Corporate Services Singapore Explains IRAS Guidelines on Tax Issues Emerging from COVID-19

SINGAPORE - June 24, 2020 - PRLog -- In April this year, the Inland Revenue Authority of Singapore released an administrative guideline on the effect of COVID-19 related travel restriction in determining the country's taxes.

One of the tax issues addressed by IRAS is the corporate tax residency status. "If the company were a tax resident of Singapore for YA 2020, IRAS would consider it as being a tax resident for YA 2021, although it will not be able to hold a board of directors meeting in the country due to the pandemic related travel limitations," stated Mr. Hans Teo General Manager of Corporate Services Singapore.

He further explained, "This consideration is applicable as long as there are no other changes to the company's economic circumstances. The company's directors also have to attend board meetings held outside of the country or via electronic means if their travel was temporarily restricted due to the COVID-19."

In contrast, a company that was not a Singapore tax resident for YA 2020 will remain a non-Singapore tax resident for YA 2021, even though it held its board of director meetings in the country during the relevant time, provided that the company has not undergone any economic changes and has to hold its meeting in the country because of the pandemic-related travel restrictions.

"To support the company's residential status, the company should always keep relevant records and documents and offer such details and copy documentation to IRAS when requested," advised Mr. Hans.

Another issue tackled by IRAS is concerning the permanent establishment. "IRAS shall not consider the unplanned presence of employees from a foreign company that has remained in the country because of COVID-19 related travel restriction to be a creation of a permanent establishment in Singapore," stated Mr. Hans.

This rule applies as long as the foreign enterprise does not own a permanent establishment in the country for YA 2020 and has not undergone any changes with regards to its economic circumstances. Also, its employees remain in the country unintentionally due to the travel restriction relating to the pandemic, with a temporary physical presence (generally does not exceed 183 days in 2020 starting from their first arrival date to the country).

"Companies should keep relevant documents and records to serve as a supportive document for their claim of no permanent residency in Singapore," advised Mr. Hans.

Corporate Services Singapore is one of the top accounting firms in Singapore. The company had quickly expanded into a rapid-growing local and multinational accounting company since its establishment back in 2010.

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