Statutory Compliance in Singapore
Singapore holds the reputation of being one of the easiest places to set up and run a business, it is because of the transparent and orderly legal system that does not require strict regulatory compliance by companies incorporated in Singapore.
The Singapore regulatory compliance is based on the statutory obligations as set out in the Companies Act. To make the process run smoothly, most of the statutory obligations are clearly set out by Accounting and Corporate Regulatory Authority (ACRA), Inland Revenue Authority of Singapore (IRAS) or any other relevant bodies.
A basic set of regulatory compliance matters are to be adhered to by all companies acting in Singapore. These compliance services can be addressed by a Corporate Services company. These compliances have a stipulated timeline to comply. It is beneficial for companies to have their governance, risk management and compliance matters sorted to have everything in line before and after incorporation in a timely manner.
Financial Year End
It is the company’s responsibility to determine a financial year end. Multinational companies, foreign companies prefer to follow the same financial year end. This is done keeping in mind the financial statements of the parent company and its subsidiaries to be finalized in the same financial period.
To enjoy the tax benefits, companies newly incorporated need to set the financial year end within 365 days, as IRAS extends the full tax exemption to newly incorporated companies that meet the qualifying conditions on the first S$100,000 of chargeable income for each of its three consecutive years of assessment. The said tax exemption does not apply to property and investment holding companies.
Appointment of Auditors
Companies should appoint an auditor within three months from the date of incorporation unless it fulfills other requirements:
- All shareholders are individuals and not corporations
- Total number of individual shareholders are less than twenty
- The annual turnover of the company is less than S$ 5 million.
Disclosure of the Company’s Registration Number
Every company gets its own Unique Entity Number (UEN) upon incorporation by the ACRA. A certificate of incorporation can be purchased from ACRA to confirm that the company is incorporated and has been registered.
Any official notices sent out by the company needs to contain the registration number i.e. on all government authorities, business letters, audited accounts, invoices. The Government recognizes a company by its registration number. IRAS makes use of the registration number as its tax reference number.
Notification of Changes
Any changes with respect to the company such as shares transfer, increase or decrease in share capital or nomination or resignation of officers etc. should be notified to ACRA, given that ACRA is nation’s Company Registrar.
A few changes are required to be notified to ACRA within a stipulated time. For instance, allotment of shares, companies are required to lodge a change with ACRA within 14 days. The company should also prepare the necessary documentation to maintain proper records in the minute book. In the transfer of shares, both ACRA and IRAS need to be notified.
Tax and Accounting Requirements
IRAS requires companies to submit certain documents on an annual basis, such as the following:
- Estimated Chargeable Income – Estimate of the company’s chargeable income for the Year of Assessment. Should be submitted within 3 months of the financial year-end.
- Accounting Records – Comprising of a Profit and Loss statement, Balance Sheet, Cash Flow Statement and Equity statement.
- Tax Returns – Audited or unaudited accounts accompanied by a tax computation Form C or Form C-S.
- Financial Report – Financial statements of the company.
Information filled in the documents may differ depending on the company’s finances, accounting transactions, sales turnover.
Business Licenses and Permits
Business Licenses are important for certain businesses even before they have can commence business. Examples for businesses that require special licenses include:
- Medical Clinics and associated services
- Hotels and Spas
- Construction companies
- Real Estate agency
- Private education services
It is important to know which statutory board governs the specific industry. Singapore is advanced in the use of technology, applications can be submitted electronically via the body’s website.
Registered Office Address
All companies should have a registered office address, a P.O. Box cannot be counted as one. The office should be open for at least 3 hours a day on weekdays. If the company does have different office timings apart from the norm (9 am to 5 pm), the company will have to notify about it to ACRA.
Holding of Annual General Meeting and Filing of Annual Returns
Every company should hold an AGM once every financial year or within 15 months of the last AGM, whichever is the earliest. However, companies newly incorporated are allowed to hold their first AGM within 18 months from the date of incorporation.
After the AGM is held, the annual return has to be filed with ACRA within one month from the date of AGM. The Annual Return is typically submitted electronically by the company’s Company Secretary or Corporate Secretarial service provider and the following information will be verified during the process:
- Company’s full name and registration number
- Registered address
- Principal activities
- Company Type ( i.e. Private company, Public Company, Small Company)
- Summary of issued and Paid-up share capital
- Registered Charges
- Information of Directors, Company Secretary, Auditors and Shareholders
- Date of AGM and the financial period that the audited accounts have been made upto
- Financial statements
Goods and Services Tax Registration
GST is the tax on the supply of goods and services and even applies to the imports in Singapore. The GST is a flat rate of 7%. Companies fulfilling any one of the following criteria need to be GST registered:
- Annual taxable revenue exceeds S$ 1 million
- A company manufactures taxable supplies and its annual taxable is expected to exceed S$ 1 million.
Even if the turnover is less than S$ 1 million, a company may still opt to register for GST voluntarily. Companies GST registered need to comply with the following requirements:
- E-filing of accurate GST returns in a timely manner
- Payment of tax in a timely manner
- Retain business and accounting records for 5 years
- Include GST in any price displays, advertisements, quotations, publications and invoices
- Be Co-operative with any GST audits
- Accounting for GST on Business Audits at a point of De-registration
CPF registration or SDF registration
CPF (Central Provident Fund) is a compulsory pension fund scheme. The employer and employee equally contribute a percentage of the salary to the fund. Mandatory for all employers having Singaporean Citizens or Singapore PR earning more than S$ 50/ month.
For work pass/employment pass holders, their employer is required to contribute a fee to the SDF (Skills Development Fund). This is payable up to the first S$ 4500 of the employee’s gross salary income.