Essential Compliance Requirements for SMEs in Singapore

Starting and running a Small and Medium Enterprise (SME) in Singapore comes with numerous opportunities, thanks to the country’s pro-business environment and strong regulatory framework. However, SMEs must adhere to several compliance requirements to operate legally and avoid penalties. Here’s a breakdown of the key compliance obligations for SMEs in Singapore.

1. Business Registration and Licenses

All businesses must be registered with the Accounting and Corporate Regulatory Authority (ACRA) under the Business Names Registration Act. SMEs typically register as Private Limited Companies (Pte Ltd).

Depending on the industry, additional licenses or permits may be required from regulatory bodies such as the Urban Redevelopment Authority (URA), the Monetary Authority of Singapore (MAS), or the National Environment Agency (NEA).

2. Annual Filing and Financial Reporting

Companies are required to file their Annual Returns (AR) with ACRA via BizFile+ within 7 months after the financial year-end to ensure that corporate information remains updated. Additionally, private limited companies must prepare financial statements that comply with the Singapore Financial Reporting Standards (SFRS).

Companies that qualify as small companies (meeting two of these three criteria: ≤ S$10M revenue, ≤ S$10M assets, ≤ 50 employees) may be exempt from statutory audit requirements but must still prepare financial reports.

3. Tax Compliance

SMEs must register for and comply with tax obligations set by the Inland Revenue Authority of Singapore (IRAS).

Key tax requirements include:

Corporate Income Tax: The corporate tax rate is a flat 17%, but SMEs can benefit from tax exemptions such as the Start-Up Tax Exemption Scheme (SUTE), which provides a 75% exemption on the first S$100,000 of chargeable income for the first three years.
Goods and Services Tax (GST): Businesses with an annual turnover exceeding S$1 million must register for GST and file returns quarterly. Voluntary registration is possible for businesses below this threshold.
Estimated Chargeable Income (ECI): Companies must file their ECI within three months of their financial year-end unless their chargeable income does not exceed S$5M. You do not have to have ECI if Revenue is <$5m and ECI is nil.

4. Employment Regulations

SMEs hiring employees must comply with the Employment Act, which governs aspects such as salary payments, leave entitlements, and working hours.

Employers must also:

Contribute to the Central Provident Fund (CPF) for employees who are Singapore citizens or Permanent Residents earning more than S$50 per month.
Comply with the Fair Consideration Framework (FCF), which requires companies hiring foreigners to advertise job openings on MyCareersFuture.sg for at least 14 days before applying for an Employment Pass.
Adhere to the Workplace Safety and Health (WSH) Act for a safe working environment.

5. Data Protection and Privacy Compliance

Under the Personal Data Protection Act (PDPA), SMEs must protect customer and employee data. This includes obtaining consent before collecting personal data, ensuring proper data security measures, and appointing a Data Protection Officer (DPO)—which is required for all companies handling personal data, though enforcement depends on business scale and risk level.

6. Anti-Money Laundering (AML) and Know Your Customer (KYC) Requirements

Certain SMEs, particularly those in finance, real estate, and professional services, must comply with AML/KYC regulations to prevent financial crimes. This involves verifying customer identities, conducting risk assessments, and reporting suspicious transactions. Suspicious Transaction Reports (STRs) must be filed with the Commercial Affairs Department (CAD) or MAS, depending on the industry.

7. Business Contracts and Intellectual Property (IP) Protection

SMEs should ensure that business agreements are legally binding and protect their intellectual property through trademarks, copyrights, or patents via IPOS (Intellectual Property Office of Singapore).

8. Statutory Record-Keeping

Companies must maintain accurate records of financial transactions, employment records, and meeting minutes. These records should be kept for at least five years for compliance with ACRA and IRAS regulations. Employment records must be maintained for two years after an employee leaves.

Conclusion

Staying compliant with Singapore’s regulatory framework is crucial for SMEs to operate smoothly and avoid legal complications. By understanding and fulfilling these key requirements, SMEs can focus on growth while maintaining good corporate governance.

For SMEs looking for expert guidance, corporate secretary services like Account-Ink can help navigate compliance requirements efficiently.

Need help ensuring your SME stays compliant? Contact us today!