Mandatory compliance filings in Singapore
Table Of Contents
This article explains the annual compliance and filing requirements for private limited companies in Singapore. In accordance with the Singapore Companies Act, every company in Singapore must file its financial reports to the relevant government bodies once a year. These annual reports are mandatory for all private limited companies and they are:
- Annual Financial Statements
- Annual General Meeting (AGM)
- Annual Return (AR) Filing with ACRA
- Annual Tax Return Filing with IRAS
In this article, you will find more details on what are the mandatory reporst that needs to be file and to which government authority.
Annual Return (AR) Filing with ACRA
ACRA (Accounting and Corporate Regulatory Authority of Singapore) is a governing agency that oversees company regulations and compliance in Singapore. All companies are to be registered with ACRA if they are operating in Singapore and are obligated to file an Annual Return with ACRA within 30 days of holding a company meeting. The Annual Return is filed through BizFile, which can be accessed online by yourself or your filing agent who can be professional services or an accounting firm.
What is an Annual Return?
An annual return is a set of documents that contains up-to-date information on:
- Company name and registration number
- Principal activities
- Registered office address
- Details of company officers (directors, secretary)
- Shareholder details, share capital, etc.
- Annual financial statements
Exemption from attaching financial statements
Certain companies do not have to attach their financial statements. These include:
- Small companies: As a reminder, small companies are companies that meet 2 of the 3 following criteria:
- Total annual revenue is less than S$10 million
- Total assets are less than S$10 million
- A maximum of 50 employees
- Exempt private companies (EPC): An EPC is a company with:
- No more than 20 shareholders
- No corporate shareholders (i.e., all the shareholders are natural persons)
- Dormant EPC: A dormant EPC is defined as a company that has not carried on any business nor generated any income in the past financial year.
XBRL Format for Financial Statements
Since 2014, the Singapore government has required companies to file their mandatory compliance filings in XBRL format.
Business Reporting Language (XBRL). XBRL is an XML-based format for exchanging financial information that businesses use. The format is free to use and open source.
Certain companies do not need to prepare their financial statements in XBRL. These include:
- Certain financial services companies regulated by the Monetary Authority of Singapore (ie. commercial banks, merchant banks, licensed insurers, finance companies)
- Foreign companies and their branches
- Companies permitted to prepare financial statements in accordance with accounting standards other than SFRS, SFRS for Small Entities, and IFRS
- Exempt private companies (EPC): An EPC is a company with:
- No more than 20 shareholders
- No corporate shareholders (ie all the shareholders are natural persons)
Annual return filing without holding an AGM
If a company does not hold an AGM, they must apply to file annual returns through BizFile.
ACRA may reject the application if it has been applied for more than one time in the previous five years. Companies that are approved will be notified of the decision within 14 days of applying.
Late lodgment fees can be as much as 100% higher than normal and are calculated based on how many days late you are submitting your return after its deadline date and is dependent on what type of company you are filing for (i.e., limited liability entity or incorporated company).
Annual General Meeting (AGM)
The Singapore Companies Act states that companies must hold annual general meetings of their shareholders unless the company has chosen not to do so by passing a resolution from its shareholder’s group. If a resolution is passed, all matters outlined in these resolutions can be settled through written documents rather than at an AGM.
What is an AGM?
An AGM is an annual meeting of the company’s shareholders. The purpose of this meeting, in relation to Singapore Law, is to give the company’s shareholders the right to participate in certain decisions concerning the company by approval from simple majority.
AGM Timeline
Key Facts
- Financial statements cannot be prepared more than 6 months prior to the date of an AGM
- The company director must sign the financial statements to take responsibility for their accuracy and preparation in accordance with Singapore accounting standards
- Small and dormant companies that meet certain criteria can prepare unaudited financial statements
Financial Statements
The financial statements that must be prepared are as follows:
- Report of Directors and Statement by Directors
- Independent Auditor’s Report (if applicable)
- Statement of Comprehensive Income (Profit and Loss statement)
- Statement of Financial Position (Balance sheet)
- Cash Flow Statement
- Statement of Shareholder’s Equity
- Corresponding Notes to Financial Statements
Audit Exemption
To ease the burden of filing, Singapore exempts certain companies from having their financial statements audited; these include:
- Small companies: A small company is any company that meets 2 of the 3 following criteria:
- Total annual revenue is less than S$10 million
- Total assets are less than S$10 million
- Maximum of 50 employees
- Dormant companies: A dormant company is any company that has not carried on business and has not generated any income in the past tax year.
Such companies can prepare unaudited financial statements.
Annual Tax Return Filing with IRAS
IRAS is an agency in Singapore responsible for collecting taxes. All Singapore companies are required to file two reports with IRAS each year. These include the income report which lists transactions and a balance sheet, and property assessment.
- Estimated Chargeable Income that must be filed within 3 months of the company’s financial year-end
- Corporate income tax return that must be filed by November 30 for paper filing or by December 15 for electronic filing
Filing estimated chargeable income (ECI)
Companies’ estimated taxable income in Singapore is ECI. ECI stands for Estimated Chargeable Income, which is an estimation of the company’s taxable income for a particular financial year.
Companies need to file ECI within 3 months of the financial year-end. They receive an email reminder from IRAS before the year ends.
As of July 2017, the following companies are not required to file ECI:
- Companies with less than S$5 million in annual revenue
- Companies whose ECI is NIL
Filing corporate income tax return
To comply with mandatory filing requirements, companies must file the ECI form and an annual income tax return within a certain timeframe. These two deadlines for corporate income tax returns are November 30th for paper filing or December 15th for electronic filings; they correspond to the date following the previous financial year- April 1st in this case. For your company’s financial year that ended on March 31r, 2017, October 31st was required as well as November 30th or December 15th of 2018.
Singaporean companies are required to file using form C when they submit a tax return. The simplified version, Form C-S, is used when certain information requiring extra detail, such as the profit and loss statement want omitted from the filing. To use this form, though, a company has to meet all of the following criteria:
- The company must be incorporated in Singapore
- The company must not make more than $5 million in annual revenue
- The company is not claiming any of the following:
- Carry-back of current year capital allowances/losses
- Group relief
- Investment allowance
- Foreign tax credit and tax deducted at source
Filing corporate income tax return
IRAS mandates annual compliance filings for companies that are not currently operating on an operational basis. Dormant companies may apply for a waiver to avoid paying corporate tax if they meet the following conditions:
- The company has not conducted business or generated any income
- The company has submitted either its Form C-S or Form C, financial statements and tax computations up to the date of stopping business activity
- The company must not own any investments (e.g. shares, real properties, fixed deposits). If the company owns investments, it must not derive any income from these investments
- The company must have been deregistered for goods and services tax (GST) purposes
- The company must not have the intention to recommence business within the next 2 years
- Failure to file a corporate income tax return
- Failure to file a form C or form C-S by the required due date
If an unregistered company fails to file their income taxes, they will most likely agree to four different levels of penalties.
Phase 1: IRAS may issue an estimated Notice of Assessment (NOA). Once the Companies with taxable income in Singapore are required to file their tax returns once they receive a Notice of Assessment (NOA) from the IRAS at the beginning of each year.
It is also important to note that you have one month to pay your estimated taxes as well as any outstanding previous years’ unpaid tax liability before filing an Objection Address with the IRAS if you believe the government’s assessment was incorrect and request for a review should be made within 3 months after the date of receipt. Failing to submit these basic provisions will result in charges imposed by law on top of fines.
Phase 2: IRAS will issue an Outstanding Tax Return Notice and assess a composition fee of up to S$1,000. The company should file their income tax and composition fee. The decision to appeal the composition fee is optional, as most fees are upheld for companies who comply with requirements.
Phase 3: IRAS will issue a Notice of a Section 65B(3) of the Income Tax Act to the director and a composition fee of up to S$1,000. If the director wishes to avoid further penalties, they must immediately submit all requested documents and pay the composition fee within 21 days.
Phase 4: IRAS will issue to the director a Summons to appear in court. The director of a company will have to submit the documents requested by the court at least one week before the hearing date and pay all costs necessary in order to avoid going to trial.
If, for some reason, she is unable to provide those documents in time or if she can’t afford them, she will be fined S$1,000 and still has an obligation to report her company’s income when filing taxes.
Phase 5: Failure to file for more than 2 years. If a company does not file its Singapore income tax return after 2 years, it is subject to the following penalties:
IRAS normally will process the waiver within 2 months.
Non-compliance with IRAS
ECI non-compliance
- Failure to submit the ECI within three months from the end of its financial year
- Failure to meet the conditions to be exempted from submitting ECI
If a company fails to comply with ECI requirements, IRAS will send the company a Notice of Assessment (NOA) that provides an estimation of the company’s income.
When filing ECI to avoid penalties, a company is obliged to include the reasons why it believes its estimate of ECI differs from IRAS’.
Additionally, if there are discrepancies between the company’s estimated earnings and IRAS’ assessment when submitting an objection notice, the company will still have to submit taxes on their ECI within 1 month.
Corporate income tax non-compliance
- A penalty that is twice the amount of tax
- A fine of up to $1,000.
Streamlining the filing of Annual Returns
Filing annual returns in Singapore involves preparing financial statements, coordinating and holding annual general meetings and submitting the right filings in the permitted timeframe to both ACRA and IRAS.
Failure to meet any of the requirements can lead to serious consequences for a company. That is why most companies in Singapore choose to rely on an experienced corporate service provider who can offer expert guidance through each step of the annual filing process and ensure that the company is in compliance with Singapore regulations.
Why Singapore?
Recently, startupbcs.com surveyed startup founders from five countries to gauge how the country is viewed as a location for startups. Read our report to find out more about their findings and attitudes about Singapore being an attractive place to establish a company.