The definition of dormant company differs between Accounting and Corporate Regulatory Authority (ACRA) and the Inland Revenue Authority of Singapore (IRAS). ACRA defines a company as dormant if it had no accounting transactions during a given period even if it does an appointment of company secretary, maintaining a registered office, keeping of books and registers, and paid fines or any fees to ACRA. Nevertheless, a company that does not have any income or revenue within a given financial period is considered as dormant by IRAS even though it may have incurred expenses.
These distinctions are significant as they affect the company’s obligations to file its annual return with ACRA and its tax return with IRAS. Here are the breakdowns of three main regulatory obligations that a dormant company must comply with in order to claim the status.
Filing annual return with ACRA
With effect from 3rd January 2016, a dormant company that fulfill these three requirements is exempted to prepare financial statement with ACRA:
- The company is not a listed company or subsidiary company of a listed company.
- The company fulfils the substantial assets test and does not exceed S$500,000 in assets regardless of standalone or consolidated basis.
- The directors of the company have lodged a declaration with ACRA stating that the company has been dormant for the relevant period.
For a dormant company which is exempted from preparing its financial statement, you may still choose to voluntarily prepare the financial statements and we do provide such services that meet your needs and expectations.
Kindly noted that all dormant companies which are required to prepare financial statements will still need to prepare it in accordance with Singapore Accounting Standards (SFRS), conduct annual general meeting (AGM) and file annual return with ACRA within the prescribed time limits. Generally, an unlisted company has to file its annual returns within 7 months after its financial year end; whereas for listed company, its annual returns have to be filed within 5 months after its financial year end.
Filing Income Tax Return with IRAS
A dormant company still needs to submit its Income Tax Return (Form C-S/ Form C) to IRAS unless the company has been granted a waiver.
In order to qualify for this waiver, the company has to fulfill the following criteria:
- The company will not recommence business for the next two years.
- The company must not own any investment. If it does, the investment must not be used to generate any revenue or income for the company.
- The company has to file an up to date financial statements and tax computations until the company ceased trading.
- If the company previously were GST registered, the company must de-registered it.
Once IRAS grants the waiver, the dormant company does not require to file the Income Tax Return annually as long as the company remains dormant.
Once a dormant company re-commence business or starts doing business again, the company has to notify ACRA of its change in status within one month from the date of commencement of business. This same applies to IRAS where you need to submit the Request for Income Tax Return (Form C-S/C) and a Notification of New Financial Year End forms within that one month period.
Company service providers such as WLP group offers comprehensive services for companies to file their Annual filings (which include income tax returns) accurately and on time. We will also be able to assist dormant companies that wish to re-commence business to file all their necessary tax documents. Contact us today for more information on how we can help your company.