Corporate Compliance Requirement | Ongoing Compliance
When you incorporate a company in Singapore, you are obliged to comply with the statutory requirements stipulated in the Singapore Companies Act, and to submit annual filing requirements to the Accounting and Corporate Regulatory Authority (ACRA) and the Inland Revenue Authority of Singapore (IRAS). It is imperative for all companies to stay in compliance with the statutory regulations to avoid penalties and, quite possibly, legal repercussions.
Financial Year End
Each company in Singapore has to determine its Financial Year End (FYE). The FYE is the completion of an accounting period. A company’s financial year-end does not necessarily need to fall on December 31, and can actually fall on any day within the year.
A company’s fiscal year is the same as its financial year. The date for the company’s FYE is left for the company to decide. Most companies use either the end of the calendar year (December 31) or the end of any of the quarter (March 31, June 30 or September 30) as their fiscal year end date.
Did You Know? It is best to keep the company’s FYE within 365 days of the calendar date in order to enjoy the zero tax exemption for new start-up companies (full tax exemption on the first $100,000 of normal chargeable income [profits] for its first three consecutive YA; a further 50 percent exemption is given on the next $200,000 of the normal chargeable income — excluding Singapore franked dividends — for each of the first three consecutive YA’s). You can refer to Singapore Taxation for the qualifying conditions of the full tax exemption scheme.
A company that is incorporated on 11 November 2011 is required to hold its first AGM by 11 May 2013 at the latest.
The year end of the company should be fixed on a date before 11 May 2013 at the discretion of the management. However, we recommend that the first financial year should be less than 12 months for tax submission purposes (31 October 2012). This is because any financial period which is more than 12 months will be considered as 2 YA by IRAS for tax exemption purposes.
The differences in determining the year end on 31 October 2012 vs.31 December 2012 are as follows:-
Year ended 31 December 2012
Year ended 31 October 2012
11/11/2011 – 31/12/2011
11/11/2011 – 31/10/2012
1/1/2012 – 31/12/2012
1/11/2012 – 31/10/2013
1/1/2013 – 31/12/2013
1/11/2013 – 31/10/2014
We conclude that the company will lose its tax incentive for a ten-month period if the company’s end of year is 31 December 2012.
To prevent companies from arbitrarily changing their FYE, the following safeguards will be put in place:
(a) companies must notify the Registrar of their FYE upon incorporation and of any subsequent change;
(b) companies must apply to the Registrar for approval to change their FYE:
– if the change in FYE will result in a financial year longer than 18 months; or
– if the FYE was changed within the last 5 years; and
(c) only FYE of the current and immediate previous financial year (provided that statutory deadlines for the holding of AGM, filing of annual return and sending of financial statements have not passed) may be changed; and
(d) unless otherwise approved by the Registrar, the duration of a company’s financial year must not be more than 18 months in the year of incorporation.
(e) companies with unusual financial year period (not 12 months) should notify ACRA via the notification of change of FYE if they want to avoid applying for approval to change FYE every year
(f) Existing companies will have their FYE deemed by law to be any date previously notified to the Registrar as their FYE date. In the absence of such notification, the anniversary of the date of incorporation will be deemed by law to be their FYE. Companies can change their FYE by notifying ACRA before or after the effective date of the new laws on FYE.
Singapore private limited companies must have at least one director who must be ordinarily a resident in Singapore, which means a Singapore citizen, a Singapore permanent resident or a person who holds an Employment Pass/EntrePass under the Company.
There is no limit on the number of additional local or foreign directors a Singapore private limited company can appoint. The director must be at least 18 years of age, and must not be bankrupt or convicted of any previous crime. Information about the directors will appear on public records. Directors can also be shareholders, and vice versa.
To comply with relevant sections under the Companies Act, Cap 50. Director can refer to ACRA Legislation for more information about Director’s Responsibilities.
The company secretary must be a natural person who is ordinarily a resident in Singapore. The Singapore Companies Act requires companies to appoint a company secretary within six month of incorporation.
Appointment of Auditors
All Singapore incorporated companies must appoint an auditor within three months of the date of incorporation- unless it is exempted from audit requirements. To be exempted from audit requirements, a company must satisfy all of the following criteria:
For a company with its financial year beginning prior to 1 July 2015:
- The company does not have any corporate shareholders;
- The total number of individual shareholders must be less than 20; and
- Annual turnover of the company must be less than S$5 million.
For a company with its financial year beginning on or after 1 July 2015, the Company must qualify as a small company for the immediate past two consecutive financial years.
A company qualifies as a small company if (a) it is a private company in the financial year in question; and (b) it meets at least 2 of 3 following criteria for immediate past two consecutive financial years:
(i) total annual revenue is not more than $10m;
(ii) total assets is not more than $10m;
(iii) no. of employees is not more than 50.
For a company which is part of a group, to qualify to the audit exemption:
(a) the company must qualify as a small company; and
(b) the entire group must be a “small group”
For a group to be a small group, it must meet at least 2 of the 3 quantitative criteria on a consolidated basis for the immediate past two consecutive financial years.
Please refer to Small Company Concept for illustration and more information.
Company Registration Number Disclosure
The Singapore Companies Act requires every company to have the company registration number, known as the Unique Entity Number (UEN) on all business letters, statements of account, invoices, official notices, publications, etc.
Notification of Changes
It is the company’s responsibility to update the Registrar (ACRA) within the stipulated time of any changes in the company’s particulars including the company’s shareholders, share capital and officers. Failure to do so will incur penalties.
Business Licences and Permits
Some business activities in Singapore are subject to regulation by government authorities. Even if your business firm has been registered, you cannot begin operation unless you have the necessary approvals and/or licences from the relevant government authorities.
Registered Office Hours
All Singapore companies must have a registered office address in Singapore and the office must be open to the public for minimum of three hours per day during normal business hours on weekdays.
Central Registration (CR) Number
If your business activities involve import, export or trans-shipment into and out of Singapore, your company will have to register with Singapore Customs and obtain a CR Number.
Singapore Goods and Services Tax Registration
The Goods and Services Tax (GST) is a tax on the supply of goods and services in Singapore and on the import of goods into Singapore. Goods exported from Singapore and international services provided from Singapore are exempt from GST. The current GST rate is 7 percent
All Singapore companies must register for GST if their annual taxable revenue is more than S$1 million, or if their current taxable income and annual taxable revenue is expected to be more than S$1 million. The business must register for GST within thirty days from the time it is deemed liable.
You may also choose to voluntarily register for GST. Approval for voluntary registration is at the discretion of the IRAS Comptroller. Once approval is given, you must remain registered for at least two years.
Registration with Singapore Central Provident Fund (CPF) & Skill Development Fund (SDF)
The Central Provident Fund or CPF is a compulsory pension fund scheme in which the employer and employee contribute a percentage of monthly salary to the fund. CPF contributions by the employer are mandatory for all local employees who are Singapore citizens or permanent residents earning more than S$50 a month. The maximum CPF contribution rate for employer and employee is 17 percent and 20 percent respectively, and can be lower depending on certain factors such as employee age, permanent resident status, etc.
Employment Pass holders do not have to contribute to CPF.
However, the employer (company) is required to contribute a fee to the Skill Development Fund (SDF). A SDF contribution is payable by employers for all employees up to the first $4,500 of gross monthly remuneration at the rate of 0.25 percent or S$2, whichever is higher.
Besides, CPF Board is the collecting agent for contributions to self-help group (SHGs) funds and SHARE donations. These contributions and donations are deducted from your employee’s wages together with the employee’s share of CPF contribution. Employees are required to contribute monthly to the SHGs Funds.
The SHGs Funds are as follows:
- Chinese Development Assistance Council (CDAC) Fund, administered by CDAC
- Eurasian Community Fund (ECF), administered by the Eurasian Association (EA)
- Mosque Building and Mendaki Fund (MBMF), administered by Majlis Ugama Islam Singapura (MUIS)
- Singapore Indian Development Association (SINDA) Fund, administered by SINDA
The SHGs are set up to uplift the less privileged and low income households in the Chinese, Eurasian, Muslim and Indian communities, respectively. The prescribed amount is deducted from the wages of the employees. If the employees wish to contribute a different amount or opt-out, they have to obtain the relevant forms from the respective SHGs.