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How do I define a dormant company in Singapore? Does a dormant company need to file annual returns? How do I close a dormant company properly in Singapore? Do I just leave it be?
While these are perplexing questions, the answer to these questions can be even more frustrating. Because the answer is - it depends.
This is due to a significant difference on how the Accounting and Corporate Regulatory Authority (ACRA) and the Inland Revenue Authority of Singapore (IRAS) define a dormant company and its different legal implications.
What is the ACRA’s definition of a dormant company in Singapore?
To put it simply, the ACRA defines a dormant company as a business that has not conducted any accounting transactions for a given financial period.
However, your business is still allowed to execute a limited number of transactions in its dormant status to assist the business with cost of compliance and a range of administrative expenses. This most notably excludes:
- Expenses associated with appointing a company secretary or auditor
- Costs of maintaining the registered office
- Payments to ACRA for fines, fees or penalties
- Maintenance costs of business books and registers
On the plus side, if your company is recognised as a dormant company by the ACRA, it will be exempted from submitting financial statements.
What is the IRAS’s definition of a dormant company?
On the other hand, the IRAS defines a company as dormant when it no longer generates income even in the case of existing expenditures and expenses. With that, your company will be exempted from annual filing of returns.
What are the filing requirements for a dormant company in Singapore?
Filing annual returns with ACRA
If your business is classified as a dormant unlisted company by ACRA regulations, it is exempted from audit requirements but you are still required to prepare financial statements for annual return filing. However, a dormant non-listed company (other than a subsidiary of a listed company) is exempt from requirement to prepare financial statements, if:
- the company fulfils the substantial assets test i.e. total assets of the company or group (for a parent company) at any time within the financial year must not exceed $500,000; and
- the company has been dormant from the time of formation or since the end of the previous financial year.
Dormant listed companies and their subsidiaries, and dormant unlisted companies which do not fulfil the substantial asset test must prepare financial statements for annual return filing but are exempt from audit.
Filing tax returns with IRAS
According to the IRAS, a dormant company is defined as a company that has not carried out business or generated income for a specified period. In a scenario where a company hasn’t generated income for the entire year of 2019, it will be considered a dormant company for Year of Assessment (YA) 2020.
However, dormant companies are still required to file their Income Tax Return. This can be done via e-filing using the myTax portal, or by submitting a copy of the Form C-S/C.
However, if your company has been granted a waiver of Income Tax Return Submission, it will not be required to file an Income Tax Return.
How to close a dormant company in Singapore
If you've decided to say goodbye to all these hassles and dissolve your company here's what you can do.
Simply submit an application to the ACRA to have your company's name struck out of Singapore's register of companies. However, this must be done by either your company secretary, director or your registered filing agent. It can also be e-submitted via Biz File Portal.
With a subsequent approval if successful, your company will be dissolved.
Let Sprout Asia guide you on filing annual returns or dissolve your dormant company
Sprout Asia offers reasonable and reliable company secretarial services that deliver with quickness and efficiency.
As a full-fledged company secretarial services provider, Sprout Asia helps businesses with excellent & comprehensive one-stop solutions at budget-friendly prices including filling your annual returns or even properly dissolving a dormant company at your choosing.
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