When considering the term “Financial Year End” (FYE), often, business owners automatically equate it with December 31st. However, in Singapore, companies aren’t bound by the conventional calendar year.
Once your company is incorporated in Singapore, you are free to choose a Financial Year End Date that suits your needs. This decision determines your company’s financial year conclusion and establishes the timelines for submitting essential documents to the authorities, adhering to statutory deadlines.
For instance, consider that you establish your company in Singapore in December 2023. This does not automatically mean that your initial financial year concludes on December 31, 2023. The primary rule to follow is that the first financial year of your company should not exceed a duration of 18 months. As a result, you have the flexibility to set the end of your company’s inaugural financial year for a date like December 31, 2024, or March 31, 2025, or any other date, provided it falls within 18 months from the date of incorporation. Following this, each subsequent financial year begins immediately after the previous one ends and lasts for a period of 12 months, culminating on the final day of that period.
As the appointed company secretary for your Singapore company, we are always available to answer any questions you might have when deciding on the financial year of your company.
Want to learn more on what a Financial Year End is and how it works? Keep reading.
What is FYE and Why Does It Matter?
The FYE represents the final day of a company’s accounting cycle, occurring typically every 12 months. Importantly, it isn’t obligated to align with the calendar year-end.
Understanding the FYE’s importance is integral for companies. This date establishes critical milestones for essential business activities, including:
- Annual General Meeting (AGM): An occasion where a company’s financial statements are presented to shareholders, and significant business matters are deliberated upon. Companies are required to hold their AGM within 6 months after the FYE.
- Annual Filings: You are required to submit the Annual Return (AR) to the Accounting and Corporate Regulatory Authority (ACRA) and the Annual Tax Return to the Inland Revenue Authority of Singapore (IRAS) within 7 months following the FYE.
How To Determine FYE for a Singapore Company
Unlike the common perception of aligning with the calendar year end, in Singapore, the Companies Act does not stipulate a specific FYE date for companies. Instead, it grants businesses the autonomy to select this date at their discretion. This law provides the following rules for companies incorporated on or after August 31, 2018:
- A company’s first financial year starts on the company’s date of incorporation and ends on the date of your choice;
- Each of the subsequent financial years starts immediately after the end of the previous financial year and ends on the last day of a period of 12 months (unless otherwise allowed by the ACRA);
- The company’s first financial year must not be longer than 18 months unless the other period is approved by ACRA.
ACRA suggests choosing between two typical accounting periods: 12 months or 52 weeks. Opting for a 12-month accounting period beginning on January 1, 2023 will result in your company’s FYE being on December 31, 2023. However, should you choose a 52-week accounting period starting on January 1, 2023, your company’s FYE will fall on December 30, 2023.
You can select any date as your company’s FYE. Popular choices often include 31 March, 30 June, 30 September, or 31 December.
What to Consider When Choosing Your Company’s FYE
Several factors should be taken into account when determining the most suitable FYE for your company:
- Qualification for Tax Exemptions
Newly incorporated companies often aim to benefit from the Tax Exemption Scheme for New Start-Up Companies. To maximize tax benefits, you should set your FYE on the last day of the 11th month or a date close to 12 months from the incorporation date.
- Subsidiary Company Alignment
For a Singapore company functioning as a subsidiary, aligning the FYE with that of the holding company streamlines documentation processes. This synchronization facilitates simultaneous handling of corporate and tax filings for both entities.
- Seasonal Business Cycles
Consider your business’s seasonal activities. Certain industries, such as tourism and hospitality, seasonal clothing retailers, or florists, experience cyclical fluctuations. Aligning your FYE with the end of a business cycle can simplify tasks like stock-taking and financial statement preparation.
How to Change Your Company’s FYE
To alter your company’s FYE, you must inform ACRA. This process can be completed online via BizFile+ and doesn’t incur any fees. Companies have the option to change the FYE for the ongoing or immediately preceding financial year.
However, if the statutory deadlines for holding the AGM or submitting annual returns have elapsed, you won’t be able to change the FYE.
ACRA’s approval is necessary for a FYE change if:
- The modification extends the financial year to over 18 months, or
- The previous FYE change occurred on or after August 31, 2018, for a financial year ending on or after August 31, 2018, and it’s within 5 years from the previous FYE alteration.
How We Can Help
Navigating the complexities of determining your company’s Financial Year End in Singapore demands clarity and precision. At CorporateServices.com, we specialize in guiding you through the processes of Singapore company incorporation and administration. Our dedicated team is well-versed in Singapore’s regulatory framework and can assist you every step of the way. Reach out to us today to explore how we can assist in establishing and administering your Singapore company, offering professional guidance tailored to your unique business needs.
Headquartered in Singapore, CorporateServices.com, empowers global entrepreneurs with information and tools necessary to discover Singapore as a destination for launching or relocating their startup venture and offers a complete range of company incorporation, immigration, accounting, tax filing, and compliance services in Singapore. The company combines a cutting-edge online platform with an experienced team of industry veterans to offer high-quality and affordable services to its customers. Contact Us if you need assistance with setting up a new Singapore company or if you would like to transfer the administration of your existing company to us.
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