Everything You Need To Know About Certificate of Residency in Singapore - 2024 Update
Companies and individuals can enjoy multiple benefits from getting a certificate of residency in Singapore. Foreigners are also advised to get a certificate for their companies too, but what exactly is it?
This article will go over what a Certificate of Residence (COR) is, how to apply for a COR, and how you can be eligible to apply for one.
Inside this article:
What is a COR?
Certificate of Residency, or COR, is a form of recognition awarded to individuals and companies who qualify for tax residence status in Singapore in a given year.
Why does this status matter, though?
Tax residents in Singapore enjoy better tax benefits than non-tax residents. Tax resident companies and corporations can also enjoy tax exemptions, such as Double Taxation Avoidance (DTA) perks.
Why Do You Need a COR for Your Singapore Company?
Before we talk about the reason, let us discuss the concepts of income source, double taxation, and tax residency first.
Individuals earning both foreign and local sources of income are subject to double taxation in their home country and Singapore.
The purpose of the Double Taxation Agreements (DTA) is to provide some semblance of certainty when it comes to taxation and when and how it is imposed in the country where income is generated by the business or where payment is made. Through the DTA, treaty countries can provide tax breaks (exemptions or credits) to Singapore tax residents on the income they generate from these countries. Non-tax residents do not enjoy the benefits mentioned earlier.
Being a tax resident is the first step of claiming the tax breaks from foreign countries. As an individual or multinational company, you still need to prove to the foreign tax authority about your Singapore tax residence status. By doing so, the foreign tax authority will automatically exempt you from double taxation. Hence, COR issued by the IRAS in Singapore comes into play which serves as the proof of your Singapore tax residence to foreign countries.
To summarise above in technical jargon, the purpose of the COR is to allow individuals or businesses to take advantage of the tax break through the Avoidance of Singapore Double Tax Agreements (DTA), so that you don’t need to pay corporate taxes in different countries.
Note that it's not mandatory to acquire a COR as a business owner, but it offers financial benefits to businesses with a COR. You also don’t need COR to pay or work with taxes in Singapore.
An individual or company can apply for COR with the Inland Revenue Authority of Singapore (IRAS). Both are required to prove that they are Singaporean tax residents. A company can be a tax resident of Singapore if the management and control are carried out in Singapore.
What is the Avoidance of Double Taxation Agreement (DTA)?
The Avoidance of Double Taxation Agreement (DTA) is an agreement signed between two parties: Singapore and its treaty partner (another country). This agreement aims to relieve business owners from the problems of double taxation due to income generated in Singapore and another country. This treaty refers to a partnered country as a treaty country as long as it's signed a DTA with Singapore.
DTA also includes the taxation rights on different types of income from cross-border economic transactions between Singapore and its treaty partner. The DTA also provides tax reduction, tax credit, or tax exemption on different types of income.
For more information about Avoidance on Double Taxation Agreement (DTA) and Double Tax Treaties, you may check out our comprehensive article about it on our website.
Determining Tax Residency
Before you can apply for a COR, you need to be a tax resident of Singapore.
Individuals
Individuals qualify as tax residents if they were employed or lived in Singapore for at least 183 days in the calendar year before the year of assessment (YA). Individuals will still be recognized as tax residents even if they do not meet this requirement if they live in Singapore and can prove that the absences from the country are reasonable and temporary.
If individuals meet either of these criteria, they can file for COR. If the applicant is a foreigner, then there's another requirement that they need to comply with. They'll need to secure an Employment Pass, which Piloto Asia would be more than happy to assist you with. A foreign national who happens to be a Singapore permanent resident is also encouraged to sign up for a COR if they're earning income from their home country who's a treaty partner for tax purposes.
Local Companies
A local company can either be a tax resident or a non-tax resident of Singapore. Tax residency in Singapore is determined by the place where the business is controlled and managed.
The residency status of a company can change every year. Companies are considered tax residents for a given year of assessment if the management and control of business activities and decisions were exercised in Singapore for the preceding calendar year.
A good example is a company that can be a tax resident for YA 2021 if the management and control of the business were done in Singapore for the whole year of 2020. In contrast, a company is considered a non-tax resident if the control and management are not exercised in the country.
To obtain a certificate of residence (COR), a local company needs to meet the following conditions:
They need to be a Singapore tax resident company
Foreign income is remitted or will be remitted in Singapore.
What Types of Companies Are Not Eligible for COR?
Not all companies in Singapore are eligible for COR, even if some of them are incorporated in the country.
Nominee Companies
A nominee company is a business that acts as a custodian of shares on behalf of its beneficial owners. Nominee companies are not eligible for COR because they are not the beneficiaries (or beneficial owners) of foreign sourced income coming from the treaty partner.
But IRAS may issue a COR for these businesses as long as they meet the following requirements:
Management and control of the company are carried out in Singapore
The company has good reasons for establishing an office in Singapore
To meet these requirements, the company will need to demonstrate that business decisions are made in Singapore. For example, a company can show that they hold their board of directors' meeting in Singapore.
They would also need to meet the following requirements:
The company receives administrative or support services from a related company in Singapore
The company has tax residents in Singapore or conducts business activities in Singapore.
The company has at least one key employee (usually CEO or CFO) based in Singapore
The company has one director based in Singapore, holds an executive position, and is not a nominee director.
Non-Singapore Incorporated Business or Singapore Branch of a Foreign Company
A non-Singapore incorporated business or a Singapore branch of a foreign corporation is not eligible for a COR. The reason being that these companies are not managed or controlled in Singapore.
Singapore branches of foreign companies are controlled by their parent companies overseas.
But IRAS may issue a COR to these companies if they can convince IRAS that:
The Singapore branch of foreign companies exercises complete control and management in Singapore.
The company has a valid reason for not incorporating the business in Singapore.
Additionally, IRAS reserves the right to request additional information.
To apply for a COR, the company may write to IRAS containing the following details:
Name and Unique Entity Number (UEN)/ tax reference number of the company
Reason(s) for requesting the COR
Year of Assessment for which the COR is required
Name of the tax treaty country
Nature and amount of income to be derived from the treaty country
Name of the foreign company/ person paying the income
Date of remittance of income
Confirmation that control and management of the company's business for the whole of the preceding calendar year is/will be exercised in Singapore.
IRAS may issue a COR to foreign-owned companies if they meet the following conditions:
Control and management of the company are done in Singapore.
The company has a valid reason for establishing an office in Singapore.
To satisfy these conditions, the company must demonstrate that decisions on strategic matters are made within the country. For example, it can show IRAS that the Board of Directors' meetings are held in Singapore. Foreign companies will need to hire a corporate service provider that offers outsourced accounting services in Singapore to navigate the tax requirements set forth by the government. This article should shed light on how to find the right accounting firm in Singapore.
On top of that, the company also needs to:
Prove that they have related companies in Singapore that are also tax residents or conduct business activities with said businesses in the country
Receive support and administrative services from a related company in Singapore
Have at least one director based in Singapore and is not a nominee director
Have at least one key employee (i.e. CEO, CFO, COO) residing in Singapore (Should be an EP holder or a Singapore PR holder).
If the conditions above are met, the company may apply for a COR via mytax.iras.gov.sg.
The company staff or tax agent must be authorized in CorpPass and assigned as "Approver" for the IRAS' e-Service - 'Corporate Tax (Filing and Applications)' digital service before logging in to the website to apply for COR on behalf of the company.
IRAS may request additional information and supporting documents on the company when the application is submitted.
If you need assistance in setting up your Corppass, you may refer to their official step-by-step guide .
Foreign-Owned Investment-Holding Companies
Foreign-owned investment-holding companies relying on foreign-sourced payment and foreign-sourced income are not eligible to apply for COR. Like a foreign-owned company, a holding company is considered foreign-owned when 50% of their shares are held by:
Foreign companies which are incorporated outside Singapore; or
Individual shareholders who are not citizens of Singapore.
The ownership is to be applied at the ultimate holding company level.
However, IRAS may still issue a COR if these companies can satisfy IRAS that:
The control and management of the company's business is exercised in Singapore; and
The company has valid reasons for setting up an office in Singapore.
In addition to satisfying the conditions above as listed by IRAS, the company must also show that the business’ decisions on strategic matters and other activities are made in Singapore. For example, they can show that the company’s board of directors’ meetings are held in Singapore. On top of this, the applicant must also prove that:
They conduct business activities with companies who are tax-residents in Singapore, or have related in Singapore that are tax residents; or
Get support or administrative services from a related company in Singapore; or
Have at least one director based in Singapore who holds an executive position and is not a nominee director; or
Have at least one key employee (e.g. CEO, CFO, COO) based in Singapore.
Variable Capital Company (VCC)
Please note that VCC is actually eligible to apply for COR provided that it is a tax resident of Singapore. However, there are several exceptions that VCC could not get the COR
The sub-fund of VCC cannot apply for COR directly. To obtain a COR for its sub-fund, the VCC itself has to apply for it
Tax residence of the sub-fund under a VCC is determined at the umbrella level of the VCC.
VCC cannot apply directly for a COR via the myTax Portal but will have to submit their application in writing.
Once the application is approved, the COR issued will contain the following information for both the VCC and its sub-fund
Tax Reference Number
Name
Please note that IRAS may also request additional information and other required documents about the VCC during the time of application.
Related Article: Setting up a VCC in Singapore
How to Apply for a Singapore Certificate of Residence (COR)
All COR applications are filed electronically via IRAS myTax Portal .
Individuals
Individuals who want to apply for a certificate of residence can fill up these forms:
Fill up this form if you're a Singapore citizen or permanent resident.
Fill up this form if you're a sole proprietor, a partner in a partnership, or a self-employed individual
Fill up this form if you're a foreigner with a SingPass ID.
What's The Process?
Login to the Portal using your SingPass ID
Fill in one of the COR forms for each year you're applying for.
After you submit the form, click on Submit Another Form to apply for a different year.
If you're a non-SingPass holder, you can apply for Singapore COR by completing the XLS document and sending it via email .
Companies
Companies looking to apply for COR can do so via the IRAS myTax Portal . They will need to log in to the website via their CorpPass credentials.
You can apply for a COR for:
The current calendar year
Or up to four back calendar years
In the calendar year 2021, your company may apply for a COR for 2017 to 2021. You may also apply for a COR for one advanced calendar year from October to December of the current calendar year.
The COR is granted to a company for the calendar year only if the control and management of the business are exercised in Singapore in the specified calendar year. That means that if you're applying for a COR 2021, the control and management of your company in 2020 should've been done in Singapore.
Your company will need to authorize your staff member or third-party consultant (like a tax agent) if you want someone else other than you to apply for the COR. You will need to authorize these people as approvers in Corppass to log in and apply on behalf of the company.
IRAS processes applications within seven working days after receiving the application. You'll receive a digital copy of the approved COR through the myTax Portal.
When Do You Apply For COR in Writing?
All COR applications are made via the myTax Portal. But in some cases, you'll be asked to submit your application in writing if:
You're applying for COR for a sole-proprietorship business owned by the company
You're applying for COR for a partnership business in which the company is a partner
Companies may write to IRAS containing the following details:
Name and Unique Entity Number (UEN) of the company / sole-proprietorship / partnership
The calendar year for which the COR is required
Name of the treaty country
Confirmation that the control and management of the business of the company for the whole of the calendar year is/ will be exercised in Singapore
IRAS processes applications within 14 working days after they receive the complete information. Processing time may take longer if the case is complicated.
Once the application is processed, you will receive a copy of your approved COR through the myTax Portal.
Closing
A Singapore tax certificate is a powerful document that lets you take advantage of Singapore's Double Taxation Agreement with several countries.
Obtaining a certificate of residency for your business is not mandatory, but it does help lower costs, which aims to improve profits long term. As a business owner, having a COR allows you to expand your business' horizons without worrying excessively about taxation.