Certificate of Residence (COR) in Singapore: The Definitive Guide
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!
What Is a Singapore Certificate of Residence (COR)?
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:
- Double taxation exemptions
- Tax reductions/exemptions for specific types of income
- Cross-border economic transaction benefits
Important Note
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.
What Are the Eligibility Criteria for a COR Application?
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.
Companies
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.
- Board of directors’ meetings do not take place in Singapore and directors’ resolutions are passed by circulation
- The local director is the nominee director and the rest of the directors are overseas
- The local director does not take part in the strategy decision-making process
- No essential employees are located in Singapore (e.g. CEO, CFO, COO)
Individuals
There are four different instances in which you are an eligible individual for tax residency in Singapore:
- Singapore Permanent Residents or Citizens residing in Singapore with only temporary absences
- Foreigners who resided or worked in Singapore for a minimum of 183 days in the previous year or for three consecutive years
- Foreign employees who have worked in Singapore for two consecutive years and have resided in Singapore for at least 183 days
- Foreigners with a work pass that is valid for at least one year
Which Companies Are Not Eligible for a COR?
Aside from the companies that are not eligible for a certificate of residence because of their ‘control and management’ practices, there are a few other general types of companies that do not qualify. Let’s take a look at these types of companies.
Non-Singapore Registered Companies
Since most non-Singapore registered companies are not controlled and managed in Singapore, they are usually not eligible for tax residency and, thus, a COR. However, the IRAS may still issue a COR if you demonstrate the following:
- Proof that the company is controlled and managed in Singapore
- Valid reason(s) for not incorporating in Singapore
Important Note
This applies to branches of offshore companies located in Singapore since they are controlled and managed by the parent company.
Foreign-Owned Investment Companies
Investment holding companies with entirely passive and foreign sources of income do not qualify for a COR.
A company is considered a foreign-owned investment holding company if it satisfies the following conditions:
- 50% or more of its shares are held by companies incorporated outside of Singapore or by non-Singapore citizen shareholders
- The ultimate holding company level has ownership
However, the IRAS may deem your company eligible if your company can provide proof of the following:
- It is controlled and managed in Singapore
- It has related businesses in Singapore that hold Singapore tax residency or engage in business activities within the country
- It receives assistance or administrative services from related businesses in Singapore.
- It has at least one executive director in Singapore that is not a nominee director
- It has at least one key employee in Singapore
In other words, a foreign-owned investment holding company may be eligible to obtain a COR if it has a substantial business presence and operations physically conducted in Singapore.
Nominee Companies
Nominee companies are companies that hold shares on behalf of an earning entity. Since nominee companies are not the beneficial owners of the income obtained from the DTA partner, they are not eligible for a certificate of residence.
Companies that are the beneficial owners of the income, holding the rights to the economic benefits and risks of the income, are able to qualify for a COR.
Variable Capital Companies (VCC)
In most cases, Variable Capital Companies that meet the tax residency requirement are eligible for a COR. Even so, there are a variety of circumstances that may prevent a VCC from obtaining a COR.
- To acquire a COR for its sub-fund, a VCC must apply rather than the sub-fund itself
- The VCC rather than the sub-funds must be a tax resident
As a result of the distinct structure of a VVC, a VCC certificate of residence will contain the tax reference number and name for both – the VCC and its sub-funds.
How Can Companies and Individuals Apply for COR?
Companies
To apply for a company COR, you or your tax agent can submit an application through the myTax Portal. Below we have outlined the key steps to submit an application:
- Log in to the myTax Portal using your company’s CorpPass credentials
- Select the “Apply for Certificate of Residence” option in the navigation menu
- Click the “Proceed” button on the new window
- Enter your company’s particulars (business name, registered address, etc)
- Provide details of the applicant and the contact person
- Verify that all the information on the confirmation page
- Submit the COR application
Once the COR application has been submitted, you will receive a confirmation that your application has been received. In most cases, it takes 7 business days for the IRAS to process your application. Once it has been processed, you will receive an email notification or paper notice (at the company’s registered address) depending on what preference you selected when completing the application. For email notifications, it usually takes 1-3 business days to be notified that you can access a digital copy of the COR on the myTax Portal, and for paper notices, it can take up to 4 business days for your company to receive the physical copy of the COR.
Individuals
As an individual, you can apply for a COR by submitting an official form based on your residency status. To apply, complete one of the following forms appropriate to your situation.
- Citizen or Permanent Resident employees form
- Self-employed/sole-proprietors/partners
- Foreign Employees (SingPass Holders) form
Important Note
If you are a foreign employee but not a SingPass holder, you can submit a COR by email to the IRAS.
Last Remarks
Although a Certificate of Residence is not a requirement for Singapore companies or individuals, it provides significant financial benefits such as tax exemptions. At Intracorp, we are aware that understanding all the different aspects of a COR might be complicated at first glance, which is why our team of tax agents is here to assist you and your company with the COR application process or with any questions you may have. Feel free to reach out to us today!
