A dormant company in Singapore is defined as a registered company that is not earning any form of income or is not actively trading now. If you are planning to set up a company that you want to utilize in the future, you aim to set up an SPV, or if you are taking a short break from trading business, then dormant companies could be very advantageous as they have reduced statutory obligations.
A dormant company is basically defined by the lack of business operations or its silence – which means, it is not carrying out any business or trading activities like:
1. Hiring staff
2. Buying or leasing any property
3. Selling or buying products and services
4. Issuing dividends to its shareholders
5. Receiving any dividend payments or managing its investments
6. Paying accountancy or other legal fees from its business bank account.
7. Paying the salaries of the directors
ACRA and IRAS have different views regarding dormant companies in Singapore. Let’s look at how these two organizations have differing opinion about dormant companies.
A company can be termed as dormant in Singapore only within a period when no business activity is undertaken. But, there are some exceptions for business activities where these activities could relate exclusively to the ‘maintenance’ of how the company is kept in compliance with ACRA and IRAS guidelines like paying the fees of its company secretary. Below are the list of transactions which do not have any effect on the dormant condition of any company in Singapore:
1. Auditor’s approval
2. Hiring of a company secretary
3. Book-keeping and maintenance of registers
4. The maintenance of a registered office in Singapore
5. Registrar fees payment, or payment of any fine/penalty to the ACRA Registrar
IRAS defines a company as dormant in Singapore in case they do not generate any income or revenue for a specified period of time although they might have incurred or booked some expenses.
If you have decided to form a dormant company, then you must incorporate it regularly, considering it as a normal LLC or limited liability company. This means that your company would only be labelled dormant as the entity does on perform any business as described above in a specified financial period.
A dormant company in Singapore gets an exemption from filing annual returns and doesn’t have to prepare any type of financial statements, if:
After you have established that your company is a dormant company, then you could apply to IRAS and seek permission to be released from the requirement to file an annual tax return (Form C or Form C-S). To qualify to get this waiver, you should be meeting the following requirements:
In a situation where a dormant company is re-commencing its business or it begins to earn any income, then you must notify IRAS within a month starting from the date of earning the income. You need to email at email@example.com for requesting to file your Income Tax Return. AS per the IRAS guidelines, it’s recommended that your email should the following details:
If you have any queries on how to register a company in Singapore or about Singapore company incorporation, do get in touch with us and we will be able to assist you. If you require more information regarding your specific situation or want guidance about dormant companies, please contact us and our experts would help you.