Dormant Company Status in Singapore: Understanding the Implications

You've incorporated a company in Singapore, perhaps with ambitious plans, but circumstances have changed. Maybe you're pausing operations, waiting for the right market conditions, or holding an asset for future development. In such scenarios, your company might be considered "dormant." But what does this really mean for your Singapore Private Limited Company? 

Many business owners mistakenly believe that a dormant company is completely free from administrative duties. This is a common pitfall! While the compliance burden is indeed reduced, a dormant company in Singapore still has specific obligations that, if neglected, can lead to penalties and issues. 

Let's demystify dormant status in Singapore. 

What is a Dormant Company? (The ACRA vs. IRAS View) 

It's crucial to understand that ACRA (Accounting and Corporate Regulatory Authority) and IRAS (Inland Revenue Authority of Singapore) have slightly different definitions of what constitutes a "dormant" company. This distinction impacts your filing obligations. 

• ACRA's Definition (Companies Act): A company is considered dormant during a financial year if it has no accounting transactions during that period. However, certain "maintenance" transactions are disregarded and do not affect dormant status. These include: 

• The taking of shares by subscribers to the constitution. 

• The appointment of a company secretary. 

• The appointment of an auditor. 

• The maintenance of a registered office. 

• The keeping of registers and books. 

• The payment of any fees or charges (including penalties) payable under any written law (e.g., ACRA fees). 

• The payment or receipt of a nominal sum not exceeding S$5,000. 

• IRAS's Definition: IRAS considers a company dormant if it has not carried on any business and has not derived or received any income (including GST) for the entire financial period. This applies even if the company incurred some expenses (e.g., legal fees, secretarial fees). 

  
  

The takeaway: A company might be considered dormant by IRAS for tax purposes (no income) but still need to prepare financial statements for ACRA if it has certain "non-maintenance" accounting transactions. 

Key Benefits of Maintaining a Dormant Company 

Despite the ongoing obligations, maintaining a dormant company can offer several strategic advantages: 

• Cost Savings: While not entirely free, administrative costs are significantly lower than for an active company, as you may be exempt from audit requirements and can apply for a waiver for income tax filings. 

• Preservation of Company Identity: Your company name, brand, and corporate structure remain intact, protecting your intellectual property and allowing for easy reactivation. 

• Flexibility for Future Plans: It offers the flexibility to pause operations during temporary setbacks (e.g., illness, market downturns) and quickly resume business without the need to set up a new entity from scratch. 

• Asset Holding: A dormant company can still hold assets (e.g., property, investments), provided it does not generate income from them and, for ACRA purposes, its total assets don't exceed S$500,000 (for exemption from financial statement preparation). 

  
  

Your Obligations as a Dormant Company in Singapore 

Do not assume "dormant" means "no work"! Here's what you generally need to continue doing: 

1. Annual Return (AR) Filing with ACRA: All "live" companies, including dormant ones, must file an Annual Return with ACRA within 7 months of their Financial Year End (FYE). This ensures your company remains on the register. 

2. Company Secretary: You are legally required to appoint and maintain a qualified Company Secretary who is ordinarily resident in Singapore. They are crucial for overseeing ongoing compliance. 

3. Registered Office: Your company must maintain a valid physical registered office address in Singapore. 

4. Keeping of Records: You must continue to maintain proper accounting and statutory records, even if minimal. 

5. Annual General Meeting (AGM): While certain dormant companies (private dormant relevant companies) may be exempt from preparing financial statements and audit, the requirement to hold an AGM still stands, unless a written resolution is passed in lieu of a meeting. 

6. Corporate Income Tax Return (Form C-S/C) with IRAS: 

7. Mandatory Filing: Even dormant companies are generally required to file their Corporate Income Tax Return annually with IRAS. 

8. Waiver Application: You can apply to IRAS for a waiver from filing the Corporate Income Tax Return (Form C-S/C) if your company meets specific criteria: 

9. It is dormant and has no income for the entire financial year. 

10. It does not own any investments (or if it does, it derives no income from them). 

11. It has ceased GST registration (if applicable). 

12. It has no intention to recommence business within the next two years. 

13. All past tax returns and financial statements are up to date. 

14. If granted, this waiver exempts you from future Form C-S/C filings until you recommence business. 

    
    

Reactivating a Dormant Company 

Should you decide to resume business activities, reactivating your dormant company is relatively straightforward: 

1. Notify IRAS: You must notify IRAS within one month of recommencing business or beginning to receive income. This is critical to avoid penalties. 

2. Resume Full Compliance: Your company will then revert to full compliance requirements, including preparing financial statements, potentially undergoing audit, and filing full tax returns. 

3. Update Particulars: Ensure your principal business activities (SSIC codes) with ACRA are accurate and up-to-date. 

   
   

When to Consider Striking Off Instead 

If you're certain you will not resume business activities, or if your company has liabilities, maintaining dormant status might not be the best option. Striking off (de-registering the company from ACRA's register) is a more definitive closure. However, specific conditions must be met for striking off, including having no outstanding liabilities and no legal proceedings. 

Expert Guidance for Peace of Mind 

Navigating the nuances of dormant status, particularly the differing definitions from ACRA and IRAS, can be confusing. Engaging a professional corporate service provider can: 

• Ensure you correctly meet the criteria for dormancy. 

• Manage your ongoing compliance obligations (Annual Returns, Company Secretary). 

• Assist with applying for the IRAS tax filing waiver. 

• Provide advice on the best course of action (dormancy vs. striking off) based on your specific circumstances. 

  
  

Don't let your "sleeping giant" incur unnecessary penalties. Understand its status and obligations to keep your Singapore company in good standing, ready for when opportunity knocks.