Certain Facts and Procedures to Apply for COR (Certificate of Residence Application)

At present, Singapore is equipped with a broad network of tax treaties and it has made Singapore the most conducive and attractive destination for overseas speculation in Asia. Also, in Singapore, 5.66% is the effective rate of tax of the initial $300,000 profit for a freshly established Exempted Private Limited Company. Moreover, various funds and government grants are accessible to assist companies to enhance their business in the country. When it comes to Certificate of Residence Application(COR), it is a form from IRAS confirming that the organization is a tax resident of Singapore. It allows the company to benefit from Avoidance of Double Taxation services Agreements, qualify for tax exemptions, and so on. To get a Certificate of Residence, it is vital to exercise management and control of the firm in Singapore.

What to Know About Certificate of Residence in Singapore?

Singapore strategically located in the Asia-Pacific region, it is considered as the ideal launchpad for organizations that desire to target the Asia-Pacific market. However, the government of Singapore has made considerable efforts to set up sturdy diplomatic ties with its neighbors and other active financial centers and it has made much more convenient for locally incorporated companies to expand their market level into the region. The main achievement of Singapore’s sturdy diplomatic policy is the initiation of double taxation agreements (DTAs) with other 76 nations worldwide. Therefore, it is essential to have a Certificate of Residence Application (COR) so that you can minimize your tax barriers and thereby motivate investment, cross-border flow of trade, and expertise between the two nations.

More importantly, a DTA enables taxpayers to experience assurance on the tax regime of both countries while abolishing double taxation. Singapore’s attractive tax regime is not only advantageous for locally incorporated companies to remove tax from profits earned in the overseas country but also advantageous for foreign-owned companies who can opt Singapore’s low corporate tax rate in comparison to their own domestic tax rate. Usually, the benefits of Singapore’s corporate tax rate and DTAs are only applicable to companies that are known to be tax residents of Singapore. Hence, one should apply for a Certificate of Residence Application (COR) to enjoy various benefits of Singapore. Unluckily, certain companies misuse such benefits of tax treaty which results in the IRAS get more strict in offering status of tax residence to organizations today.

Why Do You Need COR for Your Singapore Company?

The Certificate of Residence Application (COR) is essential to request benefits of tax below the Limited Treaties or DTAs that Singapore holds with other nations. There are few DTAs that provide tax breaks and you can receive those tax breaks with COR. You can still claim the COR letter even if you do not require any benefits of DTAs. Every company must make a note that a COR is only legally acceptable in the year it is issued as IRAS might reclassify the firm if it does not fulfill the stipulated needs within the assessment year. A company would require to give the following information to IRAS while applying for a COR:

  • Full name of a company
  • Registration number of a company
  • Year of Assessment for which the COR is needed

Apart from the information mentioned above, IRAS might need additional information from the company at its discretion. Currently, there is no shared electronic system via which companies can request their tax concessions, tax exemptions or tax credit based on the DTA signed between the two jurisdictions. Hence, the authority of the foreign tax will typically want a company to submit a Certificate of Residence Application (COR) as evidence before letting the company enjoy benefits given under the DTA. It might be required to present a tax reclaim form to the foreign tax authority depending on which foreign jurisdiction is receiving income from the Singapore tax residents. This tax reclaim form might also need certification from IRAS. In such situations, the company must refer to the Mutual Agreement Procedure clause of the relevant DTAs to avoid a problem or dispute that arises when a company tries to claim its tax exemptions, tax credit, or tax concessions.

Companies That Can or Cannot Apply for COR

To receive a Certification of Residence Application (COR), a company should compulsorily be a Singapore tax resident. The Nominee companies cannot apply for COR as they are not the favorable owner’s income obtained from the partner of the treaty. A nominee enterprise is an enterprise that plays the role of a custodian of shares in the interests of the favorable owners. The foreign-owned investment-holding enterprise with clearly passive income sources and getting income from the foreign sources are not permitted to apply for COR. A foreign-owned enterprise is an enterprise where 50% or more of its shares are undertaken by:

  • Foreign companies that are established outside Singapore; or
  • Individual shareholders who are non-citizens of Singapore.

IRAS might still issue a Certificate of Residence Application (COR) if these enterprises can satisfy IRAS that:

  • The management and control of the company’s business is practiced in Singapore; and
  • The company has accurate reasons for establishing an office in the country.

To satisfy the conditions of the IRAS mentioned above, such companies should show that decisions on strategic matters are formed in Singapore, for instance, by exhibiting IRAS that their meetings of the ‘Board of Directors’ are undertaken in Singapore. Apart from this, the enterprise should also:

  • Have associated companies in Singapore that have business activities in Singapore or are tax residents of Singapore; or
  • Acquire administrative services or support from an associated Singapore-based company; or
  • Have minimum one director who is Singapore-based and is not a nominee director and holds an executive position; or
  • Have a minimum of one main employee (e.g. CFO, COO, CEO) who is Singapore-based.

Singapore branches of foreign companies and Non-Singapore established companies are not eligible to apply for Certificate of Residence Application (COR), as these companies are not managed or controlled in Singapore. In the case of Singapore branches of foreign companies, they are managed and controlled by their foreign parent company. However, IRAS might still issue a COR in exceptional situations if these companies can satisfy IRAS as per the conditions listed above. IRAS retains the power to request for extra details of the company. However, the company will not be able to apply for COR through myTax Portal but will require to apply for COR in writing.

How Can You Apply for COR?

All applications for COR have to be e-Filed through myTax Portal or else you can also take the assistance of business consulting companies who offer Certification of Residence Application (COR) services. Except for certain situations, the paper applications will no longer be approved. If necessary, you can apply for COR through myTax Portal for:

  • the present calendar year; or
  • up to four past calendar years

For instance, in the calendar year 2019, the company might request a COR for the calendar years 2015 to 2019. The COR is rendered to the enterprise for the calendar year only if the management and control of its business are practiced in Singapore in a particular calendar year. If the COR is provided for the calendar year 2019, it means that the enterprise is a Singapore tax resident throughout the calendar year 2019.

The IRAS will forward your Certification of Residence Application (COR) within 7 working days of obtaining the application and send the COR to the company’s registered address through the mail. You should wait up to 4 working days to get it in your email address. Once your application is forwarded within 7 working days, an approved duplicate copy of the COR will be made available on the internet which you can print or download. However, you have to submit certain information to the mail ID of the business consulting company to whom you approach are as follows:

  • Name of a company
  • Treaty country name
  • Whether the company getting only overseas source income
  • Verification on the enterprise is not a nominee enterprise
  • Verification on the enterprise is not an investment-holding enterprise with a clear passive income source
  • Verification on the enterprise is not dormant
  • Income nature
  • Foreign company name
  • Date of income remittance
  • Assessment year
  • Verification on the management and control of the company in Singapore
  • Verification on the purpose of making the application
  • Whether the company is the favorable owner’s income