Singapore is a city-state in Southeast Asia, an island in the Indian Ocean and the world’s financial centre. Singapore has a developed economy, high technology and an absence of corruption. It attracts foreign investors with its tax incentives, advanced government services and document management system, and its ability to access Asian markets. A private limited company is the most suitable legal form of doing business in Singapore: such companies can get an exemption from the mandatory annual audit if certain conditions are met.
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Each Singaporean company must comply with the following requirements of the legislation:
Since not all jurisdictions have an analog to annual return, we consider it necessary to clarify this term. Annual return (AR) is a short report on the current structure of the company that is prepared by the company’s secretary annually. Normally, it includes:
In Singapore, an annual return shall be signed by director and secretary within 1 month of the date of the annual general meeting. The return contains data of the company’s activity and structure; the company’s financial statements shall be filed along with the annual return.
Directors must present at annual general meeting financial statements prepared in accordance with the Singapore Financial Reporting Standards and the Singapore Financial Reporting Standards for SME issued by the Accounting Standards Council.
Financial statements must give truthful and objective representation of the company’s financial position and results of its activity. Financial statements consist of:
The following types of legal entities must file financial statements:
A dormant company can be exempt from filing financial statements. Dormant company is a company that does not conduct activity and whose total assets do not exceed 500 000 SGD (Singaporean dollars) and it is not a listed company or a subsidiary of a listed company.
Transactions that do not affect the dormant status of a company:
IRAS can exempt a company from filing a tax return if:
The following companies can be exempt from obligatory audit:
Criteria of a dormant company are described above.
A private limited company can acquire the exempt status. Such a company is exempt from obligatory audit and from filing audited financial statements with ACRA. An exempt company, however, shall file an annual return and tax return with IRAS. The company shall be exempt when two conditions are met:
Companies that comply with any two of the below requirements during the last two financial years are considered small companies:
In accordance with section 175 of the Companies Act, companies must hold their first annual general meeting of shareholders:
Financial reporting date can be changed once in 5 years.
As mentioned before, each Singaporean company must file an annual return and financial statements with ACRA within 1 month after annual general meeting of shareholders. Information on the company’s officers, registered address and auditors must be included in the annual return.
If a company receives income exceeding 500 000 SGD, it must also provide its account statements enclosed with the tax return.
Each Singaporean company must file an annual tax return with IRAS before 30 November. Profit for the financial year that ended in the previous year will be the basis for filing a tax return in the current year. Moreover, companies are also required to file a statement of estimated chargeable income (ECI) 3 months before the end of the reporting period.
A VAT report shall be filed quarterly.
For failure to timely file financial statements with the Accounting and Corporate Regulatory Authority of Singapore (ACRA), the company will be subject to a fine of:
In the case of late submission of financial statements to ACRA, the company will be imposed with a fine of:
In the case of late tax reporting IRAS can issue a notice containing assessment of the tax that the company must pay within 1 month, and then, in the case of failure to fulfil obligations, summon to court those responsible for management of the company (including directors).
If a company does not file accounts with IRAS within two years, by court decision the company can be imposed with a penalty:
Failure to pay this penalty may result in imprisonment for a term of up to 6 months.
If a company is part of a group, the company will be assessed on a consolidated basis.
According to the provisions of FRS-110 (Consolidated Financial Statements SB-FRS 110), if a company controls one or more companies, consolidated financial statements must be prepared for the group of companies.
A group company will be exempt from annual audit of its accounts if the holding company and all subsidiaries meet the criteria for a small group, i.e. they meet at least two of the below conditions during the last two financial years: