Singapore Tax Resident
Generally, a company is considered to be a tax resident in Singapore when the control and management of the company is based in Singapore. Hence, if a company were to run the bulk of its business operations in Singapore; and have most of its employees in Singapore, but have its management office situated in Indonesia, it would not fulfil this criteria. This is a common scenario that arises for franchisees or retail stores.
Certificate of Residence in Singapore
Strategically situated in the Asia-Pacific region, Singapore aims to be the ideal launchpad for companies that wish to target the Asia-Pacific market; and the Singapore government has made substantial efforts to establish strong diplomatic ties with its neighbours and other dynamic financial centres, which in turn has made it much easier for locally incorporated companies to widen their market reach into the region.
A key achievement of Singapore’s strong diplomatic policy is the establishment of double taxation agreements (“DTAs”) with 76 other countries all over the world. With a DTA, tax barriers are minimised, incentivising cross-border flows of trade, investment and expertise between two countries. More importantly, a DTA allows taxpayers to enjoy certainty on the tax regime of either country while eliminating double taxation. Given that Singapore has an extremely attractive tax regime as compared to its peers throughout the world, this is not only beneficial for locally incorporated companies as they eliminate tax from profits earned in the foreign country while gaining access to that foreign market, but also potentially beneficial for foreign-owned companies, who may prefer Singapore’s low corporate tax rate as compared to their own domestic tax rate. Naturally, the benefits of a DTA and Singapore’s corporate tax rate are only applicable to companies that are considered to be Singapore tax residents, a classification that is not necessarily derived from a company’s place of incorporation.
Read more about Corporate Tax and Certificate of Residence at Singapore Company Incorporation.
