ECI filing is a mandatory requirement for all companies in Singapore. It is an estimated statement of the income earned or to be earned in a given financial year, and serves as an advance notice to the Inland Revenue Authority of Singapore (IRAS) on the company’s tax liability.
In this blog, we run through the entire process of filing your ECI, including when and how to file, as well as the how we can help you for peace of mind filing.
What is Estimated Chargeable Income?
Estimated Chargeable Income (ECI) is an estimate of a company’s chargeable income (income after deducting tax-allowable expenses) for a particular Year of Assessment (YA).
Who is Required to File ECI in Singapore?
All Singapore-registered companies must file ECI before the deadline unless they qualify for the ECI filing waiver or unless it is specifically not required to file ECI.
Who Qualifies for ECI Filing Waiver?
Companies can qualify for ECI filing waiver if they meet these conditions:
- Annual revenue for the FY is S$5 million or less
- ECI is nil for the YA, with the ECI being the amount before deducting the exempt amount under the partial tax exemption scheme or the tax exemption scheme for new startup companies
Companies must self-assess whether they qualify for the ECI filing waiver.
Entities Not Required to File ECI
Aside from the conditions listed above, there are also specific entities that need not file ECI. They are:
- Foreign universities
- Foreign ship owners or charterers whose local shipping agent has submitted or will submit the Shipping Return
- Designated unit trusts and approved CPF unit trusts
- Cases specifically granted the ECI waiver by IRAS
- Real estate investment trusts granted the tax treatment under Section 43(2) of the Singapore Income Tax Act 1947
What Are the Benefits of ECI Filing?
There are several benefits of ECI filing in Singapore:
Compliance and Avoidance of Penalties
Filing ECI ensures that companies comply with the IRAS requirements and avoid potential penalties. Failure to file ECI on time can result in undesirable financial penalties and legal repercussions. By regularly filing ECI, companies can demonstrate their commitment to complying with tax laws and regulations.
Improves Understanding of Tax Filing Obligations
Filing ECI requires companies to have a thorough understanding of their tax filing obligations, including deadlines and necessary documents. This can help prevent last-minute rushes or missed deadlines, avoiding any penalties or interest charges.
Enhanced Cash Flow Management
Filing ECI requires companies to document their profits and losses for the year accurately. This process helps ensure accurate financial reporting, which is essential for making informed business decisions and maintaining transparency with stakeholders. It also helps identify any potential errors or inconsistencies in financial data that could result in penalties or legal issues.
When to File ECI
Companies are expected to file ECI within 3 months from the end of the financial year (FY). IRAS will send a notification to your company to file its ECI in the last month of the financial year. If your company did not receive the notification and does not meet the ECI exemption conditions, it must still file within 3 months from the end of the FY.
Early ECI Filing Benefits
Singapore-registered companies on GIRO arrangement that file their ECI early by the 26th of each qualifying month can enjoy the maximum number of installments.
How to File ECI
We list the steps to file your ECI:
Step 1: Before ECI Filing
Make sure that you are authorised by your company as an “Approver” for Corporate Tax (Filing and Applications) in Corppass. You must also ready your Singpass and company’s Unique Entity Number (UEN) or Entity ID.
Step 2: File Your ECI
File your ECI through the myTax Portal. Remember that your company’s revenue must be declared when filing ECI. If you have an investment holding company, its main income source is investment income. If the audited financial statements are not yet available, you can check the company’s management records to declare the revenue amount.
How Do You Calculate ECI?
The ECI amount filed must not include the tax exemption for new startup companies or partial tax exemption. IRAS will calculate and automatically allow the tax exemption for new startup companies or partial tax exemption. You must indicate if your company qualifies for the tax exemption scheme for new startup companies in the File ECI digital service.
As announced in Budget 2024, a Corporate Income Tax (CIT) Rebate of 50% of the corporate tax payable will be provided for YA 2024. The maximum total benefits of CIT Rebate and CIT Rebate Cash Grant that a company can obtain for YA 2024 is S$40,000.
Since the applicable CTI Rebate for YA 2024 will be automatically computed in its tax assessment based on Form C-S/Form C-S (Lite)/Form C submitted by the company, assessments raised based on the ECI will not include the CIT Rebate.
What Are Some ECI Filing Mistakes?
When you file your ECI, it is important to avoid mistakes such as:
- Inaccurate income records
- Incorrect calculations
- Failing to include all income sources
Remember that incorrect submissions can lead to excess payment of taxes or underpayment and lead to unwanted penalties. Hence, it is imperative to verify pre-filled information and review income streams to ensure that the ECI submission is precise and accurate and avoid discrepancies with the company’s FYE figures.
When to Pay ECI
Companies must pay the payable ECI amount within 1 month from the date of the Notice of Assessment unless it meets the condition to pay in instalments. They can pay via GIRO or Electronic Payment methods such as Internet Banking, Phone Banking, and NETS.
ECI Filing Penalties
Companies that are late to file or fail to file their ECI may receive an estimated Notice of Assessment (NOA) based on their past years’ income or other information that IRAS can access.
They must then pay the full tax amount within 1 month from the date of the NOA and will not be able to enjoy instalment payment. If payment is not received by the due date, late payment penalties will be imposed and there may be enforcement actions taken.
Companies that disagree with the estimated tax assessment must file an objection within 2 months from the date of the NOA with reasons for the late filing or failure to file ECI and the revised ECI amount. Even if an objection is filed, payment must still be made based on the NOA. If the assessment is revised after, any excess payment will be refunded.
Outsource Your ECI Filing to InCorp
Outsourcing the ECI filing process to professional tax consultants like InCorp can relieve you of the complexities of tax compliance, allowing you to concentrate on growing your business. Our experts act as your vigilant partners, ensuring your taxes are accurately filed and promptly addressing any queries from IRAS. This way, you can also have peace of mind knowing that your company’s ECI filing is in good hands.
FAQs about Singapore Estimated Chargeable Income (ECI)
- The ECI is a company’s taxable income after deducting tax-allowable expenses and is required to be filed within three months after the end of their financial year.
- ECI installments refer to the option provided by the Inland Revenue Authority of Singapore (IRAS) that allows companies to pay their estimated taxes in smaller, regular payments rather than in a single lump sum. This is particularly helpful for managing cash flow and spreading out the financial impact of tax payments.
- Our experienced tax team can help you with the entire ECI filing process and provide complementary services such as Form C-S/Form C-S (Lite)/Form C corporate tax filing.
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