Singapore has been a favoured country for business owners and entrepreneurs over the years. One reason for this is its simple tax policies and procedures. Several tax criteria must be fulfilled while registering a company in Singapore, as well as when closing down such a business. The requirements are straightforward in both circumstances.
In Singapore, a company can be struck off or deregistered by contacting the Accounting and Corporate Regulatory Authority (ACRA). However, all outstanding tax obligations of the company must first be settled with the Inland Revenue Authority of Singapore (IRAS). In addition, the entity must meet some other tax conditions set by ACRA before it can be struck off. These conditions are thoroughly discussed in the following sections.
Tax Requirements for Singapore-incorporated Companies Seeking Strike Off
Section 344 of the Singapore Companies Act empowers ACRA to remove a company from the register. However, for a deregistration request to be effected, Singapore-based entities must first settle all outstanding taxes with IRAS.
When tax obligations are not met, and an objection to the deregistration of a company is made, a two-month grace period is granted. If the tax obligations are not settled within the time frame specified, IRAS may file an objection. As a result, ACRA will suspend the request for deregistration until the objection is overturned. However, if the issue is resolved and the entity is cleared to be struck off, ACRA will then proceed to do so.
To avoid unnecessary taxes and expedite the dissolution of a Singapore-based company, the following steps are recommended. You can also leverage the company strike off services provided by many corporate service providers.
Submission of Income Tax Returns (Form C-S/ C)
To get your company cleared for a strike-off, its income tax returns, that is, the form C-S or form C, must be duly submitted to IRAS. The forms must be up to date in regard to the cessation of such a business.
For a local company submitting form C, the necessary tax computations and financial accounts of such an entity must also be submitted together. All submitted details must be up to the most recent year of assessment in the year the company ceases to exist.
Cancellation of Goods and Services Tax (GST) Registration
Before a company can be struck off, its registration for the Goods and Services Tax (GST) must be cancelled. GST cancellation is a simple process that can be completed through the IRAS portal. It can take a day or two to get your GST cancellation approved. However, even if not so, it is typically done within not more than ten days.
Closure of all of the Company’s Bank Accounts
Before the company is struck off, the company’s bank accounts should be closed. However, the accounts should be closed only after all taxes have been paid and all outstanding returns have been submitted to IRAS.
Before closing company accounts, owners and shareholders should also ensure that IRAS does not owe them any tax credits. If that occurs, IRAS will be unable to make payments to them directly but will instead make payments to the Insolvency and Public Trustee’s Office (IPTO).
If that happens, a company representative can seek such credits at IPTO with the company’s accounting records and paperwork for the previous five years. The representative should be an executive, director, or member of the defunct company’s management team. It should be noted that this application is subject to the imposition of fees.
Tax Requirements for Dormant Companies Seeking Strike Off
Dormant companies are treated differently in their application for strike-off. Such businesses do not generate any revenue during a given period and are not even operational in the first place. For example, a company that is not operational in 2022 and generates no revenue would be considered dormant for the Year of Assessment (YA) 2023. Similarly, companies that have been dormant since their incorporation are treated in the same manner.
Dormant companies with outstanding Income Tax returns must apply to IRAS for a waiver to file those returns. Following that, an application is to be made with ACRA to have the company struck off.
Dormant companies seeking to be struck off must be proven dormant and will need to submit all required financial statements, tax computations, and Form C-S/C. They must also cancel their GST and have no unfinished activities in Singapore. Another important requirement is that these businesses have no plans to reopen within the next 24 months.
The successful submission of the required documents to demonstrate compliance with the aforementioned conditions does not imply approval. Typically, a review notice (indicating approval or rejection) will be sent within a month. However, if more information is required, the review may take longer, lasting even up to six months after the information is provided.
Tax Requirements for Companies with Singapore Branch Seeking Strike Off
Foreign companies incorporated in Singapore seeking to deregister their Singapore branch must meet similar requirements as those of others in the country. The entity must notify IRAS in writing of its intention to cease operations in the country. The request should be accompanied by the necessary documents, including tax and financial statements dated up to the last day of business. Following that, the company can await a strike-off from ACRA.
Tax Requirements for Striking Off Limited Liability Partnerships (LLP)
A limited liability partnership can be deregistered once all outstanding tax obligations have been satisfied. However, if there is an outstanding Form P (Precedent Partner Income Tax) that has yet to be filed with IRAS, IRAS may object to such a strike-off. An objection can also be raised if there are outstanding objections to assessments and payments. Unresolved accounts and tax computations for any accounting period involving $500,000 or more revenue may also result in an objection.
If there are no objections and the deregistration is successful, the partners must keep partnership documents and papers for five years after the entity’s dissolution. If a liquidator deregisters it, the liquidator must also keep the entity’s documents for five years from the date of dissolution.
Conclusion
Once a company or recognised corporate entity in Singapore has fulfilled all IRAS tax obligations, it can be deregistered. However, it is essential to note that ACRA will reject an entity’s dissolution application if it has outstanding tax liabilities. So, in the end, it all boils down to the company’s tax standing and liabilities.
So, to save yourself from all the hassle and ensure the strike-off process is completed smoothly, you should engage a taxation consultant in Singapore. With the professionals handling everything for you, you can channel your resources and time towards more important things.
