A dormant company is a company that is registered in Singapore, without generating any form of revenue and expenses during the financial period. Typically, a company that become dormant may be due to several reason. Such as taking a break from the business or setting up a company for future use. However, a dormant company will also be required to comply with the statutory filing.
How to define a dormant company?
A dormant company must not carry out any trading activities such as:
- Hiring of staffs
- Payment to suppliers
- Selling of goods and services
- Sale or leasing of property
- Paying director’s remuneration
- Issuing dividends to shareholders
- Receiving dividend payments or managing investments
- Investments in subsidiaries
Although it is easy to understand that dormant company must not have any business transaction, ACRA and IRAS view the dormant status differently.
ACRA standard for dormant company
A dormant company is defined whereby the company does not have any business transaction during the financial period. However certain exception to the activities are given to maintain the company. These activities are such as appointing of a company secretary, accounting fees or professional fees to corporate service provider, bank charges and penalty.
IRAS standard for dormant company
IRAS define a company as dormant when the company do not generate any revenue even though there may be expense incurred.
Similar like an active company, a dormant company are required to appoint a company secretary within 6 months from incorporation date. During the dormant status, the company has to file an annual return after the financial year to ACRA. The company may also be exempted to prepare the financial statements if:
- It does not have any business transactions
- It is not a listed company or a subsidiary company of a listed company;
- Its total assets at any time during the financial year in question does not exceed $500,000 in value or such other amount as may be prescribed in substitution by the Minister;
- It is a parent company (which is not itself a subsidiary company of another corporation), belongs to a group the consolidated total assets of which at any time during the financial year in question does not exceed $500,000 in value or such other amount as may be prescribed in substitution by the Minister
Besides complying to ACRA, the company have to inform IRAS of the dormant status by submitting a waiver of tax form. The wavier allow the company to skip the tax filing until the company recommence the business. In order to get the wavier approval, the company must meeting the following requirements:
- Your company must not own any investments (e.g., properties, shares and so on). If you do hold this kind of investments, you must not use it to generate any revenue or income for the company.
- You intend that you will not be commence any sort of business transactions for the next two years.
- You must have filed all financial statements and tax computations up until the company ceased trading.
- You must have de-registered for Goods and Services Tax (GST) purposes (if you were previously registered).
Do remember to comply with the compliance requirements and statutory filing to avoid penalty. If you need some form of advice on your company status, do feel free to contact us.
At Ace Success, we aim to be a one-stop service provider for all your corporate needs in Singapore. Our range of services include Company Incorporation in Singapore, Accounting, Annual Compliance Requirements, Corporate Secretary, Corporate Tax, Individual Income Tax, Business Solutions, Nominee Director, GST Registration, Auditing and Cloud Accounting.
We adopt a straightforward approach to cater to your business needs. We are dedicated to understanding your current back-end business process and strive towards achieving the best suited solutions. Get in touch with us to know more about our services.