What Is A Certificate Of Residence (COR) and Why Does Your Business Need One?

The Certificate of Residence (COR) is a letter issued by the Inland Revenue Authority of Singapore (IRAS) to certify that the company is a tax resident of Singapore to claim tax benefits under the DTAs that Singapore has concluded with other jurisdictions. It is necessary to prove to the foreign tax authority that the company is a Singapore tax resident.

In countries where a DTAA with Singapore is in force, the COR may be required by that country’s tax authority to determine if income from sources within its territory can be taxed at all or to what extent.

An example would include Germany whose domestic laws allow taxation of income earned by a Singapore company, regardless of whether the business has a permanent establishment in Germany or not. In such cases, the COR would be presented to the German tax authority as evidence that the Singapore company is indeed subject to tax in Singapore on its worldwide income.

As a result, the company gets to enjoy a lower corporate tax rate in Singapore as compared to that of Germany.

Who Is Eligible To Apply For A Certificate Of Residence?

A COR may only be issued to a company that is a tax resident in Singapore. 

Below are three forms of entities that do not qualify for the COR:

Foreign-owned investment holding companies

A foreign-owned company is one whereby 50% or more of the shareholdings belongs to foreign entities incorporated outside Singapore or by non-Singapore citizens individuals

There are exceptions to this rule if the company can demonstrate the following:

1. The control and management of the company’s business is exercised in Singapore and;
2. There is a valid reason to set up an office in Singapore
3. Have related companies in Singapore that are tax residents of Singapore or have business activities in Singapore
4. Receive support or administrative services from a related company in Singapore
5. Have at least one director based in Singapore with an executive role (not a nominee director) or at least one key employee based in Singapore

Nominee Companies  

A nominee company is a company that holds shares on behalf of another person or entity.

Since they are not the beneficial owner of the derived income, they are not eligible for the COR.

Non-Singapore Incorporated Companies

As these companies usually have their management outside of Singapore, they will not be eligible for the COR.

There are however exceptions:

1. The control and management of the company is in Singapore
2. The company has legitimate reasons for not incorporating in Singapore

IRAS may require further information to assess the application.

How To Apply For A Certificate Of Residence?

You can complete the application for the COR through the IRAS e-services portal.

Besides the current year, the company may apply for the COR up to four years back.

The waiting time is up to seven working days.

You may choose to do the application personally or appoint your tax agent or corporate secretary to do it on your behalf.

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