Dormant Company in Singapore
dormant company in Singapore is a registered company that is not getting any
form of income or is firmly trading. Whether you’re immersed in setting up a
business you plan to use in the future, you’re getting a pause from trading, or
you plan to set up an SPV, dormant companies can be profitable because of their
diminished statutory obligations.
A dormant company is generally defined by its silence or shortage of business activity – that is, it does not carry out any trading activities such as:
- Whatever accounting transactions
- Remittance or receipt exceeding the nominal sum of s$5,000
- Employing personnel
- Selling plus buying goods and services
- Purchasing or leasing property
- Declaring dividends to shareholders
- Paying directors’ salaries
- Receiving dividend amounts or handling investments
- Investments in subsidiaries
ACRA and IRAS views alter a little when it comes to dormant companies in Singapore. Here’s the rapid review of the difference between how the two companies see dormant companies.
Dormant companies (ACRA standards)
A corporation can be declared dormant in Singapore only through a period where no company activity happens. But, there are some exceptions for activities where these activities relate solely to the ‘maintenance’ of managing the company compliant with ACRA plus IRAS (such as spending the fees of a company secretary). Here’s the list of works that will not affect the dormant state of any company in Singapore:
- The placement of Secretary
- The placement of Auditors
- The preservation of a registered office
- The preservation of registers and books
- The amount of any fee or cost (including a penalty, interest for late payment) payable under any written law
- The payment of any composition sum
- The payment or receipt of such nominal amount not exceeding S$5,000
Dormant companies (IRAS standards)
IRAS recognizes a company as dormant in Singapore when they do not have any income or revenue for a given span of time still though they may have been booked or incurred payment.
Planning a Dormant Company in Singapore
When you plan to incorporate a ‘Dormant Company’, you include it uniformly, as if it were a normal confined liability company. In reality, this means that a corporation is only identified dormant after the entity has, over an assigned financial period, does on carrying on business as specified above.
Decreased filing requirements for a dormant company
Filling your annual return through ACRA
A dormant company in Singapore may be exempted from making its financial statements under Section 201A of the Companies Act, if:
- It doesn't have any accounting transactions
- It is not a registered company or a subsidiary company of a listed company;
- Its entire assets at any time during the financial year in question does not exceed $500,000 in value or such additional amount as may be specified in substitution by the Minister;
- It is a parent company (which is not itself a subsidiary corporation of another corporation), refers to a group the consolidated total assets of which at any time throughout the financial year in question does not exceed $500,000 in value or such other amount as may be specified in substitution by the Minister
Although, please note that a dormant company exempted from making its financial statements should still prepare a set of management accounts for approval at the company’s AGM.
Filling your tax return with IRAS
Once you have concluded that you are a dormant company, you can appeal to IRAS to be released from your responsibility to file a tax return (Form C or Form C-S). While in order to qualify for this waiver, you require to meet the following requirements:
- Your corporation must not own any investments (e.g., properties, shares, and so on). If you do hold this sort of investment, you must not use it to create any revenue or income for the company.
- You plan that you will not begin any sort of business transactions for the next two years.
- You must have filed all financial statements including tax computations up until the company discontinued trading.
- You need to have de-registered for Goods and Services Tax (GST) purposes (if you were earlier registered).
Already a dormant company re-commences business or starts to receive any income, you are required to notify IRAS within one month from the date the income was earned/received by emailing [email protected] to appeal for an Income Tax Return. IRAS has suggested that the email have the subsequent details:
- Subject header: “ Recommencement of the corporation also an appeal for Income Tax Return”
- Name and Unique Entity Number (UEN) of the corporation;
- Date of the recommencement of the company and new principal activity (if applicable); and
- Date of receipt of the different source (s) of income e.g. interest, dividend, rent, etc. (if applicable).
If you’re viewing for more information about your particular situation or desire to ask Capital Radius anything about dormant companies, we’re here to help.
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