The Inland Revenue Authority of Singapore (IRAS)  has released Advance Ruling Summary No. 5/2025 on 2 May 2025, addressing whether a company establishes a taxable presence in Singapore through the sale of locally produced goods to Singaporean customers, combined with sales and marketing support provided by a related entity based in Singapore.

A company has a taxable presence in Singapore by virtue of its selling goods manufactured locally by a related entity to its Singapore customers and the provision of sales and marketing support services by another related entity in Singapore.

The company is incorporated in and a tax resident of Country A for Country A’s income tax purposes. Its principal activities are those of manufacturing, marketing, distributing, and supporting Product X. The income derived by the company from the carrying on of its business is subject to tax in Country A.

The company’s wholly owned subsidiary, SingCo Pte Ltd (“SG Co”) is incorporated and intends to be a tax resident in Singapore. Its principal activity is that of the manufacture of Product X. It has a place of business in Singapore with employee headcounts.

SG Branch (“SG Branch”) is the Singapore branch of a foreign related company. Its principal activity is that of the provision of sales and marketing support and after-sales services support to the customers for and on behalf of the company.

The company is responsible for the manufacturing, assembly and testing, loading and configuring products to customer specification, procurement, research and development, marketing, sales and distribution, and supply chain management of the group’s products to customers located outside Country

The company engages third-party contract manufacturers to produce different product components. These third-party contract manufacturers are located outside Singapore whereby they undertake procurement, system assembly, and initial testing. After the completion of initial testing, a fully assembled product (which includes the hardware components) from the contract manufacturers (the semi-finished goods) is routed/ shipped to the company in Country A to load the software onto the products and perform quality control procedures. Thereafter, the products are sold by the company through various channels of direct sales force, authorised distributors and integrator partners.