06 Feb Guide to filing Estimated Chargeable Income – ECI
Estimated Chargeable Income (ECI) is an estimate of the total taxable income for a given Year of Assessment (YA). ECI is calculated based on the total income, minus all tax-allowable expenses and other such deductions.
Here are some important things that you need to know about ECI.
Who needs to file ECI?
All the companies in Singapore have to file the ECI to IRAS within 3 months from the financial year-end, unless the company is exempt due to waivers which will be discussed in further detail below. The time-table for compulsory filing is as follows:
- 2018 onwards – Companies with revenue more than $10 million must file for YA 2017
- 2019 onwards – Companies with revenue more than $1 million must file for YA 2018
- 2020 onwards – All companies of all sizes must submit ECI to the IRAS
Nonetheless, companies with zero income or nil chargeable income in the previous YA are also required to fill the ECI as “zero” unless the companies qualify for certain administrative concessions.
Who are exempted to file ECI?
If you are one of the following entities, you are exempted to file the ECI.
- A foreign ship owner or charterers, for whom a Shipping Return has been or will be submitted by a shipping agent;
- A foreign university;
- A designated unit trust or approved CPF unit trust
- A real estate investment trusts (REITs) that have been granted special tax treatment under Section 43(2) OF THE Income Tax Act; and
- Any other specific case granted waiver from furnishing ECI by the IRAS, for instance, via an advance ruling issued.
Why you should file your ECI?
It is vital to submit the ECI in a timely manner as it is one of the annual corporate compliance requirements in Singapore. The information in ECI plays a crucial role as it helps policymakers understand how businesses and industries work.
What are the advantages of filing ECI early?
Singapore companies that e-file the ECI statements earlier could enjoy more installment plans as follows:
- ECI filed within 1 month from financial year end – 10 installments for e-file
- ECI filed within 2 months from financial year end – 8 installments for e-file
- ECI filed within 3 months from financial year end – 6 installments for e-file
- ECI filed 3 months after the financial year end – No installments allowed
These payment installments are very beneficial to most of the companies in Singapore as the business owners can manage the company’s budget easily when they apply for this installment option.
What if the company failed to comply with filing of ECI?
If a company has failed to comply with the ECI requirements after the end of 3 months grace period, IRAS will issue a Notice of Assessment (NOA) based on its estimation of that particular company’s income. Within that precious one month from the date of IRAS’s NOA, the company has to submit a written objection if the company does not agree with IRAS’s estimated assessment. Otherwise, the NOA is considered as the final assessment.
If you are struggling on how to file ECI, our experts from W.L.P are always ready to provide the best service to you.