Singapore’s advantageous tax regime, supported by an extensive network of Double Taxation Agreements (DTAs), positions it as a preferred jurisdiction for multinational corporations, high-net-worth individuals, and investors. Central to leveraging these benefits is obtaining a Tax Residency Certificate (TRC), issued by the Inland Revenue Authority of Singapore (IRAS). This document confirms an entity’s or individual’s status as a tax resident, enabling access to treaty benefits, mitigating double taxation, and providing clarity in cross-border tax compliance.

Understanding Tax Residency in Singapore

For companies, tax residency in Singapore hinges on the “control and management” criterion. Typically, this is satisfied if the company’s strategic business decisions are made in Singapore. Factors demonstrating this include holding board meetings, formulating strategic policies, and having directors actively participate in management decisions within the jurisdiction. Companies merely incorporated in Singapore but managed overseas typically fail this test.

For individuals, tax residency is primarily based on physical presence. An individual must be physically present in Singapore for at least 183 days within a calendar year, or demonstrate significant economic or social ties, especially relevant for citizens and permanent residents.

Application Procedure for TRC

Applications for a TRC are filed electronically through the Inland Revenue Authority of Singapore’s (IRAS) myTax Portal. Factors considered by the IRAS for tax residency (including information requested by the IRAS) includes:

For Companies:

• Whether there is any board of directors’ meetings held in Singapore
• Whether any strategic decisions are made at the board of directors’ meetings held in Singapore
• Whether the directors are based in or outside Singapore
• Whether any strategic decisions are made by the local director in Singapore
• Whether there are key employees based in Singapore

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:

• At least 50% of the directors (with the authority to make strategic decisions) are physically in Singapore during the meetings; or
• The chairman of the Board of Directors (if the company has such an appointment) is physically in Singapore during the meeting.

Virtual meeting technology means any technology that allows a person to participate in a meeting without being physically present at the place of the meeting.

For Individuals:

• The individual’s designation/ role and the name of his/her employer.
• The country where the individual is deriving the income from.
• Name of the person/ company paying the overseas income.
• Nature of the income/ derived from the overseas country (e.g., dividend, interest, fees, commission, trade).
• Year of Assessment for which the COR is required.
• Declaration made by the individual applying for the COR that he/she is the beneficial owner of the income and that the application for the COR is made for the purpose of claiming benefit under the Avoidance of Double Taxation Agreement between Singapore and the treaty country (from which the income is derived).

Common Challenges for companies applying for COR / Strategic recommendations for maximising success of TRC applications

A common challenge in securing a TRC for companies arises when “control and management” is not clearly exercised in Singapore. Let us examine this discussion further in the context of foreign-owned investment Holding companies and non-Singapore incorporated companies, and Singapore branches of foreign companies.

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 their foreign companies/ shareholders.

However, such companies may still be treated as tax residents of Singapore and be eligible for COR if they can demonstrate that:

• The control and management of the company’s business are exercised in Singapore; and
• 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:

• Have related companies in Singapore that are tax residents of Singapore or have business activities in Singapore;
• Receive support or administrative services from a related company in Singapore;
• Have at least 1 director based in Singapore who holds an executive position and is not a nominee director; or
• Have at least 1 key employee (e.g., CEO, CFO, COO) based in Singapore.

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:

• Have at least 1 director based in Singapore who holds an executive position and is not a nominee director;
• Have at least 1 key employee (e.g., CEO, CFO, COO) based in Singapore; or
• 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 and Singapore Branches of Foreign Companies

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, in certain exceptional situations, the IRAS may still issue the COR if these companies can show that:

• The control and management of the company’s business is exercised in Singapore (i.e., the Singapore branch is exercising the full control and management of the company); and
• The company has valid reasons for not incorporating in Singapore.

In such cases, the IRAS may also request for additional information on the Company before determining whether the Company is eligible for a COR.

Key takeaways

Securing a TRC in Singapore requires careful planning, meticulous documentation, and an in-depth understanding of the tax residency criteria set forth by the IRAS.

For foreign businesses that are using Singapore as a springboard to move their operations into the Asia Pacific region, the issuance of a COR by the IRAS allows them to take advantage of some of the following benefits:

• Tax exemption on certain types of foreign-sourced income (e.g., dividend income, branch profits, and service fee income) under Section 13(8) of the Singapore Income Tax Act 1947.
• Foreign tax credits for the taxes paid in the foreign jurisdiction against the Singapore tax payable on the same income.
• Tax exemption for new-start up companies operating in Singapore (for the first 3 years of operations).
• Potential tax exemption or reduction in the foreign withholding tax rate on various income streams derived from tax treaty countries.
• Potential mitigation of capital gains tax in foreign jurisdictions.

Therefore, where it is important for such businesses operating in Singapore to enjoy some of these tax benefits mentioned, careful tax planning should be done upfront rather than right at the tail end when such companies are making the online COR application to the IRAS. Proper tax planning helps companies to mitigate queries from the IRAS and assist greatly in the success of the COR applications.

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