For business owners in Singapore seeking to temporarily cease their company’s activities without dissolving the entity entirely, declaring the company as dormant is a viable and strategic option.
This process effectively puts the company in a state of “hibernation,” significantly reducing its administrative and compliance burdens.
1) Is Your Company Dormant?
Before you can declare your company as dormant, your company needs to meet the criteria of both the Accounting and Corporate Regulatory Authority (ACRA) and the Inland Revenue Authority of Singapore (IRAS) as they have different definitions of what makes a company dormant.
A company can be considered fully dormant by both ACRA and IRAS if it has no accounting transactions and generates no income or revenue. For a more in-depth explanation, read our article about what a dormant company is.
2) Making Your Company Dormant
Transitioning a company to a dormant state is not an automatic process; it requires a series of deliberate and sequential actions to ensure compliance with both ACRA and IRAS.
There is no single “application for dormancy.” Instead, the status is achieved by ceasing operations and then formally declaring this state of inactivity through routine statutory filings.
i. The Company Dormancy Checklist
Before a company can be considered dormant, its directors must ensure all operational and financial affairs are properly concluded.
- Cease All Business Activities: The fundamental first step is to halt all transactions that would violate either the ACRA or IRAS definition of dormancy. This includes stopping all sales, purchases, and other commercial operations.
- Settle Outstanding Liabilities: All outstanding tax liabilities with IRAS must be settled, and all tax returns must be filed up to the date of business cessation. This includes any obligations to the Central Provident Fund (CPF) Board.
- De-register for Goods and Services Tax (GST): If the company is registered for GST, it is a mandatory requirement to apply for de-registration with IRAS. A company cannot qualify for key dormant status benefits, such as the tax filing waiver, while it remains GST-registered.
- Manage Bank Accounts: A corporate bank account can be maintained for essential statutory payments, such as ACRA fees or corporate secretarial services. However, it is critical not to close the account prematurely if a tax refund is anticipated, as IRAS will not issue refunds to third parties like directors or shareholders.
ii. Declaring Dormancy with ACRA
A company’s dormant status is officially communicated to ACRA not through a special application, but as part of its mandatory Annual Return (AR) filing.
- File the Annual Return via BizFile: All private companies, including dormant ones, must file an AR with ACRA via the BizFile portal.
- Declare Dormant Status: During the online AR filing process, the company’s representative will be prompted to declare the company’s status. It is at this stage that the company is officially recorded as “dormant” for the financial year in question.
- Lodge the Director’s Declaration: As part of the AR, the company’s directors must submit a formal declaration. This statement confirms that the company has been dormant for the relevant period and attests that it meets the specific criteria for any exemptions being claimed, such as the exemption from preparing financial statements.
This declaration is a legal attestation for which the directors are personally responsible.
ii. Declaring Dormancy with IRAS
A dormant company must still continue to file an annual Corporate Income Tax Return with IRAS. For simplicity, dormant companies can use the “File Form for Dormant Company” digital service, which requires only two essential fields to be completed.
However, a company can apply to IRAS for a waiver from the annual requirement to file tax returns. This waiver is not granted automatically and is subject to very strict conditions. The company must:
- Be dormant as per the IRAS definition (no business, no income).
- Have filed all required tax returns and financial statements up to its date of business cessation.
- Not own any investments (e.g., shares, properties, fixed deposits). If it does own such assets, it must not derive any income from them.
- Have de-registered for Goods and Services Tax (GST) if it was previously registered.
- Confirm that it does not intend to recommence business within the next two years.
- The application for this waiver must be submitted electronically through the IRAS myTax Portal.
3) Ongoing Compliance Obligations For Dormant Companies
While the compliance requirements are significantly reduced, a dormant company in Singapore still has some ongoing obligations.
Many business owners mistakenly believe that once a company ceases trading, all administrative duties are suspended. This is a dangerous misconception that can lead to severe penalties. Company dormancy reduces compliance obligations, but it does not eliminate them.
To learn more, read our guide on what a dormant company still needs to do.
