Dormant Company
Is one that has had no significant accounting transactions during the accounting period. If your company has stopped all its business activities, it will be deemed as Dormant.
What is Dormant Company according to IRAS?
A company that does not have any transactions or income during a given financial period is considered Dormant by IRAS.
You’re not generating income: no sales, investments, etc.
You have no expenses: no salaries, dividends, etc., except the statutory ones: Corporate Secretary, registered office, accounting fee.
What is Dormant Company according to ACRA?
ACRA defines a dormant company as one that has NIL transactions not allowing the “expenses only” distinction. However, ACRA makes an exception for some defined expenses which if incurred will still allow the company to be considered dormant. These expenses are:
- The appointment of a secretary of a company
- The appointment of an auditor
- The maintenance of a registered office
- The keeping of registers and books
- The payment of fees to the Registrar or an amount of any fine or default penalty paid to the Registrar (ACRA)
- The taking of shares in the company by a subscriber to the memorandum in pursuance of an undertaking of his in the memorandum
DORMANT Company ANNUAL FILING
- Companies considered “Dormant” are still required to make the following annual filings:
- For the 1st year, Companies are required to file a waiver to file Form C (Corporate Tax return) to IRAS.
- For subsequent years, no other filings to IRAS are required unless the company starts to generate revenue again.
- ACRA does not exempt dormant companies from any of its filing requirements.
- From 3 January 2016, non exempt (non EPC) private companies are exempted from requiring its accounts audited if they are dormant and
(a) the company fulfills the substantial assets test;
(b) the company has been dormant from the time of formation or since the end of the previous financial year. According to the substantial assets test, the total assets of the company at any time within the financial year must not exceed $500,000. For a parent company, the consolidated total assets of group at any time within the financial year must not exceed $500,000.
- Therefore all dormant companies need to prepare its accounts in accordance with SFRS/IFRS (prescribed Singapore accounting standards), convene its AGM physically or by written means and complete annual return filings with ACRA within prescribed time limits.
Qualifying Conditions for the Company
To waive Income tax returns are:
- It must be dormant and has submitted either its Form C-S or Form C, accounts and tax computations up to the date of cessation of business;
- It 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;
- It must have been de-registered for Goods and Services Tax (GST) purposes prior to this application if it had previously been a GST-registered company; and
- It must not have the intention to recommence business within the next 2 years.
Cost for Dormant Exempted Company:
- Company Secretarial Fee irrespective of fact that the company is dormant.
- Similarly accounting charges for preparation of accounts as per SFRS/IFRS and tax filings charges are also chargeable.
Cost Payable for Dormant Non-exempted Company:
- Company Secretarial Fee irrespective of fact that the company is dormant.
- Similarly accounting charges for preparation of accounts as per SFRS/IFRS and tax filings charges are also chargeable.
- Dormant non exempt private companies, although not required to submit audited accounts, are still required to file XBRL
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- Your company is dormant, solvent and dormant from the time of formation or since end of previous financial year.
- You have only minimal banking charges in your bank statements with no other revenue and expenses as mentioned in ACRA.
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