Corporate Compliance Requirement – Ongoing Compliance
If you are a Singapore-based company, you must comply with the legal requirements of the Singapore Companies Act and file your Annual Return with the Accounting and Companies Regulatory Authority (ACRA) and the Singapore Inland Revenue Authority (IRAS). It is imperative that all companies comply with the law in order to avoid penalties and other legal consequences.
Financial Year End (FYE)
Each Singapore-based company must determine the end of its own Financial Year End (FYE). The FYE is the end of the financial year. The company’s FYE does not have to fall on 31 December and may fall on any day of the year.
The company’s financial year is the same as that of the company’s fiscal year. The date of the fiscal year shall be left to the decision of the company. Most companies use the end of the calendar year (31 December) or the end of one of the quarters (31 March, 30 June or 30 September) as the end date of their financial year.
It is preferable to keep the company’s tax year within 365 days of the calendar date in order to benefit from the tax exemption for newly established companies (75% exemption for the first $100,000 of normal taxable income [profit] for the first 3 consecutive tax years; an additional 50% exemption for the next $100,000 of normal taxable income-excluding Singapore dividends for each of the 3 consecutive tax years). The eligibility requirements for the tax exemption scheme can be obtained from the Singapore Tax Authority.
For companies with tax years ending on or after 31 August 2018, ACRA has adopted the following safeguards to prevent companies from arbitrarily changing their tax year:
- Companies must inform the Registrar of their FYI at the time of incorporation and of any subsequent changes;
- Companies must apply to the Registrar for approval to change their tax year:
- if the change of fiscal year results in the fiscal year exceeding 18 months; or
- if the financial year has changed within the last five years; and
- Only the current and previous fiscal year (provided that the statutory period for holding the meeting, filing the annual report and sending the financial statements has not expired) may be changed; and
- Unless otherwise approved by the Registrar, the fiscal year of a corporation shall not exceed 18 months in the year of its incorporation.
- Corporations with an unusually long fiscal year (not 12 months) must notify ACRA by fiscal year change notification if they wish to avoid having to apply each year for fiscal year change approval.
- Existing companies shall have as the date of their fiscal year any date previously notified to the Registrar. In the absence of such notification, the anniversary of the date of incorporation shall be deemed by law to be their FYE. Companies may change their FYE by notifying ACRA before or after the new FYE laws come into effect.
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Resident Directors
Private limited companies in Singapore must have at least one director, who must be a resident in Singapore, i.e. a Singaporean citizen, a permanent resident of Singapore or a person holding an Employment Pass / EntrePass in relation to the company.
There is no limit to the number of additional local or foreign directors that a private liability company can appoint in Singapore. The director must be at least 18 years of age and must not be bankrupt or have been convicted of any previous offences. Information about the directors will be included in the public register. Directors may also be shareholders and vice versa.
In order to comply with the relevant sections of the Companies Act, Cap 50, directors may refer to the ACRA legislation for further information on directors’ liability.
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Company Secretary
The Secretary of the Company must be a natural person residing in Singapore. Within six months of incorporation, the Singapore Companies Act requires companies to appoint a Company Secretary. New start-ups and SMEs typically engage a corporate secretarial firm in Singapore for corporate secretarial services. Click here to learn the benefits of engaging a corporate service provider.
Appointment of Auditors
All companies incorporated in Singapore must appoint an auditor within 3 months of the date of incorporation, unless they are exempt from auditing requirements. To be exempt from the audit requirements, a company must meet all of the following criteria:
For a company with a fiscal year starting before July 1, 2015:
- The company has no shareholders;
- The total number of individual shareholders must be less than 20; and
- The company’s annual turnover must be less than $5 million.
For a corporation with a fiscal year beginning on or after July 1, 2015, the corporation must have qualified as a small business for the last 2 consecutive fiscal years.
A corporation will be considered a small business if (a) it is a private corporation in that fiscal year and (b) it meets at least 2 of the following 3 criteria in the last 2 consecutive fiscal years:
- Its total annual revenues do not exceed $10 million;
- Its total assets do not exceed $10 million;
- The number of employees does not exceed 50.
For a company that is part of a group, to be eligible for the audit exemption:
- The entity must qualify as a small company; and
- The whole group must be a “small group”.
For a group to be a small group, it must meet at least 2 of the 3 quantitative criteria on a consolidated basis for the last 2 consecutive financial years.
Company Registration Number Disclosure
Singapore corporate law requires that every company must have the company registration number, known as the Unique Entity Number (UEN), on all business letters, bank statements, invoices, official notices, publications, etc.
Notification of Changes
It is the responsibility of the company to update the register (ACRA) within the set time period for any changes in company data, including shareholders, share capital and management. Failure to do so will result in sanctions.
Business Licences and Permits
Certain business activities in Singapore are subject to regulation by government agencies. Even if your company is registered, you cannot establish your company if you do not have the necessary permits and/or licenses from the relevant government authorities.
Registered Office Hours
All companies in Singapore must have their registered office in Singapore and the office must be open to the public for at least three hours a day during normal working hours on weekdays.
Central Registration (CR) Number
If your business activities involve import, export or transshipment to and from Singapore, your company must register with Singapore Customs and obtain a CR number.
Singapore Goods and Services Tax Registration
Goods and Services Tax (GST) is a tax on the supply of goods and services in Singapore and on the import of goods into Singapore. Goods exported from Singapore and international services provided from Singapore are exempt from GST. The current rate of GST is 7%.
All companies in Singapore must register for the GST if their annual taxable income exceeds USD 1 million or if their current taxable income and annual taxable income is expected to exceed USD 1 million. The company must register with the TSO within 30 days of the date on which it is deemed liable.
You can also register voluntarily with the GST. Approval of voluntary registration is at the discretion of the IRAS comptroller. Once approval is granted, you must remain registered for at least 2 years.
Registration with Singapore Central Provident Fund (CPF) & Skills Development Fund (SDF)
The Central Provident Fund (CPF) is a statutory pension scheme under which employers and employees pay a percentage of their monthly salary into the fund. Employer contributions to the CPF are mandatory for all local employees who are either Singaporeans or permanently resident and earn more than S$50 per month. The maximum contribution rate to the CPF for the employer and employee is 17% and 20% respectively and may be lower depending on certain factors such as age of the employee, permanent residence status, etc.
Employment Pass holders are not required to contribute to the CPF.
However, the employer (company) is obliged to contribute to the Skills Development Fund (SDF). Employers must pay a contribution to the SDF of 0.25% or USD 2F, whichever is higher, for all employees up to the first USD 4,500 of gross monthly salary.
In addition, the CPF Board of Directors is the agent that collects the contributions to the Self-Help Group (SHGs) funds and the SHARE donations. These contributions and SHARE donations, together with the employee’s contribution to CPF, are deducted from the employee’s salary. Employees are obliged to make monthly contributions to the SHG funds.
The SHGs Funds are:
- Chinese Development Assistance Council (CDAC) Fund, administered by CDAC
- Eurasian Community Fund (ECF), administered by the Eurasian Association (EA)
- Mosque Building and Mendaki Fund (MBMF), administered by Majlis Ugama Islam Singapura (MUIS)
- Singapore Indian Development Association (SINDA) Fund, administered by SINDA
SHGs were created to uplift the least privileged and low-income families in the Chinese, Eurasian, Muslim and Indian communities. The prescribed amount is deducted from the employees’ salaries. If employees want to deposit or withdraw another amount, they must obtain the appropriate forms from their SHG.
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