Unravelling the Annual Compliance Essentials for Singapore Companies

‍Key Annual Compliance Tasks

Step 1: Preparing Your Financial Statements

Every year, as a company in Singapore, you're required to draft annual financial statements. These statements provide a comprehensive overview of your company's financial performance and position. They include the Statement of Comprehensive Income, which details your company's revenue and expenses, the Statement of Financial Position, which presents the assets, liabilities, and equity of your company, the Cash Flow Statement, which outlines your company's cash inflows and outflows, and the Statement of Changes in Equity, which shows the changes in your company's equity over the year. It is essential to ensure that these statements comply with the Financial Reporting Standards of Singapore. Depending on your company's transaction volume, consider monthly, quarterly, or annual bookkeeping to maintain accurate and up-to-date financial records.

Step 2: Filing the Estimated Chargeable Income (ECI)

Next, submit the Estimated Chargeable Income (ECI) form to the Inland Revenue Authority of Singapore (IRAS) within three months of your company's financial year-end. The ECI declaration includes your company's revenue and estimated chargeable income, which is the taxable income after deducting allowances and expenses. Even if you expect zero chargeable income, a "Nil" ECI filing is obligatory to comply with Singapore tax regulations.

Step 3: Auditing Your Financial Statement

A crucial milestone in the annual compliance process is auditing your financial statements. An audit is mandatory for companies that meet at least two of the following three conditions: annual revenue surpasses $10 million, assets exceed $10 million, or the company employs more than 50 people. It is important to note that companies are considered on a consolidated basis for group businesses, meaning that the criteria apply to the entire group if your company is part of one.

Step 4: Organising the Annual General Meeting (AGM)

You will need to hold an Annual General Meeting (AGM) once each calendar year. The first AGM should take place within 18 months of incorporation, and subsequent AGMs should not have more than 15 months in between. During the AGM, shareholders and company directors gather to discuss important matters such as the approval of financial statements, the appointment or reappointment of auditors, and the declaration of dividends. Private companies may opt out of AGMs under specific circumstances, such as when all shareholders agree to dispense with the meeting.

Step 5: Filing Annual Return (AR) with ACRA

After holding your AGM, you will have one month to lodge an Annual Return (AR) with the Accounting and Corporate Regulatory Authority (ACRA). The AR provides updated information about your company, including details about company officers, the registered address, and auditors. Filing the AR ensures that the public records of your company reflect the latest information, promoting transparency and accountability.

Step 6: Filing Annual Tax Return with IRAS

Finally, file your annual tax returns with the IRAS by November 30. Singapore follows a preceding year basis for taxation, which means that profits from the previous financial year will form the base for the current year's tax return. It is crucial to accurately calculate and report your company's taxable income, claim eligible deductions and allowances, and fulfill all tax obligations to avoid penalties or legal consequences.

Conclusion

Running a successful business is not just about profitability, but also about adherence to regulations and norms. As company directors, the responsibility for fulfilling these annual compliance requirements rests on your shoulders. Failure to adhere to these tasks can lead to penalties, fines, or even legal action. Nonetheless, staying on top of these duties not only ensures your company's compliance but also helps maintain its good standing in Singapore. Therefore, it's critical to address each step carefully and to keep in mind that investment in compliance is an investment in the longevity and reputation of your company. By following this comprehensive step-by-step process, you can navigate the annual compliance landscape with confidence and set your company on the path to success in Singapore's business environment.