Dormant companies in Singapore (IRAS and ACRA standards)
The Accounting and Corporate Regulatory Authority (ACRA) Inland Revenue Authority of Singapore (IRAS) views differ a little when it comes to dormant companies in Singapore. Here’s the quick rundown of the difference between how the two statutory boards’ view on dormant companies.
A dormant company is typically defined by its silence or lack of business activity – that is, it does not carry out any trading activities such as:
Any accounting transactions
Payment or receipt exceeding the nominal sum of S$5,000
Employing staff
Selling and buying goods and services
Buying or leasing property
Issuing dividends to shareholders
Paying directors’ salaries
Receiving dividend payments or managing investments
Investments in subsidiaries
A company will cease to be dormant when such above transactions takes place.
Under ACRA Definition:
The test for dormancy is provided for in the Companies Act, i.e. that there is no accounting transaction during that financial year. The Companies Act also states the transactions which will are to be disregarded when determining dormancy:
the taking of shares in the company by a subscriber to the memorandum in pursuance of an undertaking of his in the memorandum;
the appointment of a secretary of the company;
the appointment of an auditor;
the maintenance of a registered office;
the keeping of registers and books;
the payment of any fee and charges payable under written law;
the payment of any composition amount payable under written law;
the payment or receipt by the company of a nominal sum not exceeding $5,000.
Under IRAS Definition:
A dormant company is one that does not carry on business and has no income for the whole of the basis period, which is also known as the financial period. For example, if your company did not carry on business and had no income for the whole of the financial period, 1 July 2023 – 30 June 2024 (FY2024). it is regarded as a dormant company for the Year of Assessment (YA) 2025.
