As soon as you incorporate new company, you need to decide on your first Financial Year End (FYE). This date will determine when your corporate filings and taxes are due.
What is a Financial Year End in Singapore?
If you own or manage a business in Singapore, your Financial Year End determines when you submit Annual Returns and tax documentation on a yearly basis to comply with the national legislation. In accounting, the time period is called Financial Year, and your corporate filings and taxes have to be submitted at Financial Year End (FYE).
The Financial Year does not have to coincide with the calendar year, which means it can start or end on any day within the year. However, the Financial Year is normally 12 months long - just like a calendar year. So, how do you know when your company’s financial year begins or ends?
How to Determine A Financial Year End For a New Company in Singapore?
Good news is, you’re in charge of setting the dates for your company’s Financial Year and Financial Year End. According to the Accounting and Corporate Regulations Authority (ACRA), common choices by companies include 31 March, 30 June, 30 September or 31 December.
According to the Singapore Companies Act, a Financial Year normally begins on the day of company incorporation and ends on the day of your choice. However, your very first Financial Year cannot be longer than 18 months (unless the Registrar allows you to extend it).
Any subsequent Financial Year should be 12 months long; it starts on the day following the end of the previous financial year and ends on the anniversary of your first Financial Year End.
For example, if you incorporate a company on 1st January 2020 and set your first FYE on 31st December 2020, then your subsequent Financial Year starts on the following day - 1st January 2021 - and ends on the anniversary of the first FYE, which would be 31st December 2021.
You must select your company’s FYE at the time of incorporation. It cannot be done after that, so it’s best to make an informed decision on the date.
Upon incorporation, you should also choose if your accounting period covers 12 months or over 52 weeks.
How Long Should My Company’s First Financial Year Be?
While formally your very first Financial Year can be as long as 18 months, the IRAS - national tax administrator - operates with 12 month-long periods. Any period longer than 12 months will be split and assessed as 2 independent periods even if from your point of view, this period is a single Financial Year. It may directly affect the amount of taxes you’ll need to pay, especially if you want to enjoy tax exemption schemes. Thus, you should consider what exemptions you’d like to file for before you set the date of your first FYE.
Can I Change My Company’s Financial Year End?
Yes, but only for the current or previous Financial Year. However, you cannot change your company’s FYE if statutory deadlines for the holding of Annual General Meeting, filing of Annual Returns or sending of financial statements have passed.
You can change FYE by sending a notice to the Registrar, but you’ll need the Registrar’s approval if:
- if the change in FYE will make your financial year longer than 18 months,
- if it is the third request for the change of FYE; or
- if the FYE was changed within the last 5 years (from the last changed FYE).
Where to Ask for Advice About My company’s Financial Year End?
If you have more questions regarding changing the FYE of your company, you don’t have to figure it out yourself. Drop us a question any time of the day and our experienced corporate secretaries in Singapore will get your doubts sorted.