Entrepreneurs who want to close their business in Singapore can either apply to strike off their company through the Accounting and Corporate Regulatory Authority (ACRA) or wind up with the help of a professional liquidator. The business should have a reasonable cause and must be able to satisfy the set criteria for striking off. As part of the process, the entity must settle all of its tax obligations first.
Why Settle Outstanding Taxes?
ACRA requires Singapore-based companies to be struck off to settle their outstanding tax affairs with the Inland Revenue Authority of Singapore (IRAS). Otherwise, IRAS may file an objection to striking off your company, and you have two months to clear the matter. If unsettled within the given period, the application will lapse, and you can only submit a new request after the objection has been resolved.
On the other hand, if the matter is settled, a clearance of objection against striking off must be lodged via BizFile+. ACRA will then proceed with the approval to strike off your company.
Fulfilling Tax Obligations
Section 344 of the Companies Act authorises the Registrar of Companies to strike off a company from the register. Furthermore, ACRA must be able to establish that the company is no longer operational. In line with that, business owners should ensure that all tax obligations have been settled before filing the striking off request to ACRA.
Here are a few things to keep in mind:
Submission of Income Tax Returns (Form C-S/ C)
Before applying to strike off with ACRA, the company should submit Income Tax Returns (Form C-S/ C) up to the date of the cessation of business. For larger companies, Form C is submitted. It must also include tax computation accounts and details.
On the other hand, eligible small businesses in Singapore may use Form C-S. They are not required to submit accounts and how the tax was computed. It is, however, advisable that companies applying for strike off to prepare these documents should IRAS ask for them.
Cancellation of Goods and Services Tax (GST) Registration
If a company applies to be struck off, it should cancel its Goods and Services Tax (GST) registration. To cancel GST, the authorised person may log in to myTax Portal and apply for cancellation of GST online. It usually takes 1 to 10 working days to process applications submitted online. Most cases receive approval on the day of the application.
A dormant company is an entity that does not operate and has no income for a particular period. For example, if a business did not operate and had no income for the year 2020, it will be considered dormant for the Year of Assessment (YA) 2021.
Additionally, if a company has been dormant since its incorporation or has outstanding Income Tax Returns during its dormant period, it should use the e-Service to apply for a waiver to submit a tax return (dormant company) before submitting an application to strike off with ACRA. The company should meet the following conditions:
- must be dormant and submitted its Form C-S/C, financial statements and tax computations
- must not own any investments
- must be de-registered for GST prior to the application to strike off
- must not have the intention to re-open the business within the next two years
Once the necessary documents are submitted to IRAS, a notice of assessment will be sent to the requestor within one month. However, if IRAS requires additional information, the process may take up to six months to review. Keep in mind that IRAS will not issue a tax clearance letter to apply to strike off.
When the application to strike off a company is successful, a former member of the executive team must ensure that all books and papers of the business are kept for at least five years. Meanwhile, section 344D of the Companies Act also indicates that a former member can request restoration of a struck off company in Singapore and must be made within six years from the date of dissolution.