign companies are controlled and managed by their foreign parent. They are not considered tax residents of Singapore.
However, they may still be treated as Singapore tax residents if they can satisfy certain conditions.
While tax resident and non-resident companies are generally taxed in the same manner, tax resident companies enjoy certain benefits, such as:
The Certificate of Residence (COR) is a letter issued by IRAS to certify that the company is a tax resident of Singapore for the purpose of claiming tax benefits under the DTAs that Singapore has concluded with other jurisdictions. It is generally required by the foreign tax authority to prove that the company is a Singapore tax resident.
Learn how to apply for a COR.
© 2022, Government of Singapore
Last updated on 18 August 2022