Filing for Dormant Company

Fee Guideline for the Filing for Dormant Company

The definition of dormant company differs between the Inland Revenue Authority of Singapore (IRAS) and the Accounting and Corporate Regulatory Authority of Singapore (ACRA).

According to the IRAS, a company with no revenue or income during a financial period is considered dormant, even though it may have booked or incurred expenses.

According to the ACRA, a company can only be considered dormant if it has no accounting transactions during the financial period. Unlike IRAS, it does not approve a “expense only” company as a dormant company.

However, ACRA makes exception on some expenses. These defined expenses, if incurred, can still allow the company to be considered dormant.

These expenses include:

• The appointment of a secretary of a company
• The appointment of an auditor
• The maintenance of a registered office
• The keeping of registers and books
• The payment of fees to the Registrar or any fine or penalty paid to the Registrar (ACRA); and
• The taking of shares in the company by a subscriber to the constitution in pursuance of an undertaking.

Note: As IRAS and ACRA bears different definitions of a dormant company, a company considered as “dormant” for IRAS may be defined as “active” by ACRA.

A dormant company is still required to fulfil filing requirements for both IRAS and ACRA.

For IRAS, the dormant company is required to submit Income Tax Returns unless granted a waive of submission.

For ACRA, the dormant company is required to hold its Annual General Meeting (AGM) and filing of Annual Returns (AR) unless granted a waive of submission.

According to IRAS, a company is considered ‘dormant’ from the date it ceased business operations and gain no income for the period of cessation. For example, if a company did not operate and generate income for the whole of 2019, it will be considered a dormant company for Year of Assessment (YA) 2020.

A dormant company can apply to IRAS to waive the requirement of submitting its income tax return. To qualify for the “Waiver of Submit Income Tax Return”, the dormant company must satisfy the following conditions:

• It must be dormant with up-to-date submission of form C-S / C, accounts and tax to its business cessation date.
• It owns no investments (e.g. shares, fixed deposits, real properties), or if it does, it must not receive any form of income from these investments.
• It must have de-registered for Goods and Services Tax (GST) purposes before the waiver application if it was a GST-registered company; and
• It has no intention to recommence business within the next 2 years.

If the dormant company satisfies all the criteria listed above, it can apply for the waiver via IRAS’s website. IRAS will send the notification outcome in writing to the company’s registered address within 2 months from the date of application.

Upon approval, no other filings to IRAS are required until the dormant company starts generating or receiving revenue or any form of income.

According to the Company Law, dormant companies must hold its shareholders’ annual general meeting in order to file Annual Returns (AR).

With effect from 3 January 2016, a dormant company is exempted from preparing, auditing and filing of financial statements with ACRA if it fulfils the following criteria:

1. It is not a listed company or a subsidiary company of a listed company;
2. It’s total assets at any time during its financial year is no more than $500,000;
3. If it a parent company, it belongs to a group with combined assets no more than $500,000 at any time during the financial year.

Dormant companies that do not fulfil the above criteria must prepare its financial statements. However, they may be exempted from audit if they fulfil the audit exemption requirement. The financial statements must be in accordance with the SFRS (Singapore accounting standards), along with the convening of its AGM and completion of the necessary AR filings with ACRA before the deadline prescribed.

When a dormant company re-commences business operation, or starts to receive any form of income, it must notify IRAS within one month from the date the income was earned or received.

With 8 years of professional experience in providing company secretarial services, Timcole serves as a one stop solution for all your business matters. If you are unsure whether your company fits the requirement for a dormant application or would like to inquire further on our services, please feel free to contact us.