Any registered business organization that isn’t actively trading or doesn’t have any income is referred to as a dormant company in Singapore. A firm can be deemed dormant if it no longer: sells or purchases anything, employs people, receive income or pay dividends. While the concept of a dormant company in Singapore is not new, the Accounting and Corporate Regulatory Authority (ACRA) and the IRAS (Inland Revenue Authority of Singapore) define a dormant company differently.
ACRA’s definition of a private dormant relevant company
- Pays penalties, fines or fees to Accounting and Corporate Regulatory Authority
- Employs a new secretary
- Maintains registers or books
- Initiates payment of any composition amount
- Appoints auditors
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IRAS’s definition of a dormant company
All Singapore company incorporations must be in compliance with the ACRA and the IRAS. In order to enjoy the benefits of a dormant company, it is ACRA that should identify a firm as formant. ACRA exempts a dormant company from preparing financial statements, whereas IRAS releases it from the tax filing obligations.
How to get your company classified as officially dormant?
Filing requirements for a dormant company in Singapore
1. Filing annual returns with Accounting and Corporate Regulatory Authority (ACRA)
The company does not have accounting transactions
The company isn’t a listed firm or a subsidiary company of a listed organization
The company’s total assets at any time in the financial year does not surpass $500,000 in value or such other amount as may be prescribed in substitution by the Minister.
Please note that a dormant firm that’s exempted from preparing its annual financial statements must still prepare a management accounts to receive approval at the firm’s AGM.
2. Filing your taxes with the Inland Revenue Authority of Singapore (IRAS)
The firm must not own any investments (for instance, shares, properties etc). If you hold investments, you should not use it to generate any income for the firm.
The firm must declare that it will not start any sort of business transactions in the next two years.
The company must have filed all the financial statements and tax computations up until the firm stopped trading.
The firm should have de-registered for Goods and Services Tax (GST).
These processes are easier to implement when you seek professional aid from accounting services in Singapore.
What’s the procedure to recommence a dormant business?
Subject heading: “Recommencement of business and request for Income Tax Return”
Name and the Unique Entity Number of the firm
Date of recommencement of business and new principal activity (if applicable).
Date of receipt of other source(s) of income e.g. interest, dividend, rent, etc. (if applicable).
How to close a dormant company in Singapore?
If you have decided to close your current dormant company, then you must submit an application to ACRA affirming your desire to have your company’s name removed from the register of companies. The application has to be filed by your company secretary, the director or your registered filing agent. It can also be e-submitted through Biz File Portal.
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