Exempt Private Company (EPC)
Exempt Private Company (EPC) is a private company in which there are less than 20 shareholders and no corporation, directly or indirectly, holds any shares. A private company that is wholly owned by the Government is also considered an EPC and needs to be declared by notification in the Gazette by the Minister. If a company meets these criteria as per Section 4(1) of the companies act, it automatically becomes an EPC, and no additional documents or applications are required to be submitted to the Registrar.
Benefits of an Exempt Private Company
ECP is one of the most common types of business structures found in Singapore as they offer a lot of benefits:
More Tax Exemption
Under the Start-Up Tax Exemption Scheme, all newly started ECPs are exempted from corporate tax for the first three consecutive Years of Assessment (YA). From YA 2020 onwards, an ECP will receive a 75% exemption on the first $100,000 of normal chargeable income and a 50% exception on the next $100,000. After the first three years, they can enjoy the partial tax exemption like other qualifying companies.
New companies whose principal activities involve undertaking property development for sale, investment, or both, and investment holding companies can’t avail the benefits of this tax exemption scheme.
Fewer Compliance Requirements
If an ECP’s annual turnover is less than $10 million, they are exempted from accounts submissions and annual audits. But a solvency declaration signed by the company director(s) and company secretary, needs to be submitted to the Registrar of Companies in Singapore and ACRA to enjoy these benefits. They can also submit their unaudited accounts to ACRA and the Registrar.
All ECPs with a turnover of $10 million and more are required to get their accounts audited and file their returns, like any other company.
Flexibility on Loans
In Singapore, as per the Companies Act, companies are not permitted to give loans to their directors or other related companies as well as provides any security or guarantee for a credit transaction entered into with another person for the benefit of a particular director(s). But an EPC is excepted from this clause and thus enjoys more flexibility in terms of financial loans.
In Singapore, foreigners are allowed to own 100% of shares of an ECP. As the company is a separate legal entity, foreigners have limited liability.