Certificate of Residence (COR) in Singapore
Though globalisation has allowed ease of expansion when it comes to businesses, there are still many types of restrictions that businesses will have to pass to get to their reach. The first thing that most companies will look out for is the country’s taxation norms and rates. No business will plant themselves in a country where exorbitant taxes and stringent norms can cause them to lose more money.
Because of this, Singapore has introduced the Certificate of Residence (COR) to make it easier for foreign companies to establish themselves in Singapore. If you are a foreign company looking to establish yourself in Singapore, this article will go through all you need to know about COR eligibility and the application process.
What is COR?
In simple terms, the COR is an indication that your company has qualified for tax residence status. It allows entities to claim benefits under the Double Tax Agreement (DTA). This certificate also allows registered companies to enjoy the benefits of over 76 DTAs with several countries all over the world.
Why is it important?
The COR helps your company to avoid paying double taxes on the same income and is especially vital for foreign companies. Without the COR or agreements, foreign income can be subjected to tax in both that country and your own local country, which means that you end up paying double taxes on the same income.
Most countries have signed DTAs with each other to prevent such double taxation. It helps provide clarity with regards to what type of tax you are to pay and where to pay it. Furthermore, foreign countries also often offer tax breaks, which is when they exempt the income generated in their country or provide credits for the tax deducted.
However, before you enjoy such benefits, you must first be a tax resident. The COR proves that your company is a tax resident of Singapore, which also means that control and management are exercised in the country. While every business or individual assessee doesn’t need to get a COR, it will be useful in helping to prevent double-taxation.
Who is eligible to apply for COR?
The main criteria to apply for COR is that the company must be a tax resident of Singapore. Here are several entities who are allowed to apply for COR:
- Foreign-owned investment holding companies
Under normal circumstances, foreign-owned investment holding companies are ineligible for COR as they rely on foreign-sourced incomes and payments. However, several exceptions can make it eligible for COR:
- The company has set up an office in Singapore for valid reasons; and
- The company has control and management exercised in Singapore.
The companies will also have to meet the following requirements:
- Have related companies in Singapore that are tax residents of Singapore or have business activities in Singapore,
- Have at least one director, not a nominee director, holding an executive position based in Singapore,
- Have at least one top-level employee (COO, CFO, or similar) based in Singapore;
- Receives support or administrative services from a related company in Singapore
- Non-Singapore incorporated companies
Non-Singapore incorporated companies are not managed or controlled in Singapore and are not eligible for CORs. However, these types of companies can be eligible if:
- Its Singapore branch exercises complete control and manages Singapore operations
- There are valid reasons for not incorporating the business in the country
- Any other reasons as specified by IRAS
Who issues CORs in Singapore?
CORs in Singapore are issued by the Inland Revenue Authority of Singapore (IRAS). If you are interested to apply for a COR, you can start applying for one advanced calendar year from October to December of the current calendar year. You are allowed to apply COR for the current calendar year or up to four previous calendar years. Do take note that IRAS only accepts e-Filed applications unless there are any special circumstances.
How to apply for COR?
When you apply for a COR, there will be some information that the COR will ask from you. Here is what you should prepare in advance:
- Name of company
- A confirmation that the company is not an investment holding merely as a passive source of income
- A confirmation that the company is not a nominee company formed for holding shares on behalf of its beneficial owners
- A confirmation stating that it is not dormant
- Proof of whether it is only receiving foreign income or not
- Name of the treaty country with which Singapore has signed a DTA agreement
- Actual or estimated income
- Nature of income
- Name of the entity from whom income is received
- Date/s of remittance of income. If the payment has not yet been received, provide an expected date of receipt
- Year/s of assessment for which the COR is required
- Name/s of the beneficial owner
- A confirmation that the application is made to benefit from DTAs
- A confirmation that the company’s control and management for the entire period for which you need COR is/will be applied in Singapore
After you have collected the information that you need, visit IRAS’ myTaxPortal to apply for your COR. The application process will take up to 14 days from the date of receipt of complete information to process, or even longer.
Getting a COR in Singapore
Getting a COR in Singapore is one of the first steps that you should take when setting up your company in Singapore to ensure that your company makes the most profits and is not double-taxed. If you have any concerns regarding your company’s administration or IRAS and ACRA concerns, reach out to us via phone call or WhatsApp