Dormant Companies in Singapore – IRAS & ACRA Standards
Dormant companies in Singapore are generally defined as companies earning no income or those that are not actively trading. These companies have reduced statutory obligations.
Your company could be dormant because you have taken a break from trading intentionally. On the other hand, you may also indulge in private limited company incorporation and keep it dormant. Your intention behind this could be to set up a special purpose vehicle now and use it in future.
Whatever the case, your dormant company must not show any activities like:
- Accounting transactions
- Payment/receipt exceeding S$5,000
- Employing staff
- Trading in products or services
- Buying/ leasing any property
- Disbursing dividends
- Paying salaries to directors
- Receiving dividends
- Management of investments
- Investing in subsidiaries
Before you deal with the agencies like ACRA and IRAS, you need to know their views on dormant companies in Singapore. In fact, their views on the matter differ.
ACRA Standards for Dormant Companies in Singapore
As per ACRA, a company is dormant in Singapore during a period when it has no business activity. However, a company has to conduct a few transactions to keep the company compliant with ACRA. The agency considers these transactions exceptional and allows them without affecting the dormant state of the company. The list follows:
- Appointment of company secretary Singapore
- Auditor appointment
- Maintaining a registered office
- Maintaining company registers and books
- Payment of penalty or interest for late payment
- Payments or receipts not exceeding S$5,000
IRAS Standards for Dormant Companies in Singapore
As per IRAS, a company is dormant in Singapore if it has no income or revenue for a given period even though it may have booked or incurred expenses.
How to Set Up a Dormant Company in Singapore?
Initiate the Singapore company incorporation process to set up a regular limited liability company. What about its dormant status? Well, it will be labelled dormant over a given period if it does not conduct business activities. As stated above, dormant companies in Singapore have reduced filing requirements. They are as follows:
Filing Requirements for Singaporean Dormant Companies
Annual Return Filing with ACRA
As per the Section 201A of the Companies Act, a dormant Singaporean company may claim exemption from preparing its financial statements, if it:
- Has no accounting transactions
- Is not a listed company or a subsidiary of a listed company
- Has total assets, during the financial year in question, below $500,000 or as prescribed by the Minister
- Is a parent company belonging to a group having consolidated assets below $500,000 or as prescribed by the Minister
A dormant company even after exemption has to prepare and table its management accounts for AGM’s approval.
Filling Tax Return with IRAS
A dormant company can apply to IRAS to be exempted from the obligation to file a tax return (Form C or Form C-S). The dormant company gets the exemption if it:
- Minimum initial capital of S$1
- Has no investments like properties or shares
- Cannot initiate any business transactions for the next two years
- Has filed all its financial statements and tax computations up until cessation of trading
- Has de-registered for GST