Applying For A Certificate Of Residence (COR) In Singapore

For those venturing into the vibrant market of Singapore, understanding the significance of a Certificate of Residence (COR) is crucial. This essential document holds the key to tax efficiency by providing access to the benefits outlined in tax treaties.

Applying for a COR may initially appear complex, but with our comprehensive guidelines, you can easily navigate the process and position your company for success. Let’s begin.

What is the Singapore Certificate of Residence (COR)?

The Certificate of Residence (COR) is issued by the Inland Revenue Authority of Singapore (IRAS) to certify that a company is a tax resident in Singapore.

Why is this document important to your company? First, it serves as a concrete testament to your business status in this jurisdiction.

Moreover, this esteemed certificate grants you access to benefits under the Avoidance of Double Tax Agreements (DTAs). These benefits usually include:

• Double taxation relief thanks to foreign tax credits;
• Tax exemptions and reductions for certain types of income or transactions; and
• Other benefits of cross-border economic transactions (e.g. provisions related to the taxation of business profits, pensions, social security contributions, etc.)

DTA benefits are exclusively for Singapore tax residents and DTA partners. To utilize these benefits, you must provide your COR as proof of Singapore tax residency to foreign tax authorities. Obtaining a COR is essential to protect your DTA rights.

Imagine this scenario: Your company, based in Singapore, provides consulting services to a firm based in a country that has established a tax treaty with Singapore. Under normal circumstances, revenue earned from these consultancy services could be subject to a 15% withholding tax in the client’s jurisdiction.

However, with a Certificate of Residency from Singapore, your company can take advantage of the provisions outlined in the Double Taxation Agreements (DTAs).

By presenting the COR, your company may be eligible for a reduced withholding tax rate, potentially as low as 10%. This can lead to significant cost savings over time, reinforcing the value of obtaining a COR for businesses operating in Singapore.

Indeed, this certificate holds immense value for multinational corporations establishing a strong presence in Singapore, but specific conditions must be fulfilled

This leads us to the question: What are the crucial eligibility criteria for the COR application? Let’s find out.

What are the eligibility criteria for the COR application?

To apply for COR, your company must qualify as a tax resident of Singapore.

How to qualify as a Singapore tax resident?

Tax residency in Singapore is determined by the location of key operational activities and strategic decisions rather than by the place of incorporation.

In general, a company is regarded as a Singapore tax resident for a specific Year of Assessment (YA) if the control and management of its business operations were conducted in Singapore during the preceding calendar year.

Assuming that your company’s control and management were solely conducted in Singapore throughout 2022, consequently, your business is considered a Singapore tax resident for the YA 2023.

Furthermore, the control and management of a company may be deemed not exercised in Singapore in the following instances:

• No board meetings are conducted in Singapore, and directors’ resolutions are simply passed by circulation.
• The local director is a nominee director, while other directors are located overseas.
• The local director does not make strategic decisions.
• No key employees are based in Singapore.

Which companies may not be eligible for COR?

Following the aforementioned criteria, there are cases where certain types of companies may, unfortunately, be ineligible for the Certificate of Residence (COR). Let’s explore a few common situations.

Non-Singapore incorporated companies

Companies in this category are typically not controlled or managed in Singapore, therefore ineligible for a COR. This also applies to branches of foreign companies, as they are under their overseas parent companies’ surveillance.

However, IRAS may still issue a COR if a non-Singapore company can demonstrate that:

• The company exercises control and management of its business in Singapore; and
• There are valid reasons not to incorporate in Singapore.

For companies that fall within this category, IRAS may request further information for clarification purposes.

Foreign-owned investment holding companies

An investment holding company whose income is solely passive and received from foreign sources is not eligible for COR application.

A business is regarded as a foreign-owned investment holding company if

(1) It has 50% or more of its shares held by:

• Foreign companies incorporated outside Singapore; or
• Individual shareholders (who are not Singapore citizens); and

(2) Its ownership is applied at the ultimate holding company level.

Fortunately, the IRAS may still issue a COR for business if the company:

• Is controlled and managed within Singapore;
• Has valid reasons for setting up an office in Singapore;
• Has related companies that are tax residents or engaged in business activities within Singapore;
• Receives support or administrative services from a related company in Singapore;
• Has at least one director (who is not a nominee director) based in Singapore; and
• Has at least one key employee (e.g. CEO, CFO, COO) based in Singapore.

Meeting all of these criteria may make a company eligible to apply for a COR, despite the business being foreign-owned.

Nominee Companies

In the legal sense, a nominee company serves as a holder of shares on behalf of its beneficial owners. Since nominee companies are not the beneficial owner of the income derived from the DTA partner, they cannot obtain a COR.

The COR is typically granted to the actual beneficial owners of the income, who are entitled to the economic benefits and bear the risks associated with the income generated.

How can your company apply for COR?

To streamline the procedures, you must submit the COR application electronically through the IRAS myTax Portal, unless specified otherwise for certain circumstances. You can visit the myTax portal here.

Below is the step-to-step outline of the process:

Step 1: Log into myTax using CorpPass

The first step is to visit the myTax Portal and log in to the system using your company’s Singapore CorpPass credentials.

Once logged in, you should be able to locate the menu area. Click on e-Service and select Corporate Tax.

Step 2: Choose the “Apply for Certificate of Residence (COR) service

Within the Corporate Tax section, choose the option Apply for Certificate of Residence (COR) to proceed with the application.

A new window or page will appear with the COR application form. Click on Proceed to access the document.

Step 3: Enter your company particulars, COR tax year, and other taxation information

After accessing the form, you shall enter the company particular details (e.g. the business name, type, registered address, key officers, etc.), the treaty country (if applicable), and the tax year for the COR.

Per the needs and nature of your business, you can apply for a COR for the following years:

• The current calendar year
• No more than 4 back calendar years
• 1 advance calendar year, commencing from October of the current calendar year.

For instance, in November of the calendar year 2023, your business can apply for a COR covering 2019 to 2024.

Once the filing is completed, move on to the confirmation page. At this stage, you have the option to save the page as a PDF file or print it to keep hard copies.

Step 4: Type in details of the applicant and contact person

In this step, you will be required to provide information about the applicant and contact person. This might encompass your name, designation, phone number, and email address.

In addition, you must agree to the terms and conditions stated. Once the information is verified, you can submit the application.

Upon submission, you will receive a confirmation indicating that your COR application has been successfully received. You should actively monitor the application status and stay attentive to any updates from the tax authority for the best results.

What happens after you complete the process?

The IRAS normally takes 7 working days to go through your application from the date of receiving the application.

After the application is processed successfully, IRAS will send you a notification via email or physical mail to the company’s registered address.

If your company opts for email notifications as its notice preference in the Update Notice Preferences service, an email will arrive within 1-3 working days. The email shall state that the digital COR is available on myTax Portal. In this case, no physical COR is sent.

However, if you select paper notices, please expect to receive the paper COR at the registered address within 4 working days.

Please note that the timelines and procedures for notifying the results may vary depending on the specific circumstances.

Upon approval, you will have access to a digital copy of the COR through the myTax Portal’s View Notices/Letters – Corporate Tax digital service. You can also print or download the COR for record-keeping.

Conclusion

Overall, the Certificate of Residence plays a vital role in facilitating tax benefits for businesses in Singapore. It enables enterprises to benefit from tax exemptions such as Double Taxation Agreements and other treaties.

While certain requirements must be met, the process has been made more convenient through the myTax Portal. Simply follow our guide to submit your COR application with ease!

If you have further questions about doing business in Singapore, please contact us at service@bbcincorp.com. Our team is ready to provide timely support.

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