Registering a Non-Profit Entity in Singapore

Last modified: December 12, 2015

Non-Profit-Entity

A large number of people are interested in doing their bit in the interest of society and public. Singapore allows them to register non-profit organizations (NPO) and give their efforts a legal status.

Types of Business Structures

  • A Society
  • A Charitable Trust
  • A Public Company Limited by Guarantee

In Singapore, the interested parties can use one of these business structures to set up company in Singapore as an NPO. These individuals must apply to the Company Registrar of Singapore (ACRA) to open a company in Singapore.

ACRA (Accounting and Corporate Regulatory Authority) acts in the capacity of the Company Registrar. It governs all the companies that are registered in Singapore, including the NPOs.

Registering an NPO as a Charitable Trust

A charitable trust is established to promote a purpose and rather than the welfare of an individual. A board of trustees is appointed to govern its activities strictly following the trust deed or the constitution of the trust. They are not answerable to the rest of the trust members.

In the first step, a non-profit entity is incorporated. The Singapore Charities Act governs these entities. The incorporation of these entities is costly. The entity then can apply, within 3 months from their incorporation, to the Commissioner of the Charities for the grant of charitable status. The process may take 3 months but costs nothing.

The trustees are responsible for the liabilities of the trust under their charge. Its disclosures are public and limited, however, a trust deed may not insist on it. The trustees must see to the filing of trusts financial statements, annual returns, and reports detailing the trust’s activities and the plans. They must also publish its fundraising activities online. They need to update the accounts and records of donations regularly. They are also tasked with the holding of the Annual General Meeting of the trust.

Such a charitable trust is registered to promote causes in one of the following categories.

  • The relief of poverty
  • The educational advancement
  • The religious advancement
  • Other community purposes

Singapore Taxation for the Charity Trusts

In Singapore, all the registered charitable trusts enjoy tax exemption. Additionally, they can apply for the IPC (Institutions of a Public Character) status. It then qualifies to receive tax-deductible donations. It is beneficial to the donor of the charity.

The donations to an  IPC for the foreign charitable purpose do not come under this category. They are not tax deductible.

Registering an NPO as a Society

A non-profit organization can also be set up as a Society. Under this provision, a company, partnership, club, or an association can be formed as a society. A body of 10 or more pro-society individuals with financial means register a society. These entities are incorporated under the Singapore Societies Act.

To register a society, the interested parties must apply to the Registrar of Societies (ROS). However, it is not a separate entity from its members. Its President, Secretary, and Treasurer must come from the Singapore resident and it must have a constitution.

ACRA (the Accounting and Corporate Regulatory Authority) of Singapore directs these entities to audit their annual accounts and file their returns with the Registrar of Societies.

Registering a society is easy, but it attracts lesser donation than the Public Companies Limited by Guarantee.

Singapore Taxation for Societies

The societies enjoy income tax exemption, only if their members have contributed to the surplus funds or the members’ have contributed 50% or more of the non-tax deductible revenue receipts. They may also get full tax exemption by acquiring the charity status.

Registering an NPO as a Public Company Limited by Guarantee

A group of socially inclined individuals must apply to ACRA to register an NPO as a Public Company Limited by Guarantee. Many a times, the purpose is to participate in scientific, artistic, or religious activities important for the nation or to the society.

A public company limited by guarantee has a separate legal existence and the rights of a natural person. The company name must include the term ‘Limited’ as the suffix. Its members pledge to contribute a certain amount when it is time to wind-up the company.

According to ACRA mandate, such an entity needs to appoint at least 2 members, 2 directors, and qualified Company Secretary. A director and the company secretary need to be Singaporean residents or the Employment Pass or Dependant Pass holders. A governing council, a committee, or a board of trustees is appointed to manage the activities of this entity.

The ACRA expects this entity to stick to public disclosure obligations and statutory compliance and file its annual returns. The annual reporting requirements that are applicable to the public company limited by guarantee are complex. In addition, it must hold Annual General Meeting without fail as part of the statutory compliance.

Singapore Taxation for Public Company Limited by Guarantee

A public company limited by guarantee is exempted from income tax if its members’ contribution gives it surplus funds or a half of its gross tax receipts are from members. They cannot ask tax-deduction for these receipts. The entity can try to acquire full charity status, in order to qualify for the full tax exemptions.

The NPOs are also called Voluntary Welfare Organizations (VWOs). The basic purpose of these entities is to work for the betterment of the society and public. Making the profit is nowhere part of their program. If they manage to have surplus funds, it is not distributed as the dividend among its members, but it is kept in reserve for the activities planned in future.