A Singapore company is considered tax-resident in Singapore if the control and management of the company’s business is exercised in Singapore. This is typically the case when the board of directors meetings, where strategic decisions are made, take place in Singapore.
The tax residency status of a company can have several implications. Singapore tax-resident companies can avail themselves of tax benefits accruing from the avoidance of double taxation agreements (DTAs) that Singapore has concluded with other countries.
Additionally, tax-resident companies can enjoy certain tax incentives and exemptions, such as:
- The Partial Tax Exemption and the Newly Incorporated Company Tax Exemption, which provide reduced tax rates on a certain amount of normal chargeable income.
- Under the Foreign-Sourced Income Exemption scheme, a Singapore tax-resident company can enjoy tax exemption on its foreign-sourced dividends, foreign branch profits, and foreign-sourced service income that is remitted into Singapore, subject to meeting certain conditions.
The Inland Revenue Authority of Singapore (IRAS) typically treats a company as a tax resident for a particular Year of Assessment (YA) if the company has control and management of its business exercised in Singapore in the preceding year.
It’s important to note that tax residency is determined on a yearly basis. Therefore, a company could be a tax resident in one year and not in another, depending on where it exercises its control and management.
Please note that the above information is based on the understanding of Singapore’s tax laws as of my last training data in September 2021. It is advisable to consult with a tax professional or check for the latest regulations to understand current tax laws and their implications.