Important Compliance Requirements for Companies in Singapore
Contrary to popular belief, incorporating a company does not end with deciding on a business name or paying a registration fee. In fact, there is more to it than that. You are required to comply with the Company Act among other statutory requirements in order to avoid any potential legal ramifications.
Be it a business licence, annual returns, or GST, here are some compliance requirements for you to take note of to ensure exemplary corporate governance for your business.
1. Obtain A Business Licence
The kind of licence your company requires depends on the nature of your business and the activities and industries your business will engage in. These should be acquired prior to any business activity or transaction. Activities include running a spa, manufacturing food and beverage, wholesale trading, among others. It is imperative that you perform thorough research to find out which business licenses are needed before you begin operations.
2. Tax Deadlines
Companies in Singapore are taxed on income earned in the preceding financial year. Whatever income earned in financial year 2020 will thus be taxed in 2021. At present, the default corporate income tax rate is 17%. Hence, ensure that your taxes are filed on time to avoid any legal repercussions.
3. Register for GST
Singapore’s equivalent to the VAT (Value Added Tax), GST is levied on certain goods and services within Singapore, along with foreign imports. Currently valued at 7%, your business may be required to mandatorily become GST-registered. From there, you will need to submit a tax return to the authorities based on your set accounting cycle. Presently, GST registration isn’t mandatory for all businesses, unless your company’s annual taxable turnover exceeds or is likely to exceed S$1 million from the sales of taxable goods and services. However, registering for GST can be very beneficial to companies.
4. Register with CPF
CPF contribution is mandatory for all Singaporeans and PRs earning over $50 a month. Once you hire your first employee, apply to submit your contribution details to CPF using your SingPass or CorpPass and UEN. Upon approval, you will receive your CPF Submission Number (CSN), which must be quoted upon making CPF-related transactions. You are also required to contribute to the Skills Development Fund for all your employees. Levy goes up to S$4,500 of each employee’s total monthly income at a levy rate of 0.25% or a minimum of $2.
5. Setting Your Financial Period
In Singapore, companies can choose their own FYE (Financial Year End), which forms the basis for their accounting period. FYE typically recurs every 12 months and doesn’t necessarily needs to fall on 31st December. If your organisation is a subsidiary of a holding company, then your FYE must correspond to that company’s FYE.
6. Annual Returns Deadlines
All Singapore-incorporated companies are required to file their annual returns to ACRA on time. Information required upon filing includes company details, shares, financial statements, and date of AGM. You won’t be required to file with ACRA if you are the owner of a partnership or sole proprietorship.
7. Engage A Corporate Secretary
Engage a corporate secretary within six months of incorporation of your business. Having a corporate secretary ensures that your business completely adheres to all company rules and regulations, safeguards you against penalties, fines, and lawsuits, and helps you easily manage legal and administrative matters.
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