A company is generally considered a tax resident of a country if the control and management of its business is exercised in that control during a particular tax year.
Under Singapore tax law, the tax residency of a company is determined by where the business is controlled and managed. The residency status of a company may change from year to year. Generally, a company is considered a Singapore tax resident for a particular Year of Assessment (YA) if the control and management of its business was exercised in Singapore in the preceding calendar year.
A company is a non-resident when the control and management of its business is not exercised in Singapore.
‘Control and management’ is defined as the making of decisions on strategic matters, such as those concerning the company’s policy and strategy. Where the control and management of a company is exercised is a question of fact.
Usually, the location of the company’s Board of Directors meetings where strategic decisions are made determines where the control and management is exercised. Under certain scenarios, holding Board of Directors meetings in Singapore may not be sufficient and IRAS will consider all facts provided by the company to determine if the control and management of the business is indeed exercised in Singapore.
Some examples of scenarios where the control and management of a company may be considered not exercised in Singapore include:
- There is no board of directors meeting held in Singapore. Instead, the directors’ resolutions are merely passed by circulation
- The local director is a nominee director while the rest of the directors are based outside Singapore
- No strategic decisions are made by the local director in Singapore
- No key employees are based in Singapore
We generally push all companies registered in Singapore to be fulfill tax residency requirements and that includes;
- Resident director actively advising the board of strategic decisions and policies
- Resident director actively responsible for compliance and governance functions
- Resident director taking part in decisions with regards to hiring and appointments
- Resident director participating and initiating all general meetings such as AGMs and EGMs
- No nominee directors are appointed. Each director has a clear role and responsibility to play towards the success of the business.
Speak to us about qualifying your company as a tax resident of Singapore.