Annual Branch Office Filings
There are statutory requirements of filing the yearly returns of foreign companies having branch offices in Singapore.
Filing of ECI
All branch offices have to declare their chargeable income as well as the revenue earned to the tax authorities within 90 days of the end of their accounting period. The form to be used for this purpose is called ECI form that contains important information pertaining to sources of income of the branch office. It does not include the capital gains of the branch through the disposal of assets. If there is no chargeable income according to the company, it has to file Nil ECI.
Financial accounts preparation
According to the Companies Act, all companies in Singapore have to follow accounting standards referred to as Financial Reporting Standards (FRS). Branch office accounts must statement of profit and loss account as well as a statement reflecting the financial standing of the company reflecting its assets and liabilities. The financial accounting standards in Singapore called FRS are very similar to the framework of International Financial Reporting Standards (IFRS).
Financial accounts auditing
There are certain responsibilities of a branch office in Singapore that include appointing an auditor for annual auditing of accounts. The branch must also file the accounts annually. This has to be done inside 60 days of the holding of the AGM of the company. Parent company’s financial accounts of the corresponding year must be kept ready by the branch office for the tax authorities. All documents that have been presented to the authorities in the jurisdiction of the parent company must also be kept ready. The branch office must have a copy of audited accounts for the tax officials. The branch office has to file financial accounts that are audited within the time frame of 7 months after the end of the financial year even if the parent company is not required by law to maintain audited financial accounts.
Filing of returns for income tax
The organization and the structure of the income tax regime in Singapore are annual in nature. The period for which tax is collected is called the Assessment Year and it is the time that precedes the current year. Put simply, it is the profits in the last year that are taxed by the tax authorities. The last date for filing income tax returns of a company is 30 November though the financial year is taken from 1 April till 31 March. Thus, a company has sufficient time to prepare its financial accounts and to file returns.
It is the agents running the branch office in Singapore that are responsible for keeping the financial accounts and filing of income tax returns on time. If they fail to do so, they are held accountable and punishable by the authorities through monetary fines or even prison sentences.