Company Incorporation | 2 mins read | Last updated on 30 June 2019
The FYE will determine when our corporate filings and taxes are due, such as filing of Estimated Chargeable Income (ECI), holding of AGM, and filing of Annual Return.
A company’s FYE does not necessarily need to fall on 31 December and can actually fall on any day within the year.
Generally, newly incorporated companies may consider setting their first financial period to end on the last day of the 11th month from the date of incorporation. For example, a company incorporated on 15 April 2019 will likely choose to end its first financial year on 31 March 2020. This is to maximise the coverage of the tax exemption for new start-up companies for its first three consecutive years of assessments (YAs). Any financial period which is longer than 12 months will be considered as 2 YAs by IRAS.
Another consideration is to set our FYE on the date when business activity and inventory are at its lowest. This could make our life easier in closing the year end account and doing the stock-taking.
Meanwhile, if we are setting up a subsidiary company, we should align the FYE to our holding company unless there is a better reason or purpose.
Some companies may have their FYE determined by other factors such as audit exemption, franchisee agreement, joint venture agreement and etc. Setting the FYE should be backed by commercial reasons and/or tax benefits.
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