If your company stops all business activities, it will be considered dormant. This article explains the requirements for dormant companies, the dormant company application process, and how dormant companies submit annual reports.
I can obviously cancel the company, why should I keep the dormant state?
If you want to close the company, you can also write it off. If you do not have any further development plans for the company, and do not want to bear the company's maintenance costs, then canceling the company may be a good solution.
But if you can't rule out using the company again in the future, it's best to consider keeping it dormant. You only need to follow the procedure to apply for dormancy, and only pay a small portion of the retention fee each year. If you have a brand name, license or patent related to the company, you can keep it dormant. After applying for dormancy, you can also use the company to strategically hold investments in Singapore, but you may not be able to earn income from it.
What is a dormant company?
If a company does not have any related business activities, the company will become dormant: for example, you have not sold or bought anything, did not hire anyone, paid no dividends, and have no income. In Singapore, the dormant status application will involve the Singapore Accounting and Enterprise Authority (ACRA) and the Singapore Taxation Authority (IRAS), and their definitions of dormant status are different. You need to meet ACRA's dormant requirements so that you don't have to submit financial statements to them. If you do not want to file a tax return, you must meet the dormancy requirements of the Inland Revenue Authority of Singapore (IRAS). Your company may only be regarded as a dormant company by one of the parties.
ACRA's definition of dormant companies
ACRA will exempt dormant companies from the obligation to submit financial statements and convene annual shareholders' meetings. ACRA's definition of dormant company is: a company that does not have any accounting in a certain period. ACRA will still treat your company as a dormant state even if it is doing the following:
- Appoint company secretary
- Keep registered address, register and account book
- Pay fines or fees to ACRA
IRAS definition of dormant company
The Singapore Inland Revenue Department can exempt dormant companies from the obligation to file tax returns. For them, the most important part of the definition of dormant company is: the company does not have any income. Even if there is expenditure, it will not affect the sleep state.
How do I apply for a dormant company?
This article was written by Osome professionals. Osome — An online provider of company registration services, secretarial services and accounting services in Singapore. We can help entrepreneurs register and run companies, help companies apply for dormancy, and help companies reopen. You can contact us through the secure chat window and respond quickly 24/7. You can click osome.net.cn for more information and get a free consultation.