At the heart of Singapore’s taxation landscape lies the Certificate of Residence (COR), a document of significant importance for companies and individuals engaged in international transactions. The COR serves as official proof of an entity’s tax residency status within the country, a key determinant in availing the benefits of Double Taxation Agreements (DTAs). This article will take you through the fundamental aspects of the Certificate of Residence, exploring its purpose, eligibility criteria, application process, and much more!
A Certificate of Residence (COR) is an official document issued by the Inland Revenue Authority of Singapore (IRAS) to certify that a company or individual is a Singapore tax resident.
But why is a COR needed in the first place? Well, the COR provides access to a wide variety of tax benefits under the Double Taxation Agreements (DTAs) that Singapore has in place with other countries. These benefits include:
These are not available to non-tax residents and non-certified tax residents.
Definition: A Double Taxation Agreement is a treaty between Singapore and another country that prevents double taxation of income earned in these countries. As of 2023, Singapore has DTAs with nearly 100 countries, which are included in this official list of DTAs .
The primary advantage a COR provides is the avoidance of double taxation for companies and individuals with sources of income in multiple countries. Possessing a COR is especially useful for companies looking to expand business activities to other countries, as they won’t have to pay corporate taxes twice and will be able to pay reduced withholding taxes.
For example, suppose a company in Spain – a country with a withholding tax of 19% – distributes dividends to a Singapore company. In that case, the tax rate can be reduced up to 0% because of the DTA between Singapore and Spain . However, for this to be possible, the Spanish company would have to request the Singapore company’s COR and show it to the Spanish tax authorities before the tax requirement is paid.
Being a tax resident, however, only serves as the first step to acquiring these benefits. You or your company must have a COR as proof of Singapore tax residence that can be shown to foreign tax authorities. Additionally, it’s important to note that a tax residency status is not permanent and that the certificate of residence is granted upon approval on a yearly basis, which means that you or your company could enjoy the benefits of a COR for one year but not necessarily for the next.
Now that you know what a certificate of residence in Singapore entails, let’s explore the eligibility criteria.
For companies and individuals to qualify for a COR, they must only satisfy one criterion: be a tax resident in Singapore. But what are the requirements to become a tax resident? Let’s take a look at the criteria for companies and individuals.
A company’s tax residency status is determined by the location where the business is controlled and managed, which refers to where the decision-making process for strategic matters takes place. As a result, the place of incorporation of a business is not considered when granting tax residency.
A company is considered a Singapore tax resident for a Year of Assessment (YA) if its control and management took place in Singapore during the previous year. For example, if a company was controlled and managed in Singapore in 2023, it will be regarded as a tax resident in 2024 YA.
There are a few cases explicitly stated by the IRAS that are not considered as controlling and managing a business in Singapore. Thus, if your company falls in any of these categories, it will not be eligible for tax residency.
There are four different instances in which you are an eligible individual for tax residency in Singapore:
