Is Zero Filing for Singapore Companies Truly Zero Cost? Understand Hidden Fees and Key Considerations in One Article

Is Zero Tax Filing for Singapore Companies Really Zero? Revealing the Costs and Key Considerations

In the global business landscape, Singapore has become a top destination for companies setting up overseas operations, thanks to its low tax rates, stable political and economic environment, and efficient services. In recent years, with the rapid growth of cross-border e-commerce and digital services, more small and medium-sized enterprises SMEs and individual entrepreneurs are choosing to register companies in Singapore to achieve international expansion.

During this process, the concept of zero tax filing frequently appears in various business promotions, attracting many investors. But is it really possible for a Singapore company to have zero tax? What are the associated costs and considerations? This article will explore the truth behind zero tax filing, based on recent developments and official regulations.

1. Understanding the Concept of Zero Tax Filing

Zero tax filing generally refers to a situation where a company has no taxable income in a given tax year, and thus is not required to pay corporate income tax. However, it still needs to submit annual tax returns to the Inland Revenue Authority of Singapore IRAS as required by law.

Singapore operates on a territorial tax system, meaning only income sourced within Singapore is subject to tax. If a company does not conduct actual business activities in Singapore and has no income, it may, in theory, file a zero income declaration. However, this does not mean that the company is exempt from all tax obligations.

According to IRAS regulations, even if a company has no income, it must still submit annual financial statements and Form C-S or Form C for tax reporting purposes - a process known as zero filing. Failure to file for two consecutive years may result in the company being flagged as non-compliant, facing penalties, or even being struck off the register.

2. The Hidden Costs Behind Zero Tax Filing

Although the term zero tax filing may suggest no tax is payable, companies still incur administrative and compliance costs. Below are some of the common expenses associated with maintaining a Singapore company

1. Company Registration Fees Initial registration typically costs between SGD 1,000 to SGD 2,000, covering registration fees and company secretary services.

2. Annual Compliance Fees Even if the company is dormant, annual fees for company secretary, audit if applicable, and tax filing services are still required. These usually range from SGD 800 to SGD 1,500 per year, depending on the service provider.

3. Company Secretary Fees Under the Singapore Companies Act, every company must appoint a company secretary who is a Singapore resident. If the owner does not serve in this role, a professional service is required, typically costing around SGD 500 annually.

4. Annual Filing and AGM Costs Companies must hold an Annual General Meeting AGM and submit an Annual Return to the Accounting and Corporate Regulatory Authority ACRA. Any changes in directors or registered address may incur additional fees.

5. Other Operational Costs Even if the company is not actively operating, future plans such as opening a bank account, leasing office space, or hiring staff will involve further costs.

In short, while the company may not generate income, maintaining compliance is not free.

3. Eligibility and Key Considerations for Zero Tax Filing

To qualify for zero tax filing, a company must meet strict conditions

It must not have generated any income, either locally or overseas.

It should not hold any assets or liabilities.

It must not have engaged in any commercial transactions.

Having a bank account, invoices, or any business correspondence may be interpreted as business activity, requiring normal tax reporting.

Starting from 2025, Singapore has imposed stricter disclosure requirements on dormant companies. For instance, all companies must now disclose their beneficial owners - the individuals who ultimately control the company - to comply with international anti-money laundering AML and counter-terrorism financing CFT standards. This means that even companies in a zero-filing status must maintain transparency and cannot be used to evade regulatory scrutiny.

4. Recent Policy Changes and Industry Impact

In 2025, the IRAS intensified its scrutiny of corporate tax filings. According to The Straits Times, in the first quarter of that year, IRAS audited over 500 companies that had declared zero income. Nearly 30% were found to have underreported income or concealed transactions, leading to back taxes, fines, and inclusion on a high-risk business list.

At the same time, the Monetary Authority of Singapore MAS has tightened oversight of offshore entities. In June 2025, MAS issued a directive requiring local banks to verify the actual business activities of account-holding companies, aiming to prevent shell companies from being used for money laundering or other illegal activities. As a result, opening a bank account for a zero-tax company may become more difficult and subject to stricter due diligence.

5. A Rational View on Zero Tax Filing

In conclusion, the so-called zero tax filing for Singapore companies does not mean complete tax exemption. It refers to a situation where no corporate income tax is due under specific conditions, but compliance obligations still apply.

For investors planning to register a Singapore company, it is important to approach zero tax claims with caution. Misinterpreting the policy can lead to compliance risks. It is advisable to consult with professional advisors before registration to understand the full process of company setup, operation, and tax reporting, ensuring legal and compliant operations.

For companies planning to expand into Southeast Asia, Singapore remains an ideal location for a regional headquarters. Its zero tax filing mechanism can serve as a useful tax optimization tool during the initial phase. However, in the long run, tax strategies should be adjusted based on actual business development.

Summary

Singapore's zero tax filing system offers flexibility in tax planning, but it is not a way to escape all obligations. Only by complying with regulations and understanding the full scope of requirements can companies truly benefit from this system.