Every year, regardless of size or business structure, all Singapore companies must fulfil specific legal obligations. Compared to other countries, Singapore’s compliance requirements are known to be relatively straightforward. However, even the most diligent entrepreneurs can sometimes overlook essential deadlines, leading to potential fines and penalties.
To ensure smooth operations and avoid legal issues, company owners must clearly understand the compliance requirements and establish a comprehensive plan to stay on track. Staying compliant with the laws helps build a company’s reputation, which can also directly impact its funding prospects.
This article aims to provide valuable insights into the annual filing obligations for your foreign company’s branch in Singapore, mandated by Singapore company law.
By familiarizing yourself with these requirements and implementing an effective strategy, you can safeguard your company’s compliance and maintain a solid legal standing in Singapore’s business landscape.
Inside This Article:
Annual Filing Obligations
To ensure compliance with Singapore law, companies must fulfill annual filing obligations with two government agencies:
- ACRA (Accounting and Corporate Regulatory Authority) and
- IRAS (Inland Revenue Authority of Singapore).
ACRA serves as the national regulator for business entities in Singapore, while IRAS is responsible for tax collection and sets the annual filing requirements.
The following sections outline an overview of these yearly filing requirements, ensuring companies adhere to Singapore’s regulatory framework.
Annual Return Filing
- Purpose: An Annual Return is a mandatory electronic document that companies must submit to ACRA annually to ensure their basic information is up to date.
- Required Information: The Annual Return should include the company’s name, registration number, principal activities, registered office address, company officers (directors and secretary), shareholder information, and share capital.
- Authorized Signatories: The Annual Return must be signed by either a director or a company secretary.
Audited Financial Statements: Companies must attach their audited financial statements when submitting the Annual Return to ACRA. However, small companies may be exempt from this requirement, subject to specific criteria defined by ACRA. (See more in FAQ on small company audit exemption).
The financial statements must be prepared in XBRL format, an XML-based format for exchanging financial information.
Companies can accurately present their financial information when submitting the Annual Return by complying with these requirements.
- Filing Deadline: The Annual Return must be filed within 30 days from the Annual General Meeting (AGM) date. Sometimes, companies can file their Annual Return without conducting the AGM.
Tax Return Filing
- ECI Reporting: Companies in Singapore must report their estimated taxable income, known as Estimated Chargeable Income (ECI), to IRAS annually. The ECI must be submitted within three months from the end of the Financial Year using the ECI Form.
- ECI Exemptions: Companies are exempted from reporting ECI if the ECI is Nil or if their annual revenue does not surpass S$1 million.
- Income Tax Return: Post reporting the estimated income, companies must file an income tax return that calculates the actual tax liability. The deadline for tax return filing is December 15 for e-filing or November 30 for paper filing.
- Preceding Year Basis: Singapore follows the “preceding year basis” for taxation, meaning that companies file their tax return in the current year based on the profits earned in the preceding year.
- Waiver for Dormant Companies: Business activity or income for the financial year is necessary for Dormant companies to lodge for a waiver of income tax return filing. If IRAS approves, these companies are not required to report estimated income or file a tax return for that financial year.
Responsibility for annual filing
The responsibility for annual filing lies with two key parties:
- Company Secretary: The Company Secretary must ensure that the company fulfils its obligations regarding filing statutory reports. They are crucial in overseeing compliance and ensuring the documents are prepared and submitted on time.
- Directors: The company’s directors are responsible for ensuring the accurate preparation of the company’s financial statements. They must ensure that the financial statements comply with the relevant accounting standards and provide a true and fair view of the company’s financial position.
The Company Secretary and the directors work collaboratively to meet the annual filing requirements and ensure that the company complies with the necessary regulations and reporting obligations.
Consequences of Non-Compliance of Annual Return Filing with ACRA
- Delayed AGM: If a company fails to hold it’s Annual General Meeting (AGM) within the specified timeframe, it can face penalties.
- Late Submission: Failure to submit the Annual Return and financial statements within the prescribed deadline can result in penalties ACRA imposes.
- Outdated Financial Statements: Presenting outdated financial statements at the AGM can lead to non-compliance issues and potential penalties.
Companies found non-compliant may face fines of S$300 for each instance of non-compliance. ACRA has recently increased its enforcement actions against companies that fail to meet their filing obligations.
Non-Compliance of Filing Tax Returns with IRAS:
- Late ECI Submission: If a company does not submit the Estimated Chargeable Income (ECI) within three months from the end of the financial year, IRAS will issue a Notice of Assessment (NOA) estimating the company’s income.
- Failure to Object: Upon receiving the NOA, if the company disagrees with the estimated assessment, it must file a Notice of Objection within two months. Please do so to avoid treating the estimate as final, even if the company’s income on the tax return is lower.
Non-compliance with tax return filing requirements can lead to potential disputes and complications with tax assessments. Companies must fulfil their obligations and submit the necessary documents within the specified timelines to avoid penalties and comply with IRAS regulations.
Compliance Rating and Certificate:
When a company fulfils its annual filing requirements, it is awarded a green checkmark displayed next to its name in ACRA’s online directory. This signifies that the company is compliant and eligible for a Certificate of Compliance.
On the other hand, if a company fails to adhere to the annual filing requirements, it is marked with a red cross symbol, indicating non-compliance. In such cases, the company cannot obtain the Certificate of Compliance.
Maintaining compliance with annual filing requirements is crucial for entrepreneurs, as anyone accessing ACRA’s online directory can view the company’s basic information and compliance rating. This transparency allows stakeholders, potential business partners, and customers to assess a company’s level of compliance, reinforcing the importance of meeting these obligations.
In conclusion, adherence to the annual filing requirements imposed by ACRA and IRAS is crucial for all Singapore companies. To avoid any potential legal issues, it is highly recommended to seek the assistance of a reliable corporate services firm. We at Rikvin can provide valuable guidance and support in meeting compliance obligations, safeguarding the company’s interests and ensuring the timely submission of necessary returns and forms. Companies can maintain their reputation and operate per Singapore’s regulatory framework by proactively managing annual filing requirements.
FAQs Financial Reporting for Branch Offices in Singapore
- Small private companies in Singapore may be exempt from submitting audited financial statements to ACRA if they fulfil at least two of the following criteria for the past fiscal year:
- Total annual revenue is less than S$10 million.
- Total assets are less than S$10 million.
- Total employees are fewer than 50.
If a small company meets these criteria, it can benefit from the audit exemption and is not required to engage an external auditor for its financial statements.
However, it’s important to note that even though an audit is not mandatory, small companies are still expected to maintain proper accounting records and prepare unaudited financial statements that provide an accurate and fair view of their financial position.
- The Annual General Meeting (AGM) is a compulsory yearly gathering where a company presents its financial statements to shareholders, providing an overview of its financial position.
The following rules regarding AGMs apply for private limited companies:
- The first AGM must be held within 18 months after the company’s incorporation.
- Subsequent AGMs should be held within a maximum interval of 15 months between each meeting.
- All financial accounts must be updated six months before an AGM.
- AGMs can be conducted outside of Singapore if desired.
It’s important to note that private limited companies in Singapore can dispense with an AGM if all members unanimously agree to a resolution. The company can present its Annual Return without conducting an AGM.
- No, branch offices cannot seek double taxation relief under Singapore’s network of Avoidance of Double Taxation Agreements (DTAs). This relief is usually available to resident companies.
- Yes, if a branch office meets the registration criteria, it must register for GST and comply with the relevant GST regulations in Singapore.
- No, branch offices are not eligible for Singapore’s tax incentive programs, grants, or exemptions. These benefits are typically reserved for resident companies.
- While annual returns focus on company details and compliance, yearly accounts provide a comprehensive view of the company’s financial performance and health. Both filings are essential for different purposes and help stakeholders assess other aspects of the company’s operations
Are Your Annual Filings Timely?
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