Does a Dormant Company Need to File Annual Returns and Tax in Singapore?

Starting a business is thrilling, but plans can shift. You might have set up your company, then paused or never started it.

Many think not doing anything means they don’t have to follow rules. But, it’s key to stay compliant to avoid fines.

It’s important to know the rules for filing tax return for dormant company singapore. Even if your account is empty, the government wants you to keep records.

We’ll help you understand these rules. This way, your business stays in good shape. Let’s look at how to handle your duties with confidence.

Key Takeaways

• Dormant status does not automatically exempt you from all regulatory filings.
• Annual General Meetings are required unless you get an exemption.
• You must send financial statements to the Accounting and Corporate Regulatory Authority.
• The Inland Revenue Authority of Singapore needs to know you’re not active.
• Not following these rules can cause fines or legal issues.

What Exactly is a “Dormant” Company? (ACRA vs. IRAS)

The term “dormant company” can be confusing. This is because of how ACRA and IRAS view it. In Singapore, a company is seen as dormant by these two bodies. They have their own rules for what makes a company dormant.

From ACRA’s perspective, a dormant company hasn’t started business or isn’t doing business. This rule looks at if the company is active or not.

IRAS sees a company as dormant for tax reasons if it hasn’t started business or stopped business. They also look at if the company makes taxable income. IRAS focuses more on taxes.

• ACRA’s focus is on if the company is active.
• IRAS’s focus is on taxes and income.

Knowing these definitions is key. They affect what a dormant company must do, like filing annual and tax returns.

Here are the main points to remember:

1. A dormant company, as ACRA sees it, might need to file annual returns.
2. IRAS says a dormant company must file tax returns unless they get a waiver.

ACRA Compliance: Does a Dormant Company Need to File Annual Returns?

When a company goes dormant, many wonder if it must follow ACRA’s annual filing rules. The answer depends on what it means to be dormant and the rules that come with it.

A dormant company, as ACRA defines it, is one that’s registered but not active. It doesn’t do business or make big deals. Yet, it must follow some rules, like filing annual returns with ACRA.

Filing annual returns is key for all Singapore companies, even dormant ones. It means sending in the right info and documents to ACRA every year. You can do this online through ACRA’s site. For more on setting up a company in Singapore and annual needs, check this guide.

Key Points to Consider:

• Dormant companies must file annual returns with ACRA.
• The filing process is online and needs the company’s latest info.
• Not filing can lead to fines and even being removed from the register.

Dormant companies must keep up with their duties to avoid trouble. Filing on time keeps ACRA happy and makes it easier to start up again if needed.

Filing Tax Returns for a Dormant Company

Dormant companies in Singapore must follow tax rules every year. They need to file taxes, even if they’re not active. This is unless they get a special exemption.

Corporate Income Tax Return Filing

Yes, dormant companies must file their tax returns. They need to do this with the Inland Revenue Authority of Singapore (IRAS). This is true even if they made no money or did no business that year.

For help with this, you can look into services from a company secretary for Singapore companies.

They need to tell IRAS they’re dormant and file the tax returns. Being dormant doesn’t mean they’re free from filing taxes.

Applying for a Waiver

A dormant company might not need to file taxes if IRAS gives them a “waiver.” To get this waiver, they must meet certain IRAS rules. These rules usually mean they had no income or gains for that year.

Key considerations for a waiver application include:

• No income or gains during the YA
• No business activity or transactions
• Compliance with all previous tax filing and payment obligations

Getting a waiver makes it easier for dormant companies. It means they don’t have to file taxes every year.

How to Qualify for the IRAS Waiver

Dormant companies can breathe a sigh of relief if they qualify for the IRAS waiver. It eliminates the need for annual tax filings.

To qualify for the IRAS waiver, a company must meet specific criteria. The company should not have any taxable income for the relevant Year of Assessment (YA). It should also not be required to file a tax return under Section 62 or Section 63 of the Income Tax Act.

Key Criteria for IRAS Waiver:

• No taxable income for the relevant YA
• Not required to file a tax return under Section 62 or Section 63 of the Income Tax Act
• Submission of a waiver application to IRAS

The process involves submitting an application to IRAS. You need to provide details about your company’s status and financial situation. It’s important to ensure all information is accurate to avoid any complications.

1. Gather required company information and financial records
2. Submit the waiver application through IRAS’ official channels
3. Ensure timely submission to avoid late filing penalties

Upon successful application, the company will be exempt from filing tax returns for the specified YA. This provides significant administrative relief.

The Danger of Ignoring Dormant Company Filings

Not taking care of tax annual compliance for dormant companies can lead to serious problems. Even if a company is not active, it must follow rules. This includes filing annual and tax returns in Singapore.

Not doing this can cause big issues. For example, not filing with the Accounting and Corporate Regulatory Authority (ACRA) might mean your company gets struck off or deregistered.

Penalties for Non-Compliance:

• Fines from regulatory bodies
• ACRA might strike off or deregister your company
• It could harm your business’s reputation

Also, the Inland Revenue Authority of Singapore (IRAS) can fine you for late or missing tax returns. It’s key for dormant companies to know these risks and act to stay compliant.

In summary, even if a company is not active, it must follow rules. Taking the right steps to meet filing needs is vital. This helps avoid risks and penalties.

The Big Question: Should You Keep It or Strike It Off?

Deciding what to do with a dormant company in Singapore is a big choice. You must weigh the pros and cons of keeping it or striking it off. This decision is not easy.

Keeping a dormant company might be smart if you plan to start again soon. It saves you from the trouble of re-registering and losing your company name. But, you must keep up with rules like filing annual and tax returns, even if you’re not active.

Pros of keeping a dormant company:

• Retains the company name
• Avoids the cost and process of re-registration
• Ready for future business activities

Striking off a dormant company might be better if you don’t plan to start again. It means you won’t have to deal with ongoing costs and rules. But, it’s a final choice that ends the company.

Cons of striking off a dormant company:

• Permanent dissolution
• Loss of company name
• Potential impact on directors’ and shareholders’ liabilities

Choosing to keep or strike off a dormant company depends on your business goals and plans. If you’re not sure, talking to a professional can help you make the right choice.

Let Hub Handle Your Dormant Company Compliance

Managing a dormant company’s compliance can be tough, mainly with tax return filing in Singapore. At Hub, we get the details and help you meet your obligations well.

Choosing Hub means you get our team’s deep knowledge of Singapore’s rules. We guide you through tax return filing and other tasks. This lets you relax and focus on your business when it’s time to start again.

Our services are easy and stress-free. We make sure your dormant company follows ACRA and IRAS rules. With Hub, you can count on us to handle your tax return needs in Singapore.