Dormant Company Filing Obligations: Essential Guide 

What exactly is a dormant company, and why does it still have obligations despite being inactive? In Singapore, even when a business isn’t actively trading, it doesn’t mean it’s entirely free from administrative duties. If you’re running—or rather, not running—a dormant company, it’s important to understand what filing requirements and statutory obligations still apply to avoid unnecessary penalties. This blog article will walk you through what you need to know about maintaining a dormant company in Singapore, including the reduced filing requirements, ensuring you’re fully compliant with local regulations. But first… 

What Defines a Dormant Company in Singapore? 

In Singapore, a company is considered dormant if it has no significant accounting transactions throughout the financial year. But what does this mean in practice? Simply put, if your company isn’t generating revenue, incurring expenses, or making payments to employees or suppliers during a given financial period, it’s likely classified as dormant under the Companies Act. 

Common scenarios where a company might be considered dormant include businesses that are set up but haven’t started operations yet, or companies that have temporarily ceased activities. Even though these companies are not actively trading, they must still meet specific regulatory obligations. 

The concept of a dormant company in Singapore is nuanced, with distinct definitions provided by the Accounting and Corporate Regulatory Authority (ACRA) and the Inland Revenue Authority of Singapore (IRAS). 

ACRA’s Perspective on Dormant Companies 

According to ACRA, the national regulator of business entities in Singapore, a company is considered dormant if it has had no accounting transactions during a financial year, with the exception of those strictly related to maintaining the company’s compliance. However, this classification is not solely based on inactivity; there are specific criteria that a company must meet to be deemed dormant. For instance, the company must not be a listed entity, must not have assets exceeding S$500,000, and must not be a subsidiary of any listed company. 

IRAS’ Criteria for Dormant Companies 

On the other hand, IRAS, Singapore’s tax authority, views dormancy through the lens of income and business activity. The IRAS considers a company dormant if it has not earned any revenue or income for a given period of time, including goods and services tax, during the financial year, also known as the Year of Assessment. This classification applies even if the company incurs some statutory expenses, as reflected in its financial statements or tax computations. 

Filing Obligations for Dormant Companies 

While a dormant company may not be actively doing business, it doesn’t mean it’s free from filing obligations. Here’s what you need to know: 

Annual Filings with ACRA 

One of the key responsibilities of a dormant company in Singapore is the annual filing of its returns with ACRA. These filings are essential to maintain the company’s dormant status and ensure compliance with statutory requirements. Dormant companies in Singapore may be exempt from preparing financial statements if they meet certain criteria, but they must still file their annual returns within seven months following the end of their previous financial year. Failure to do so can result in enforcement actions, as it is a statutory duty under the Companies Act. 

Tax Return Filings with IRAS 

In addition to ACRA filings, dormant companies in Singapore are also obligated to submit tax returns to IRAS. Typically, dormant companies can file a “nil” Corporate Income Tax Return using the ‘File Form for Dormant Company’ digital service, unless they have been granted a specific filing waiver. Obtaining this waiver requires the company to meet certain criteria, such as not owning any investments and having no intention to start a business or engage in business transactions within the following two years. However, it is important to note that the company’s status must be declared as “dormant” with ACRA before filing a “nil” tax return with IRAS for the registered company. 

You can find this easy guide from IRAS here 💡 User Guide To Dormant Company Filing 

Appointing a Company Secretary 

Despite their inactivity, dormant companies in Singapore are still legally required to appoint a company secretary within six months of incorporation. This role is important for ensuring the company’s compliance with statutory requirements and maintaining its records. The company secretary’s primary responsibilities include effectively managing compliance obligations, even when the company is not actively trading. 

What if I Want to Revive My Dormant Company in Singapore? 

The revival process is relatively straightforward, allowing the company to return to active status and resume its business activities. Just keep in mind that once your dormant company recommences business or starts to receive any income, you have to notify IRAS within 1 month from the date of commencement of business or earning or receiving the income. 

The process involves two key steps: notifying the Inland Revenue Authority of Singapore (IRAS) and meeting additional requirements. Let’s delve into these steps to understand what reviving a dormant company entails. 

Notify IRAS 

The notification process is simple and requires you to send an email via myTax Mail to request for the Form C-S/ Form C-S (Lite)/ Form C, with all of the following details (indicate ‘N/A’ if not applicable) with the following details: 

• Subject header: ‘Recommencement of business and request for Corporate Income Tax Return’ 

• Name and Unique Entity Number (UEN) of the company 

• Date of recommencement of business in dd/mm/yyyy format 

• Date of receipt of other source(s) of income (e.g. interest, dividend, rent) in dd/mm/yyyy format 

• New principal activity and the effective date of change in dd/mm/yyyy format together with a copy of your business profile extracted from the Accounting and Corporate Regulatory Authority (ACRA) BizFile+ portal 

It is an offence if a company fails to inform IRAS when it has recommenced business or started to receive income. IRAS will not hesitate to take strong actions against companies and its directors who deliberately avoid or assist their companies to avoid the obligations to file their Corporate Income Tax Returns. 

Additional Requirements 

Beyond notifying IRAS, there are a few additional steps you need to take when reviving your dormant company. These include passing the shareholding test to ensure continuity for corporate tax reliefs and assigning an ‘Approver’ for corporate tax matters. Additionally, if your dormant company has made donations to approved institutions or the Singaporean government, you can claim these donations when filing your taxes through the appropriate digital services. However, be mindful of the 15-minute timeout feature on the online platform, which can interrupt the filing process if you are inactive for too long. 

By following these steps, your company can smoothly transition back to active status, allowing you to take full advantage of business opportunities while remaining compliant with regulatory requirements. 

How Does a Company Become Dormant? 

A company can become dormant by ceasing all trading activities, usually because it’s not generating income or has no significant transactions. It must not be involved in any business activity, including buying or selling goods or services, to meet the dormant company status criteria. 

Closing a Dormant Company 

While maintaining a dormant company offers its advantages, there may come a time when closing the company is the best decision. This process, however, requires meeting specific criteria, such as solvency, and following the ‘striking off’ procedure. 

The Striking Off Process 

Closing a dormant company in Singapore involves the ‘striking off’ process. This application can be made to ACRA by a company director, secretary, or registered filing agent. However, to be eligible for striking off, a dormant company must clear all liabilities and receive consent from its members. This ensures a smooth closure process and prevents any future complications. 

Closing vs. Maintaining Dormant Status 

The choice between closing a company and maintaining its dormant status often depends on the company’s future prospects. Closing a company completely removes it from the register and ends all administrative requirements. On the other hand, maintaining dormant status allows for taking breaks from running the company, such as during illness or temporary relocation, and provides flexibility for business owners to adapt to changing business landscapes. 

Curious about how to close a dormant company in Singapore? Our latest blog provides a step-by-step guide on the process, including important considerations and legal requirements. Read our blog. 

How Outsourced Corporate Secretary and Accounting Services Can Help With Filing Obligations For Dormant Companies? 

Outsourcing corporate secretary and accounting services can be a game-changer for managing a dormant company’s filing obligations. They ensure that all regulatory requirements are met promptly and accurately, from filing annual returns to maintaining proper financial records. 

Having said that, Grof Singapore offers comprehensive corporate secretary and accounting services tailored to the needs of dormant companies. Our expert team ensures that all filing obligations are met seamlessly, keeping your company compliant with ACRA and IRAS regulations. Whether you’re maintaining a dormant status or planning to reactivate your business, Grof Singapore provides the support and expertise needed to manage your obligations efficiently, allowing you to focus on your strategic goals with confidence. 

Moreover, if your company is dormant but still GST-registered, it’s important to cancel your GST registration before applying for a waiver to file Form C-S, Form C-S (Lite), or Form C. If you’re unsure how to navigate this process, Grof Singapore can assist you every step of the way, ensuring that all necessary actions are taken accurately and efficiently, so you can meet your filing obligations without any hassle. 

Conclusion 

In summary, even dormant companies have essential filing obligations that must be met to remain compliant with Singapore’s regulatory framework. Staying informed and on top of these requirements will help you avoid penalties and ensure your company remains in good standing. If you’re uncertain about your obligations or need assistance, get in touch with us to help you navigate the process.