If you have questions about Estimated Chargeable Income in Singapore (ECI), you're in the right place. In this article, we'll discuss everything there is to know about ECI in Singapore, and why your business should be filing for ECI. Let's get started now, beginning with the basics about ECI.
Estimated Chargeable Income, or ECI for short, is the estimate of the total taxable income for your company, during any given Year of Assessment, or YA.
It is calculated based on your total income, minus all tax-allowable expenses and other such deductions.
The IRAS (Inland Revenue Authority of Singapore) requires that ECIs be filed so that they can raise an early assessment of corporate performance, and use this information to help the Singaporean government track business health from a macro level. Essentially, it helps to track the financial performance of Singapore and its businesses and ensures that your company is being taxed properly.
ECI must be filed every year for every company, except if you are exempt due to waivers which we will discuss in further detail below.
Failing to file an ECI when you are required to by law will result in the IRAS releasing a Notice of Assessment, or NOA, based on their own
estimation of your company’s income. Failure to object to this assessment will result in the NOA being recognised as final.
The Singaporean Government announced new ECI regulations for Budget 2016, which will result in every company being required to submit and file ECI estimations. The time-table for compulsory filing is as follows:
Even if your company has an ECI of “NIL” for the YA in question – that is, you made no profits or your company is dormant – you still must file an ECI. The only exceptions are if your company is:
You can learn more about these exceptions and exemptions on
the IRAS website.
To see if you must file, you can use the New
Company Start-Up Kit from the IRAS.
Every company needs to file its ECI within 3 months after the end of its financial year, with no exceptions. In some cases, you may be able
to get an extension from the IRAS, but you should still always plan to file ECI within 3 months of your financial year ending.
E-filing of ECI is compulsory, starting after YA 2018 – so your company is encouraged to begin the e-filing process early.
To begin, simply visit mytax.iras.gov.sg. Then, you will need to ensure that you have the following:
E-filing is recommended, because it will result in the fastest processing times, and provide your company with a larger number of
instalments, through which it can make its estimated tax payments.
ECI will eventually be mandatory for businesses of all sizes – but even before this happens, there are a number of good benefits of applying ECI, particularly for SMEs.
The biggest reason is the Corporate Income Tax (CIT) rebate on your ECI. For the Year of Assessment (YA) 2019, companies are granted a 20% CIT tax rebate, based on their corporate tax payable.
This is limited to a cap of $10,000 – so while this rebate may not be useful for a multi-billion dollar international company, it can be extremely helpful for smaller businesses, for which each tax break can make a big difference.
In addition if you file early, you will have a greater number of instalments with which you can pay your company's estimated tax, as follows:
Once the IRAS has processed your form, you will receive your Notice of Assessment, which will inform you of the total amount of tax that is to be paid by your company. This tax must be paid within one month from the issue date of the NOA, unless you are participating in the GIRO instalment plan.
You will be sent information about the various ways to pay after your filing has been accepted, and your NOA issued. You can view your NOA
at mytax.iras.gov.sg after you have filed your ECI and received your NOA.
At Precursor, we specialise in accounting, audit, and taxation in Singapore. If your SME is going to be required to file ECI in the upcoming YA, we are here to help. We can help you understand how ECI works, how to minimise your tax liabilities, when and how to file, and much more.
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