Right after incorporating your local company in Singapore, you need to decide on many things, such as appointing a Company Secretary, obtaining licenses, tax registrations, etc.
Finalizing the Company’s Accounting Period is one such important aspect that impacts your Company’s compliance requirements, tax reporting deadlines, and financial planning strategies.
Whether you are an entrepreneur establishing your first company or a seasoned business professional, choosing the right Accounting Period early effectively aligns you with the business cycles and compliance processes, maintaining operational efficiency.
Therefore, in this blog, we’ll explore how to choose the right Accounting Period, the importance of selecting the same and its impact on statutory obligations
What Is An Accounting Period?
An Accounting period in general refers to the specific time frame for which a Company prepares its financial statements. These statements include the profit and loss account, balance sheet, and cash flow statement, which collectively provide insight of the company’s financial performance and position over the period.
This period can vary in length, not strictly confined to a 12-month duration. For instance, a Company might prepare monthly, quarterly, or semi-annual financial reports, each representing a distinct accounting period in accordance with the compliance and reporting requirements of the country of incorporation.
Accounting Period For Singapore Companies
The Accounting and Corporate Regulatory Authority (ACRA), Singapore allows for an Accounting Period of 12 months or 52 weeks.
Companies can choose an accounting period which need not align with the calendar year and suits their business operations, subject to compliance with ACRA’s and Inland Revenue Authority of Singapore (IRAS)’ s guidelines,
For example, you can have an Accounting Period starting from 1st January 2025 to 31st December, 2025 and also 1st April, 2025 to 31st March, 2026 or any other 12 month period that suits your business operations.
However, if you choose to have a 52-week accounting period beginning from 1st January 2025, your accounting period will end on 30th December, 2025.
Significance Of Financial Year End (FYE)
In Singapore, a Company’s Accounting Period is also its Financial Year and the Company’s financial year end represents the final day of its accounting period.
Therefore, if you choose an Accounting Period of 12 months starting from 1st April, 2025, your FYE date will be 31st March, 2026 and if you choose an Accounting Period of 52 weeks starting from 1st April, 2025, your FYE date will be 30th March, 2026.
Deciding on the FYE is crucial as it determines when your corporate filings and taxes are due each year. Holding the Company’s Annual General Meeting (AGM) also depends on the FYE.
The common choices for FYE in Singapore include 31 March, 30 June, 30 September, and 31 December.
Statutory Compliances Corresponding To The FYE
ACRA Filing Requirements
Under the Singapore Companies Act, 1967, holding the Annual General Meeting of the Company and filing its *Annual Returns (AR), depends on the FYE as per the following table:
The Annual Return includes the company’s financial statements and other statutory information.
IRAS Tax Filing Requirements
Companies have to file their Estimated Chargeable Income (ECI) and corporate income tax returns with IRAS within due dates, which are 3 months from the end of the financial year and November 30 of the following year, respectively.
Selecting an appropriate accounting period ensures that these deadlines are manageable and do not conflict with other operational demands.
Changing the FYE
The Singapore Companies Act, 1967 allows Companies to change the FYE for the current or immediate previous financial year subject to the following:
1) They must notify the change to the Registrar of change.
2) The statutory deadlines for the following have NOT passed:
- Holding of Annual General Meeting (AGM)
- Filing of Annual Return (AR)
- Sending of financial statements
3) Prior approval of Registrar is taken to change the FYE if:
the change results in a financial year of more than 18 months; or
the FYE was previously changed on or after 31 August 2018 for a financial year ending on or after 31 August 2018, and it is within 5 years from the end of that previously changed FYE.
First Accounting Year and Tax exemption
Ø First Accounting Year: The ACRA allows companies to have the first accounting period lesser than 12 months and also exceeding it, up to 18 months.
Ø Tax Exemption: Under the tax exemption scheme of IRAS for new start-up companies, the qualifying companies are granted tax exemptions at the following rate for the first 3 consecutive years of assessments (YA).
Ø How To Avail Maximum Tax Exemption Benefit
The IRAS considers a maximum of 12 months as the ‘basis period’ for tax assessment. Therefore, whether a company can take maximum tax exemption benefits depends on its chosen FYE.
Let us understand with the help of the below situations where a Company incorporated on 1st July 2025 chooses different FYEs and closes its accounts in the first year for different periods:
From the above illustration, it is clear that companies should try to close their first set of accounts for a period closer to 12 months to take maximum tax exemption benefits.
Key Considerations For Deciding An Appropriate Accounting Period
Businesses should consider the following factors while deciding on the accounting period:
- Industry Practices: Aligning with the fiscal cycles of the industry may facilitate comparisons and benchmarking.
- Operational Peaks: Choosing a period that ends after peak operational months provides a more accurate representation of financial performance.
- Group Alignment: Subsidiaries often align their financial year with the parent company to simplify consolidation.
Conclusion
Understanding the complex laws of Singapore and their practical application can be challenging, especially for businesses that are getting corporatized for the first time.
This is where corporate solution provider offers a range of services, simplifying the compliance processes, including:
- Advising on matters like the selection or change of accounting periods;
- Ensuring compliance with ACRA and IRAS filing requirements;
- Providing bookkeeping, accounting, and tax planning services.
Partner with 3E Accounting Services, who will be the one-stop solution provider in your journey of business corporatization, financial reporting and compliance obligations.
Optimize Your Accounting Period for Maximum Tax Benefits
Partner with 3E Accounting Services, your one-stop solution for corporate solutions
Contact us now!Frequently Asked Questions
An accounting period is a specific time frame for which a company prepares its financial statements. These statements provide an overview of the company’s financial performance and position over the period. It usually spans 12 months but can vary depending on the company’s chosen Financial Year End (FYE).
Yes, the Singapore Companies Act allows companies to choose an accounting period shorter or longer than 12 months for the first set of accounts only. The subsequent periods must not exceed 12 months.
The accounting period determines the ‘basis period’ used by IRAS to assess a company’s taxable income for the corresponding Year of Assessment (YA).
To maximize tax exemption benefits under the Startup Tax Exemption Scheme, the first accounting period should be closer to 12 months. Shorter or longer periods may lead to unutilized benefits.
