September, 2020
The landscape of regulatory compliance across the world is constantly evolving with increasingly stringent requirements across all types of industries.
Singapore companies provide numerous advantages, including limited liability and taxation benefits. While Singapore has a reputation as one of the easiest countries to set up and run a business, its orderly legal and transparent system carries strict regulatory requirements.
To maintain its business-friendly climate, most statutory obligations are straightforward and clearly set out on the websites and brochures of the Accounting and Corporate Regulatory Authority (“ACRA”), Inland Revenue Authority of Singapore (“IRAS”), and other relevant government bodies.
Compliance requirements can generally be attended to by a professional corporate services firm. It is prudent for companies to consider regulatory compliance matters even before the incorporation process so that everything can be executed in a timely manner.
Main corporate compliance requirements under Singapore law include:
- Disclosure of company registration number
Every new company is issued a system-generated Unique Entity Number (UEN). Businesses must use this UEN when transacting with government agencies, such as tax filings. A Singapore company is required to display its name and UEN on all company documents and communications.
- Notification of Changes
Companies are required to update ACRA within 14 days of any changes to the company’s name, address, or business activity.
- Registered Office Address
Singapore companies must have a registered office address to which all government communications and notices may be sent. It is also where the company’s registers and records are kept. A registered office must be operational and accessible to the public during normal office hours but need not be where the company conducts its activities. For example, the registered office address may be in Raffles Place, but the factory could be located in Tuas. Companies that do not own or rent a physical property in Singapore may choose to use a virtual office instead. Service providers offer business address and mail-forwarding services, making it an affordable option.
- Register of Registrable Controllers
With effect from 31 March 2017, all companies, unless exempted, are required to maintain beneficial ownership information in the form of a register of registrable controllers. This information is available only to government agencies upon request.
- Financial Year End
Newly set-up companies must decide on the financial year-end (“FYE”). The FYE determines when corporate filings and taxes are due. Common choices include 31 March, 30 June, 30 September, or 31 December. A main consideration for newly set-up companies is to set the FYE within 365 days to enjoy maximum tax benefits. IRAS extends tax exemptions to newly incorporated companies that meet qualifying conditions on the first S$200,000 of chargeable income for each of its first three consecutive years of assessment. However, the exemption does not apply to property and investment holding companies.
- Holding of AGM and filing of Annual Return
For unlisted companies, an AGM must be held within 6 months after the company’s financial year-end. All companies must file their Annual Return within 7 months after the passing of its FYE via the Bizfile portal. The Annual Returns must include the company’s financial statements, comprising the Director’s report, Statement of Financial Position, Statement of Profit & Loss, Cash Flow Statement, Equity Statement, and Notes to the Financials.
- Accounting and tax filing requirements
IRAS requires companies to submit certain documents annually: Estimated Chargeable Income—an estimate of the company’s chargeable income for the Year of Assessment (YA), to be submitted within 3 months after the financial year-end; Tax Returns—audited or unaudited Financial Statements accompanied by a tax computation form known as Form C and C-S.
- Goods and Services Tax Registration
If the company’s annual revenue exceeds or is expected to exceed S$1 million, the company must register for Goods and Services Tax (“GST”), equivalent to Value Added Tax (“VAT”) or Sales Tax in other countries. GST-registered companies must charge this tax, currently at 7%, to their customers on goods and services provided. A GST exemption may apply if the taxable turnover is wholly or mainly zero. A company can also opt to be GST-registered, though it must comply with all obligations that apply to GST-registered companies, even if its turnover is less than S$1 million.
- CPF or SDF registration
The Central Provident Fund (“CPF”) is a compulsory pension fund scheme. Employers and employees contribute a percentage of their monthly salary to the fund. This is mandatory for all employers with employees who are Singapore Citizens or Permanent Residents. For work pass holders and employment pass holders, their employer is required to contribute a fee to the Skills Development Fund (“SDF”).
- Business Licenses and Permits
A Singapore company must obtain a license or approval from the relevant regulatory authority to commence certain business activities, such as a pet shop, running a hotel, or restaurant. The license application process in Singapore is highly streamlined and business-friendly, accessible through the Singapore government’s one-stop platform, GoBusiness portal, which compiles the licensing frameworks of most Singapore statutory bodies.
