What is Estimated Chargeable Income or ECI?
Inland Revenue Authority of Singapore (IRAS) defines Estimated Chargeable Income as the appraisement of a company’s chargeable income for the Year of Assessment (YA), which varies according to the company.
An estimate of a company’s chargeable revenue for a Year of Assessment (YA) made within three months from the financial year-end is known as “Estimated Chargeable Income,” or “ECI.” In other words, it is the total revenue or income before deductions for StartUp Tax Exemption (SUTE) and other factors, such as a gain from the sale of fixed assets.
What to file?
A company may use its management accounts for the declaration of the revenue amount if audited accounts are not accessible. If the amount based on audited accounts differs from the amount reported on the ECI Form and your ECI remains the same, a company is not required to change the revenue amount.
ECI statement includes the company’s revenues, excluding items such as gain on sale of fixed assets. Therefore, if a company is an investment holding company, investment income will be its main source of income.
Who needs to file the ECI?
Every company is required to provide ECI within three months after its financial year-end. Even if a company estimates its chargeable income to be nil, it is still required to file a “Nil” ECI form. It must be submitted to IRAS.
When and why should companies file the ECI?
ECI data makes it easier to evaluate industrial performance and make macro-level policy decisions. Additionally, one of Singapore’s yearly corporate compliance requirements is the filing of the ECI.
How to file an ECI?
You can read the instructions published by the Inland Revenue Authority of Singapore (IRAS) for the steps in submitting an ECI, which can be obtained through this website: https://www.iras.gov.sg › pdfPDF User Guide for Company File Estimated Chargeable Income (ECI)
Advantages of e-filing ECI
Compared to businesses that file their ECI accounts on paper, those that file electronically benefit from additional tax payment installment programs. Additionally, your company will receive more installments the earlier the ECI declaration is submitted.
Advantages of filing ECI early
For businesses that submit their ECI statements ahead of schedule, IRAS offers flexible payment options. Taxes can be paid in installments. The number of payment installments awarded increases with the timing of the ECI statement submission. Companies can pay their taxes in ten payments if they electronically file their ECI by the 26th of the month following the financial year-end.
There are 8 payment installments for companies who submitted the ECI on the 26th of the second month following the financial year-end, and 6 for submissions made on the 26th of the third month following the financial year-end.
Failure to file an ECI as required
Following the expiration of the three-month grace period, if the company has not complied with the requirement, IRAS will issue a Notice of Assessment (NOA) based on its estimate of the income of that specific company. If the company disagrees with IRAS’ projected assessment, it has one month from the date of the NOA to submit a written complaint.
Other than that, the NOA is accepted as being final, and this is true even if the accounts that were provided later deviate from the information of revenues indicated on Form C. You can read about Form C in a different article published on this page.
What happens after you file an ECI?
IRAS will utilize the data from your company’s ECI to make an early assessment of your corporate income tax. After receiving a Notice of Assessment (NOA), which serves as your tax bill, you can proceed to pay your taxes using GIRO or another recognized electronic payment method.
