Our first article Complying With Singapore Statutory Requirements in The Legal Stuff section detailed the information you need to know about a company’s compliance with Singapore’s statutory law. Here, we’ll delve into the nuts and bolts of filing of Annual Returns. Do note that these regulations are only applicable to a Singapore Private Limited Company, and not the other business structures such as Sole Proprietorship and Partnership. To find out more about the various business structures, please read the articles under the section All You Need To Know About Starting A Business.
What Is An Annual Return?
The Annual Return is a submission to the Accounting and Corporate Regulatory Authority (ACRA) to indicate your company’s financial health and status. It includes particulars of the company such as the name of the Company Secretary, Directors, shareholders and their respective share capital, and the date to which the financial statements of the company are made up to.
Why Does My Company Need To File Annual Returns?
It is required by the law. According to S175, S197 and S201 of the Singapore Companies Act, all Singapore-incorporated companies are required to hold their Annual General Meeting (AGM) and file their respective returns to ACRA and the Inland Revenue Authority of Singapore (IRAS) for taxation purpose. These statements must be prepared according to the Singapore Financial Reporting Standards (SFRS).
What Should Be Included In The Annual Returns?
It depends on the type of company you own. Remember, we are talking only about Private Limited Companies here, but even within this category, they are divided into two types:
- Exempt Private Companies (EPC) – Private Limited Companies with up to 20 shareholders and none of them are corporations; and
- Non-EPC Companies – Private Limited Companies with 20 to 50 shareholders.
It also depends on whether your company is solvent. An insolvent company is one that:
- Has a creditor served a statutory demand on the company for more than $10,000, and the company fails to repay the amount to the creditor’s reasonable satisfaction within 21 days from the date the demand was served;
- Has a creditor who tries to enforce a court judgment or order for a certain sum of money against the company, but is unable to recover the entire sum; or
- Has proven to the court that the company is unable to pay its debts.
If your company is a solvent EPC, you can file your Annual Returns without financial statements. You are only required to complete an online declaration of solvency when completing your filing.
If your company is an insolvent EPC, you are required to file your Annual Returns with either a full set of financial statements (in XBRL format) or Financial Statement Highlights (also in XBRL format) with a PDF copy of the financial statements.
Otherwise, your company must submit a full set of financial statements when filing its Annual Returns.
Preparation Of Financial Accounts
The set of financial statements comprises:
- Statement of Comprehensive Income (Profit & Loss Statement)
- Statement of Financial Position (Balance Sheet)
- Statement of Cash Flows
- Statement of Changes in Equity
The Company Director is responsible for appointing individuals with the required level of expertise to prepare the above statements. Many small outfits do engage professional corporate services providers to maintain their ledgers and bookkeeping and prepare the necessary statements.
Please refer to our article for more information about the Singapore Financial Reporting Standards.
Do My Company’s Financial Statements Need To Be Audited?
If your company is a Small Company, it is exempted from preparing audited financial statements. Otherwise, the set of accounts needs to be audited by a certified auditor.
Small Companies are defined as one that meets at least two of the following requirements:
- Total annual revenue of not more than $10 million;
- Total gross assets as at the end of the financial reporting period of not more than $10 million; or
- Total number of employees as at the end of the financial year of not more than 50.
Please refer to our article on audited and unaudited annual financial statements for more information.
How To File Annual Returns?
ACRA has made the filing of Annual Returns much easier since December 2019, reducing it to only the following few steps:
Step 1: Go to BizFile+
Step 2: Under “File eServices”, select “Local Company”
Step 3: Under “Annual Filing”, select “Annual Return by Local Company”
What Is The Submission Deadline For Filing Of Annual Returns?
You should file your company’s Annual Returns within one month from the date of its AGM. Companies could apply for an extension with ACRA if they missed the deadline. If the company misses the extended deadline, ACRA will impose penalties. The Registrar can strike off companies that fail to file Annual Returns for consecutive years.
Final Note on Filing of Annual Returns: The Annual Returns need to be signed by the Director(s) or the Company Secretary, who are also the appointed officer to file the document. If there isn’t a need for your company to hold an AGM, you can have a resolution passed by all members with voting rights. But be sure to circulate the company’s financial statements to all members for approval.
Filing Of Corporate Income Tax Returns
The other filing that your company needs to take care is the filing of Corporate Income Tax Return. There are two steps to this filing:
1. Filing of Estimated Chargeable Income (ECI)
- You are required to declare your company’s revenue amount and ECI by filing an ECI form with the Inland Revenue Authority of Singapore (IRAS) within three months of its Financial Year End.
- The ECI is the estimated taxable income of your company. However, it can qualify for an exemption if its annual revenue is less than SGD5 million.
2. Filing of Tax Returns
- After the filing of ECI, you need to submit your company’s annual Income Tax Return with IRAS by November 30.
For detailed information on the filing of Corporate Income Tax Return, please read our article All You Need To Know About Filing Annual Corporate Income Tax Returns.