A company is dormant when it doesn’t have any income, issue dividends to the shareholder, nor employ any staffs. ACRA (Accounting and Corporate Regulatory Authority) and IRAS (Inland Revenue of Singapore) have their own definition for dormant status. Dormant companies can be beneficial because of their reduced statutory obligation
ACRA DEFINITION OF A DORMANT COMPANY
According to ACRA, a company is dormant when there is no business activity happening, the company is not listed, and the nominal sum of payment is not exceeding S$ 5,000.
A dormant company is exempted from submitting financial statements and holding AGM.
To be exempted from submitting financial statements and holding AGMs, the following requirements must be met:
– The company is not a listed company or a subsidiary of a listed company
– It holds less than S$500,000 in asset
– It has been dormant since the formation of the end of its previous financial year
There is a list of transaction that dormant companies can do and will not affect the dormant status, such as:
IRAS DEFINITION OF A DORMANT COMPANY
According to IRAS, a company is dormant when it does not generate any revenue though the companies may have been incurred expenses.IRAS exempted dormant company in Singapore from filing tax returns if it meets the following requirements:- It does not own any investments- It will not commence any business transaction for the next two years- All financial statements and tax computation have been filed up until the company stopped the trading- It has to unregistered for GST