Applying for a Certificate of Residence

Applying for a Certificate of Residence

Applying for Benefits under a Double Taxation Agreement

When a Singapore tax resident company receives foreign income from a DTA partner, they can claim benefits under the DTA (i.e. the company is exempt from tax in the foreign jurisdiction or is subject to withholding tax at a lower rate).

To apply for DTA benefits, companies must indicate to their DTA partners that they are tax resident in Singapore by applying for a Certificate of Residence (COR).

This is a letter certifying that a company is a Singapore tax resident for the purpose of claiming tax benefits under the DTA.

To claim tax benefits under a Double Taxation Agreement (DTA) or a Limited Treaty, a Singapore tax resident company can apply for a Certificate of Residence.

What is a Certificate of Residence

A Certificate of Residence (COR) is a letter issued by IRAS certifying that the company is a tax resident of Singapore (i.e. the control and management of its business is carried out in Singapore) for the purpose of applying for a tax benefit under the DTA or Limited Treaty.

In general, income derived by a Singapore tax resident company from a foreigner or company may be subject to taxation in that foreign jurisdiction.

Under a DTA or Limited Treaty entered into between Singapore and a foreign jurisdiction (i.e. a DTA partner), a Singapore tax resident may enjoy tax benefits (such as tax exemption or lower withholding tax rates) on income derived from a foreign jurisdiction. Non-residents do not enjoy these benefits.

To enjoy such tax benefits, a COR must be submitted to the tax authority of the DTA partner to prove that the company is a Singapore tax resident.

For DTAs with Limitation of Relief provisions, a Singapore tax resident company must meet an additional condition to claim the DTA benefits (i.e. it must or will remit foreign source income taxable in Singapore on a remittance basis) to Singapore.

Example

Your Pte Ltd is a Singapore tax resident company. It derives royalty income from XYZ Company, a tax resident in Australia, subject to 30% withholding tax in Australia.

However, Your Pte Ltd is entitled to a lower withholding tax rate of 10% on its royalty income under the Singapore-Australia DTA if it lodges a COR with the Australian tax authorities.

Who is Eligible for a Certificate of Residence

To obtain a Certificate of Residence (COR), a company must be a tax resident in Singapore. Generally speaking, foreign-owned investment holding companies, nominee companies and non-Singapore incorporated companies are not eligible for COR.

Foreign-owned investment holding company

A foreign-owned investment holding company with a purely passive source of income and receiving only foreign source income is not eligible for COR. A foreign-owned company is a company in which 50% or more of the shares are held by:

• A foreign company established outside Singapore; or

• Individual shareholders who are not Singapore citizens.

Ownership applies at the ultimate holding company level.

However, IRAS may still issue a COR if these companies can demonstrate that:

• The control and management of the business of the company is conducted in Singapore; and

• There are valid reasons for the company to have an office in Singapore.

This includes demonstrating that decisions on strategic matters are taken in Singapore (for example, showing IRAS that its board meetings are held in Singapore). The company must also:

• Have related companies in Singapore that are tax resident of Singapore or have business activities in Singapore;

• Obtain support or administrative services from related companies in Singapore;

• Have at least one director who holds an executive position in Singapore and is not a nominee director; or

• Have at least 1 key employee (e.g. CEO, CFO, COO) in Singapore.

Nominee company

Nominee companies are not eligible for COR because they are not the beneficial owners of the income received from DTA partners. A nominee company is a company that acts as the custodian of the shares on behalf of the beneficial owners.

Non-Singapore incorporated company

Non-Singapore incorporated companies are not eligible for COR as these companies are not controlled or regulated in Singapore. This also applies to Singapore branches of foreign companies as they are controlled and managed by their overseas parent company.

However, in exceptional cases, IRAS may still issue a COR if these companies can demonstrate that:

• The control and management of the business of the company is exercised in Singapore (i.e. the Singapore branch exercises overall control and management of the company); and

• The company has valid reasons not to be incorporated in Singapore.

Variable Capital Company (VCC)

For tax purposes, a VCC incorporated under the Variable Capital Companies Act 2018 is treated as a company.

To obtain a COR, the VCC must be a tax resident in Singapore. The tax residency status of a VCC sub-fund is determined at the umbrella level of the VCC. To obtain a COR for its sub-funds, the VCC (not the sub-funds) must apply for a COR. The COR will show the VCC and sub-fund details (tax reference number and name).

How to Apply for a Certificate of Residence

All Certificate of Residence (COR) applications must be submitted through mytax.iras.gov.sg, except in specific circumstances.

You can apply for COR through mytax.iras.gov.sg for:

• Current calendar year

• Up to 4 calendar years

For example, in calendar year 2023, a company can apply for a COR for calendar years 2019 to 2023.

Companies can also apply for COR 1 calendar year in advance, starting in October of the current calendar year.

A company will only be granted a COR for a given calendar year if it exercises business control and management in Singapore for that calendar year. Obtaining a COR in calendar year 2022 means that the company is a tax resident in Singapore for the entire calendar year 2022.

Once your application has been processed, a digital copy of the approved COR will be available at View Notice/Letters - Corporate Tax digital service at mytax.iras.gov.sg. You can print or download the approved COR.

Processing Time

IRAS will process your application within 7 working days of receipt.

If your company's notification preference in the Update Notice Preferences digital service is email notifications, you will receive an email notification within 1-3 business days that the digital COR is available at mytax.iras.gov.sg. If your company uses email notifications, no paper COR will be sent.

If your company's notification preference in the Update Notification Preferences digital service is for paper notices, you will receive a paper COR at your company's registered address within 4 business days.

Specific Circumstances for Applying for a COR in Writing

This only applies to the following companies:

• Applying for a COR for a sole proprietorship owned by a company

• Application for COR for partnerships in which the company is a partner

• Non-Singapore incorporated

These companies can write to IRAS via myTax Mail providing the following details:

• Name and Unique Entity Number (UEN) of the company/ sole-proprietorship/ partnership

• Reason(s) for requesting for the COR

• Calendar year for which the COR is required

• Name of foreign jurisdiction

• Nature and amount of income to be derived from foreign jurisdiction

• Name of the foreign company/ person paying the income

• Date of remittance of income

• 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

Once your application has been processed, a digital copy of the approved COR will be available at View Notices/Letters - Corporate Tax digital service at mytax.iras.gov.sg. You can print or download the approved COR.

IRAS will process your application within 14 working days of receipt of complete information. Processing time may be longer if the case is complex.

If your company's notification preference in the Update Notice Preferences digital service is email notifications, you will receive an email notification within 1-3 business days that the digital COR is available at mytax.iras.gov.sg. If your company uses email notifications, no paper COR will be sent.

If your company's notification preference in the Update Notice Preferences digital service is for paper notices, you will receive a paper COR at your company's registered address within 4 business days.

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Bestar is a tax agent. For assistance on applying for a COR, contact us.