As a Singapore corporate services firm, we provide accounting and company incorporation services to different kinds of businesses. Most of them are actively trading, while a few do not engage in commerce for a certain period. Those that are not actively trading are called dormant companies.
According to the Accounting and Corporate Regulatory Authority (ACRA), a company is considered dormant if it does not have any accounting transactions within the company’s financial year. In other words, the company has stopped trading (oftentimes, temporarily) and does not generate any form of income.
Important Requirements to File
One of the benefits of having a dormant company is the ability to trade at a shorter notice. The owner has already laid the groundwork in advance; the only thing that’s left to do is notify the proper channels and submit the required paperwork for the company to launch (or recommence) business.
Although dormant companies do not gain any profit, they are still obliged to file the following requirements:
Income Tax Return
Unless granted a waiver of Income Tax Return submission, all dormant companies still need to submit Form C to the Inland Revenue Authority of Singapore (IRAS). There are two ways to do this:
- E-Filing through the IRAS website – Before you can accomplish the Income Tax Return form, you need to authorize yourself or a third party (such as Singapore company formation services firm) as Approver. The e-Services Authorisation System (EASY) requires a SingPass or IRAS pin as well as your company’s tax reference number. Once authorized, you or a representative can accomplish and submit the form online.
- Submit a printed copy of the Form C-S/C to IRAS – Fill out only the first page of the form and submit it to IRAS.
Waiver of Income Tax Return (Form C-S/ C) Submission
The waiver of Income Tax Return (Form C-S/ C) is a requirement for dormant companies that will not recommence business in the next two years. Similar to the Income Tax Return form, the waiver can also be accessed and processed online or by personally submitting it to IRAS. GST-registered companies, however, must first cancel their GST registration before they accomplish the waiver for Income Tax Return.
Once IRAS grants the waiver, a dormant company no longer needs to file the Income Tax Return. Additionally, there is no need to renew the waiver annually as long as the company remains dormant.
Transactions that do not affect a company’s dormant status
A company is considered dormant when it does not have any financial transactions. However, a dormant company may perform some housekeeping tasks during its inactivity.
The situations below will not affect a dormant company’s status:
- Appointment of corporate secretary
- Appointment of director
- Payment of ACRA fees
- Maintenance of the registered office
- Keeping of the company’s registers and books
- Taking of shares in the company by a subscriber
ACRA allows only the transactions above for a company to remain dormant. ACRA will no longer consider a company dormant if it engages in financial transactions.
What dormant companies need to do when recommencing business
As soon as a dormant company resumes its trade, it must notify ACRA of its change in status one month from the date it generates income. To do so, owners must submit the Request for Income Tax Return (Form C-S/C) and a Notification of New Financial Year End forms.
If a business owner is unable to process and submit personally the necessary paperwork, he or she may seek the assistance of a corporate services provider Singapore.