A Singapore tax resident company gets to enjoy the benefits from the Avoidance of Double Taxation Agreements (DTAs) that Singapore has signed with other treaty countries. Therefore, a Singapore Accounting Firm can offer invaluable services and advice to business operators in Singapore with regard to their company’s tax residency, which may actually change from year to year, as determined by the place in which the business is controlled and managed for each Year of Assessment (YA). For example, a company is a Singapore tax resident for YA 2020 if the control and management of its business was exercised in Singapore for the whole of 2019.
IRAS defines Control and Management as:
the making of decisions on strategic matters, such as those on company policy and strategy. Where the control and management of a company is exercised is a question of fact. Typically, the location of the company’s Board of Directors meetings, during which strategic decisions are made, is a key factor in determining 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 other factors to determine if the control and management of the company is indeed in Singapore.
Some examples of scenarios where the control and management of a company is considered not to be exercised in Singapore include:
- There is no board of directors meeting held in Singapore. Instead, the directors’ resolutions are merely passed by circulation;
- The local director is a nominee director while the rest of the directors are based outside Singapore;
- No strategic decisions are made by the local director in Singapore;
- No key employees are based in Singapore.
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A company that meets the the above Control and Management requirements and qualifies as a tax resident of Singapore can apply for a Certificate of Residence (COR), which is a letter certifying that the company is a tax resident of Singapore, and submit it to a relevant foreign tax authority to prove that it is a Singapore tax resident to claim benefit under DTAs. However,
- a nominee company as it is not the beneficial owner of the income derived from the treaty country. A nominee company is a company that acts as custodian of shares on behalf of the beneficial owners, and
- a Singapore branch of a foreign company as the control and management of its business is vested with its overseas parent company
are not eligible.
Contact an accounting services provider Singapore to find out the latest regarding Singapore Corporate Tax and Tax Filing.