A company that has its business activities temporarily halted is deemed to be a dormant company in general. In Singapore, both ACRA and IRAS has different definition of dormant.
WHAT IS A DORMANT COMPANY IN SINGAPORE?
DEFINITION OF ACRA’s DORMANT COMPANY
ACRA Singapore defines a dormant company as per the Singapore companies act. A company that has no accounting transactions during a given financial period is deemed to be a dormant company. An accounting transaction is a transaction that affects the financial statements of the company.
Example of transactions includes those that bring in revenue or result in expenses.
- Selling goods to customers
- Purchasing assets from suppliers
- Selling assets (e.g. property, machinery) to a third party
- Issuing a dividend to shareholders
- Borrowing funds from lenders
A company will cease to be a dormant company when a transaction as above takes place.
As per ACRA, your company will still be deemed a dormant company if a transaction arises from one of the following actions
- A subscriber to the company’s constitution takes shares in the company
- The appointment of a company secretary
- The appointment of an auditor
- The maintenance of a registered office
- The keeping of books and registers
- The payment of any fee (including any penalty or interest for late payment) is payable under any written law.
DEFINITION OF IRAS DORMANT COMPANY
A dormant company that has not conducted any business and received any income over 12 months is deemed a dormant company.
For example, if a company has not conducted any business and has received no income in 2023, IRAS will deem the company a dormant company in the income tax year of assessment (YA) 2024.
FILING REQUIREMENTS FOR A DORMANT COMPANY IN SINGAPORE
A dormant company is not exempted from annual filing requirements. However, there are some exemptions available.
ACRA Annual Return Filing
- ACRA has stated that a dormant company should submit the annual return. The company can opt for the simplified annual return.
- A dormant company is exempted from preparing audited financial statements. Nevertheless, a dormant company must still prepare simplified financial statements.
- The assets of such a company also cannot exceed S$500,000.
- A dormant company that is unlisted must file the annual returns within 7 months after its financial year-end. If a dormant company is listed, it must file its annual returns within 5 months after its financial year-end.
IRAS Corporate Tax Return Filing
A dormant company must still declare dormancy and file an annual tax return before the deadline. For a dormant company that has obtained a waiver from filing, the company does not have to file any corporate tax returns. However, the company must notify IRAS of the commencement of operations within one month from the date of resuming operations.
The company must fulfill the following conditions to be eligible for applying for a waiver from filing exemption:
- The company is prohibited from holding any investments (e.g. property, shares, etc.). If the company does own such an investment, it cannot use it to bring any form of income to the business.
- The company does not intend to engage in any kind of commercial activity within the following two years.
- Until the business ceases its operations, the company has provided and filed all financial reports and tax computations.
- The company has canceled its goods and services tax (GST) registration.
Restore Active Status Of The Company
Once your dormant company resumes its operations or begins to receive income again, its dormant status can be waived. To restore the dormant company that has become an active company, you must contact IRAS within one month of the income being generated or received.
The email should contain details such as the below for the authorities to restore the active status.
- “Recommencement of business operation and request for the income tax return,” in the subject header
- Unique Entity Number (UEN) and the company’s name
- Name the new major business activity (if applicable) and the return to a business date
- The date on which additional sources of income, such as interest, dividends, rent, etc., (if applicable) were received.
STEPS TO CLOSE THE DORMANT COMPANY
The easier option to close down your dormant company would be to apply for striking off.
A request to remove the company’s name from the register of businesses can be done by submitting an application to ACRA using the CorpPass to strike off the company name in the company registrar. The secretary, nominee director, or registered filing agent must be the one who files and apply. Once ACRA approves the strike-off, your dormant business will be formally dissolved after approval. No additional filing fee will be imposed for this procedure.
If you require assistance to strike off your dormant Singapore company, feel free to reach out to our team at enquiry@relinconsultants.com alternatively, you can also refer to our how to close a Pte Ltd company in Singapore for additional information.
Relin Consultants is a Singapore corporate service provider specializing in company incorporation, secretarial, accounting, and tax services.
Feel free to contact us if you require assistance in secretarial matters or accounting and tax returns, our team of Relin Consultants can guide you.
