Certificate of Residence (Company)
Companies may also apply for Singapore tax certificates of residence. Just like individuals, the IRAS also issues certificates of residence to companies to state that a particular company is a Singapore tax resident. A company is a tax resident of Singapore if its control and management is exercised in Singapore.
Eligibility to apply COR
When the IRAS issues a certificate of residence to a company, it takes the following factors into account before doing so: the company’s decision-making body’s power to raise finance and maintain control over the company’s bank accounts; declare dividends; approve accounts; appoint people to manage the company’s daily operations; and decide on issues related to acquisitions, joint ventures, and mergers. A company requesting a certificate of residence must provide its full name, registration number, and YA for which the certificate is required to receive the certificate. To receive a certificate, the company’s directors must also live and keep the company’s books and records in Singapore.
Benefits of owning ap COR as a company
In Singapore, a company may use a certificate of residence to establish its eligibility for certain tax exemptions regarding its profits remitted from foreign operations. These profits may include foreign branch profits, dividends, and foreign-sourced income. Another benefit eligible companies may receive is like the one received by eligible individuals. It provides tax benefits under DTAs that Singapore has concluded with other countries. New start-up companies that have certificates of residence may also claim a tax exemption. After having its certificate of residence approved by the IRAS, the company becomes eligible for the benefits.
The company should be able to supply supporting documents to prove that it exercises its control and management in Singapore. “Control and management” is defined as the making of decisions related to the company’s strategic matters or policies. Examples of such documents include the following: board resolutions and minutes of the board of directors’ meetings, material contracts signed in Singapore which have to do with the taxpayer’s business, and any correspondence between the management team or board of directors proving that discussions and decisions were made during meetings conducted in Singapore. If the board of directors or management team is based outside Singapore, travel calendars and passport copies can also prove that the directors and management team frequently spent time in Singapore.
Branch of foreign company & Foreign-owned investment holding companies
Singapore branches of a foreign company that has its headquarters abroad are not regarded as residents and thus normally cannot receive a certificate of residence or the benefits it confers. The same is true of foreign-owned investment holding companies. These companies are defined as those which have at least 50% of shares held by foreign companies and shareholders. They are not regarded as residents because these companies normally act on the instructions of foreign parent companies or shareholders. For example, a holding company owned by a non-Singapore entity receiving only foreign-sourced income will not be a Singapore tax resident. Despite this, the IRAS might issue a certificate of residence if the company can prove that the control and management of the company’s business is exercised in Singapore, as well as that the company has valid reasons for setting up an office there. The company must also satisfy one of the following conditions to qualify for a certificate of residence: having related companies in Singapore that are either tax residents of or have business activities there, receiving support or administrative services from a related company which is based in Singapore, having at least one director based in Singapore who is not a nominee director but holds an executive position; or having at least one key employee based in Singapore.
Companies that are not incorporated in Singapore
Similarly, non-Singapore incorporated companies are also not regarded as residents because they are managed and controlled by their foreign parent companies. However, the IRAS may issue a certificate of residence to foreign incorporated companies and its Singapore branches if the company can prove that the control and management of the company’s business is exercised in Singapore, as well as that the company has valid reasons for setting up an office there. The IRAS may request additional information about the company at any time.
Variable Capital Company (VCC)
Recently, the Monetary Authority of Singapore confirmed that a Variable Capital Company (VCC) can also benefit from a certificate of residence. A VCC which is a Singapore tax resident can apply for a certificate of residence. After the certificate is approved, it will be issued in the VCC’s name and will give the names of all the VCC’s sub-funds receiving the same income from the same source jurisdiction.
A Singapore tax certificate of residence is an extremely important and powerful document for any Singapore tax resident. Having one opens many doors and allows its bearer to benefit from several tax benefits.
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