1.According to IRAS, a dormant company is one that does not carry on business and has no income for the whole of the basis period. For example, if your company did not carry on business and had no income for the whole of the basis period ending in year 2023, it is regarded as a dormant company for the Year of Assessment (YA) 2024.
For example, a company owned investments such as real properties, fixed deposits or shares during the financial year 2024. Other than investments, it did not carry on business and also had no income from its investments during the same period. Therefore it is regarded as a dormant company for financial year 2024.
2. Unlike an active company, a dormant company are not allowed to claim capital allowances and deduction of expenses incurred in the basis period. This is because the dormant company did not carry on a trade or business during that period and consequently, there is no income available that can be used to offset the capital allowances and expenses. However, unutilised losses brought forward from a previous years when the company was not dormant can still be kept and be deducted against income in the subsequent years which they are active.
3. On the contrary, a dormant company can make a claim for donations if the donations were made to an approved Institution of a Public Character (IPC) or to the Singapore Government. The claim for donations can be used to reduce the amount of taxable income and hence the final tax payable to IRAS. If there are any unutilised donations balance, this amount can be carried forward to subsequent years up to a maximum of 5 years.
4. A dormant company are allowed to exempted from the requirement to file its Form C-S/ Form C-S (Lite)/ Form C if it satisfies the following qualifying conditions:
- Dormant and have filed its Form C-S/ Form C-S (Lite)/ Form C, financial statements and tax computation(s) up to the date of cessation of business.
- Do not own any investments (e.g. shares, real properties, fixed deposits). If the company owns investments, it must not derive any income from these investments.
- Already de-registered for Goods and Services Tax (GST)
- Do not have the intention to recommence business within the next 2 years.
Once a dormant company has been granted a waiver, it will not be issued with Form C-S/ Form C-S (Lite)/ Form C from that date onwards. Hence, a dormant company does not need to submit the waiver application on a yearly basis to IRAS.
5. If a dormant company recommences business or starts to receive any income, it must to notify IRAS within 1 month from the date of commencement of business or earning/ receiving the income. It must write to IRAS to request for the Form C-S/ Form C-S (Lite)/ Form C so this tax filing forms can be issued in time for it to file its tax returns to IRAS.
6. A dormant company need not file the company’s Estimated Chargeable Income (ECI) if the company has been granted a waiver to file Form C-S/ Form C-S (Lite)/ Form C. However, once the dormant company is active and had applied to IRAS for Form C-S/ Form C-S (Lite)/ Form C, it has to start filing the company’s Estimated Chargeable Income (ECI) to IRAS.
7. Please contact us if you require help in handling the tax affairs for your dormant company. At PL Biz Consulting Pte Ltd, we have the tax experts with many years of experience to advise and help you in making sure you are compliant with the tax requirements for a dormant company in Singapore.
