Global Daily Tax News, Singapore Clarifies Business Tax Residency Rules, (Nov 30, 2023)

The Inland Revenue Authority of Singapore has updated its guidance to clarify when a company will be deemed to be tax resident in Singapore when its control and management is exercised there. The guidance concerns digital board meetings.

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.

The updated guidance provides that a Board of Directors meeting which involves the use of virtual meeting technology will generally be regarded as having strategic decisions made in Singapore if either of the following conditions is met:

• At least 50 percent of the directors (with the authority to make strategic decisions) are physically in Singapore during the meetings; or

• The chairperson of the Board of Directors (if the company has such an appointment) is physically in Singapore during the meeting.

The Inland Revenue Authority of Singapore said 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; or

• No key employees are based in Singapore.