Closing a Singapore Company: The Loose Ends Nobody Warns You About

Choosing how to close your company is the easy part. The hard part is everything that has to be true before the closure will go through: tax returns filed to the date of cessation, GST registration cancelled, employees paid and their passes cancelled, CPF told, and the bank account left open longer than you expect.

Raffles Corporate Services works with a panel of experienced Singapore law firms who offer cost-effective and efficient legal service and advice. This article is general information only and is not legal advice.

Most closures that stall do not stall at ACRA. They stall because a government agency raised an objection, and objections almost always trace back to something the company forgot to close off six months earlier.

This article assumes you have already chosen your route. If you have not, our sibling piece on choosing between striking off and winding up does that comparison, and our longer note on voluntary winding up versus striking off goes deeper on the cost and timing difference.

The order of operations matters

There is a natural sequence to closing a company, and doing it out of order is what creates most of the pain. Broadly, you settle with the tax authorities before you touch the bank account, and you deal with employees before you deal with either.

What IRAS actually requires

There is no tax clearance letter. IRAS does not issue one for the purpose of closing a company, so anyone waiting for a certificate before applying is waiting for something that will never arrive. What IRAS does instead is object to your application if your file is not clean.

To be clean, three things have to be true.

Returns filed up to the date of cessation

Corporate Income Tax returns (Form C-S, Form C-S (Lite) or Form C) must be filed for every Year of Assessment up to and including the basis period that ends on your cessation date. If you file Form C, the financial statements and the tax computation go in with it.

The wrinkle is the advance Year of Assessment. If you ceased business part way through a year, the return for that final period may not exist yet in the normal filing service, because returns for a given YA typically become available from May. IRAS provides a separate digital service for that final return, and once you have used it you are given a short window to file the return itself.

Assessments finalised and tax paid

Filing is not the same as settled. The assessment has to be finalised, any open queries answered, and the tax and penalties paid. Check this yourself in myTax Portal rather than assuming: your latest Notice of Assessment tells you where the assessment stands, and your latest Statement of Accounts tells you whether anything is owing.

GST registration cancelled

If the company was GST registered, that registration has to be cancelled and there must be no outstanding GST matters. You are required to apply to cancel within 30 days of the point at which you have stopped making taxable supplies and do not intend to make any in future.

Two traps in the final GST return, the Form F8. First, output tax is still due on supplies where the goods or services were delivered before the cancellation date even though the invoice or payment lands afterwards. Second, if you claimed input tax on business assets and you still hold them on the last day of registration, GST has to be accounted for on those assets where their total market value exceeds S$10,000. A company that hands its laptops and equipment to the directors on the way out can create a real GST liability by accident.

Our separate guide on how to cancel your GST registration walks through the mechanics.

If IRAS objects, you have two months

This is the part people underestimate. If IRAS lodges an objection to a striking off application because something is outstanding, the company has two months from the date of the objection to resolve it. Miss that window and the application lapses. You do not get to pick up where you left off: you clear the objection, then start a fresh application.

Two months sounds generous until you remember that finalising a set of accounts, filing a late return and waiting for an assessment can easily consume it.

Employees, CPF and work passes

Employees are the loose end with the shortest fuses, because several of the deadlines run backwards from the last day of employment rather than forwards from it.

Notice. Give the contractual notice period, or the statutory minimum where the contract is silent, or pay in lieu. Redundancy on closure is still a termination and the usual rules apply.

Final salary. Where the employee has served the required notice, the final salary is due on the last day of employment. Where notice was not served, payment is due within seven days of the last day.

Tax clearance for foreign and SPR employees. Form IR21 must be filed at least one month before a non-Singapore-citizen employee stops working for you, and you are required to withhold monies due to the employee pending clearance. Late filing or non-filing can attract a fine of up to $5,000. In a closure this is frequently missed, because the directors are thinking about the company’s tax position and forget the employees have one too.

Work passes. Employment Passes, S Passes and Work Permits must be cancelled once the holder no longer works for you. Do not leave live passes attached to a company you are trying to dissolve.

CPF. Tell the CPF Board. Stopping contributions, cancelling the GIRO arrangement or deleting employees from CPF EZPay does not count as notification. The Board’s position is that an employer who has terminated the business or ceased to hire local employees must inform it so the records can be updated, and failing to do so is what generates enforcement letters addressed to a company that no longer trades.

Do not close the bank account yet

Closing the company bank account early is the single most expensive administrative mistake in this process, and it is also the most common, because it feels like the natural thing to do once trading has stopped.

If a tax credit is owing to the company and the bank account is closed, IRAS cannot pay it to a third party. Not to a director, not to a shareholder. Once the company is dissolved, credits due to it pass to the Insolvency Office. Shareholders can then apply to claim them, with processing charges, and the exercise costs more time than the refund is usually worth.

Keep one account open until every assessment is final, every refund has landed and every direct debit has been cancelled. Then close it.

Contracts, charges and the registered office

Charges. If the company has ever granted a charge, check the charge register rather than your memory. Where the debt has been paid or the property released, the company may lodge a statement of satisfaction with the Registrar under section 136 of the Companies Act 1967, endorsed by the chargee. A facility repaid in 2019 with no statement ever lodged still shows as a live charge today, and a live charge will block a striking off application.

Leases and subscriptions. Office leases, equipment leases, software subscriptions, insurance, domain renewals. Anything on auto-renewal against a card will keep billing a company that no longer exists.

Licences and permits. Sector regulators are not told automatically. If the company holds a licence, surrender it on the regulator’s own terms.

Registered office and company email. Keep both working and correct until the very end. ACRA writes to the registered office and to officers’ residential addresses during the closure process, and correspondence that does not arrive is correspondence you cannot respond to. A company that loses its registered office mid-process can find the closure fails and the entity returns to live status.

The records you must keep after the company is gone

The company ends. The record-keeping duty does not.

While the company is still live, section 199(2) of the Companies Act 1967 requires accounting records to be retained for at least five years from the end of the financial year in which the relevant transactions were completed, and default is an offence carrying a fine of up to $10,000.

Where a company has been wound up, section 195(2) of the Insolvency, Restructuring and Dissolution Act 2018 requires the liquidator to retain the books and papers for five years after the date of dissolution before they may be destroyed.

Where a company has been struck off, IRAS’s published guidance is that the books and papers must be kept for at least five years from the date of dissolution, and that this responsibility falls on the people who were officers of the company immediately before it was dissolved. In other words it becomes a personal duty of the former directors and secretary.

One practical point that follows from that: download everything before the company disappears. Once a company is struck off, access to its corporate tax notices in myTax Portal goes away, because there is no longer an entity to transact. Notices of Assessment, Statements of Accounts, GST returns and acknowledgements should be saved locally before you apply, not after.

What goes wrong in practice

The forgotten dormant year. The company stopped trading in March, the directors mentally closed it then, and nobody filed anything for the eighteen months that followed. The return for the final period is still owed. The closure stalls until it is filed.

The GST registration nobody cancelled. Trading stopped, returns stopped, but the registration remained live. Nil returns kept falling due, late filing consequences accumulated, and the company now has an outstanding GST matter standing between it and closure.

The final dividend that was never declared. Cash sitting in the company at the point of dissolution does not revert to the shareholders. It becomes a problem for the Insolvency Office to solve, slowly. Distribute properly before you close, and take advice on the tax treatment first.

The director who moved house. ACRA writes to officers at their residential address. A director who changed address and never updated the register misses the letter, misses the chance to respond, and finds out months later that the closure failed.

If a company has already been struck off and you need it back, that is a court application, and our note on company reinstatement and restoring statutory registers explains what that involves. It costs far more than doing this properly the first time.

Frequently asked questions

Does IRAS issue a tax clearance letter before I close my company?
No. IRAS does not issue a tax clearance letter for the purpose of closing a company. Instead it will object to your application if anything is outstanding. To evidence a clean position yourself, retrieve your latest Notice of Assessment and latest Statement of Accounts from myTax Portal before you apply.

How long do I have to fix things if IRAS objects to my strike off application?
Two months from the date the objection is lodged. If the objection is not resolved within that period, the application lapses and you must submit a fresh application once the objection has been cleared. Resolving it usually means filing an outstanding return, answering a query or paying an assessment.

When must I cancel my company’s GST registration?
Within 30 days of the point at which you have stopped making taxable supplies and do not intend to make any in future. You then file a final return, Form F8, accounting for output tax on supplies delivered before the cancellation date and on business assets held on the last day of registration where their total market value exceeds S$10,000.

Can I close the company bank account once trading stops?
You can, but you should not. If a tax refund is owing and the account is closed, IRAS cannot redirect it to a director or shareholder, and after dissolution the credit passes to the Insolvency Office for shareholders to claim with processing charges. Keep one account open until every assessment is final.

How long must I keep the company’s records after it is dissolved?
At least five years from the date of dissolution. For a wound up company that duty sits with the liquidator under section 195(2) of the Insolvency, Restructuring and Dissolution Act 2018. For a struck off company, IRAS’s guidance places the duty on the people who were officers immediately before dissolution, so it is a personal responsibility of the former directors and secretary.

Do I need to tell CPF that the business has closed?
Yes, and you must tell them expressly. Stopping contributions, cancelling the direct debit arrangement or deleting employees from CPF EZPay does not count as notification. Employers who have terminated the business or ceased hiring local employees are expected to inform the Board so records can be updated and enforcement action avoided.

Closing cleanly the first time

Closing a company well is a project-management exercise, not a filing exercise. The filings themselves are short and mostly free. What costs money is discovering in month four that a 2021 return was never filed, or that the bank account you closed in January was holding the only route to a refund.

Raffles Corporate Services runs closures end to end: final accounts, the last tax returns, GST cancellation, employee and CPF wind-down, the ACRA application, and the record set handed back to you in a form you can actually keep for five years. If you are part way through a closure that has stalled, that is usually a short diagnostic conversation.

You can reach us through Raffles Corporate Services, or read more on Singapore corporate secretarial practice at Singapore Secretary Services.

— The Editorial Team, Raffles Corporate Services