Resident vs Non-Resident Company in Singapore – Pros and Cons Explained
Introduction
When setting up a business in Singapore, one of the key considerations is whether your company will be treated as a resident company or a non-resident company. This distinction is critical because it affects tax treatment, access to incentives, and compliance obligations.
In this article, we explain the differences between resident and non-resident companies in Singapore, outline the pros and cons of each status, and provide insights to help business owners and investors make informed decisions.
What Is a Resident Company in Singapore?
A resident company is one that is controlled and managed from Singapore. According to the Inland Revenue Authority of Singapore (IRAS), control and management usually refers to where the company’s board of directors makes key decisions.
✅ Pros of a Resident Company
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Tax Benefits: Resident companies enjoy Singapore’s extensive Avoidance of Double Taxation Agreements (DTAs) with more than 80 countries.
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Tax Exemptions and Reliefs: Access to schemes like the Start-Up Tax Exemption (SUTE) and the Partial Tax Exemption (PTE).
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Reputation and Credibility: Being a Singapore tax resident enhances trust with banks, clients, and investors.
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Access to Incentives: Eligibility for government support schemes such as grants and rebates.
❌ Cons of a Resident Company
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Higher Compliance Requirements: Resident companies must maintain proper governance and local directorship.
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Substance Requirements: Actual management and decision-making must be proven to be in Singapore, which may increase operating costs.
What Is a Non-Resident Company in Singapore?
A non-resident company is incorporated in Singapore but its control and management take place outside the country. For example, if the board of directors mainly resides overseas and decisions are made outside Singapore, the company will likely be considered non-resident.
✅ Pros of a Non-Resident Company
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Flexibility: Management decisions can be made from abroad, which is convenient for foreign-owned businesses.
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Local Incorporation Benefits: Even as non-residents, companies still benefit from Singapore’s world-class infrastructure, ease of doing business, and political stability.
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No Local Management Cost: No need to base key management staff in Singapore if decisions are made overseas.
❌ Cons of a Non-Resident Company
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No Tax Residency Benefits: Non-resident companies are not entitled to DTAs and local tax exemptions.
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Higher Tax Exposure: Overseas income may still be taxable in the foreign jurisdiction without DTA relief.
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Reduced Access to Incentives: Ineligible for certain government schemes available only to resident companies.
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Perception Issues: Non-resident companies may be viewed as less established compared to resident companies.
Resident vs Non-Resident Company – Which Should You Choose?
The choice depends on your business model and long-term goals.
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If your company plans to operate in Singapore, work with local banks, and benefit from tax exemptions, resident status is the better option.
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If your company only uses Singapore as an incorporation base but operates fully abroad, non-resident status may be sufficient.
To determine your tax residency status, IRAS requires supporting documents such as board resolutions, meeting minutes, and proof of decision-making in Singapore. For details, see the official IRAS Tax Residency Guidelines.
Incorporating a Company in Singapore or Malaysia: Step-by-Step Guide (2025)
Practical Example
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A Singapore-incorporated trading company holds its board meetings in Singapore, hires local management, and makes strategic decisions locally. It qualifies as a resident company and enjoys tax benefits like the Start-Up Tax Exemption.
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Another Singapore-incorporated company has all directors based overseas and conducts board meetings outside Singapore. It is a non-resident company and does not qualify for DTA benefits.
Conclusion
The distinction between a resident company and a non-resident company in Singapore has significant implications for taxation, compliance, and credibility.
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A resident company enjoys lower taxes, exemptions, and access to government incentives, but requires local management and governance.
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A non-resident company offers flexibility and lower local compliance costs but misses out on tax benefits and may face credibility challenges.
Business owners should carefully evaluate their goals before choosing the right status. Consulting a professional adviser ensures compliance with IRAS and ACRA regulations while optimizing tax efficiency.
Disclaimer: This article is for informational purposes only and does not constitute any professional advice. Feel free to contact us to consult with our professional advisors team for personalized advice and guidance.
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