What is a Certificate of Residence (COR) & Does My Business Need It?
What is a Certificate of Residence?
A Certificate of Residence (COR) is a document issued by the Inland Revenue Authority of Singapore (IRAS) to businesses within Singapore to prove that the respective legal entity is a tax resident. The primary benefit of COR is that it allows the entity to claim benefits under the Avoidance of Double Tax Agreements (DTAs). In Singapore, a legal entity is a tax resident if the business is controlled and managed within Singapore, however, a legal entity is considered to be a non-resident if the control and management is not exercised within Singapore. If the travel restrictions caused by the pandemic impacted the status of your tax residency, refer to the Tax Residence Status of a Company and Permanent Establishment for more information.
What is Double Taxation?
Companies that are Singaporean tax residents or companies that are not Singaporean tax residents can apply to declare themselves as such and be approved for avoiding double taxation. An Avoidance Double Taxation Agreement (DTA) allows for a relief of double taxation of income that is earned in one jurisdiction by a resident of another jurisdiction (a treaty partner). The DTA permits a reduction or exemption of tax on certain types of income. In the case of the DTA only permitting a reduction of tax, the DTA will provide relief for this double taxation by allowing the Singapore company to claim a credit of the foreign tax suffered against its Singapore tax payable on the same income. This form of credit is known as Double Tax Relief (DTR).
Does My Company Need a Certificate of Residence?
Applying for a COR is not a necessity; although, it can allow for financial benefits for the company. If you earn foreign income, you may be subject to tax in that foreign country/region. However, if there is a DTA between Singapore and the foreign country/region you may be able to claim tax benefits, in the form of reduction or exemption of tax. In the case where you are not claiming benefits under the DTA but wish to obtain a letter certifying that the company is a tax resident of Singapore, you may write to IRAS and ensure to include the following information:
- Name and Unique Entity Number (UEN) of the company
- Reason(s) for requesting the letter of residence
- Confirmation that the control and management of the company is exercised in Singapore
- Calendar year for which the letter is required
How to Apply for a Certificate of Residence
To apply for a COR your application must be e-Filed through myTax Portal. Unless your company falls under one of following specific circumstances as paper applications are no longer accepted:
- Applying COR for a sole-proprietorship business owned by the company
- Applying COR for a partnership business of which the company is a partner
- Non-Singapore incorporate companies
When applying, it is possible to apply for the current calendar year, one future calendar year, or even up to four previous calendar years. When preparing to apply, the company will need to authorise a staff member or a third party (such as a tax agent) for Corporate Tax (Filing and Applications) in Corppass before the staff member / third party can log in and apply for COR on behalf of the company. IRAS will process your application within 7 working days of receiving the application.
Reach Out to Sprout!
Our team of professionals at Sprout can help guide your company in the right direction. Sprout offers seamless application services to apply for the Certificate of Residence (COR) on the behalf of our clients. Feel free to contact us with any of your queries, we’ll respond within 24 hours.