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Epica Learn Series

A Guide on Singapore ECI (Estimated Chargeable Income)

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What is ECI and its purpose? Are there any exemptions from Filing Estimated Chargeable Income (ECI)?

All Singapore-incorporated companies must act in compliance with ACRA (Accounting & Corporate Regulatory Authority) and IRAS (Inland Revenue Authority of Singapore). ACRA acts as Singapore Company Registrar, who ensures that Singapore-registered businesses are complying with the Companies Act. On the other hand, IRAS is the tax collector in Singapore that ensures that companies pay their taxes on time without any default.

What is ECI or Estimated Chargeable Income?

Filing ECI with IRAS is a part of statutory obligations for all the Singapore-registered businesses. ECI, or Estimated Chargeable Income, is the estimation of the company’s expected taxable income for a given YA (Year of Assessment).

Revenue Declaration in ECI Form

The revenue declaration in ECI form has become compulsory now barring some situations.

The revenue here indicates the company’s leading source of income only. For instance, the primary income source for an investment holding company is its investment income, i.e., dividend and interest income.

Revenue does not include the following:

  • Fixed assets disposal gains
  • Capital gains

How to compute a company’s ECI?

There are two methods to prepare an ECI statement of a company.

Guide on ECI - Company ECI
  • Using the company’s audited accounts
  • Using the company’s management accounts, in case audited accounts are unavailable

ECI needs to be filed within 3 months from the end of the accounting year of the company. Many times the final accounts are not ready by then. So a company can rely on its provisional / management accounts for filing ECI. Afterall it is “Estimated Chargeable” and hence not considered as final. When ECI is filed using the management accounts, there is a possibility that the actual revenue after audit differs from the declared amount in ECI form. However, IRAS will not ask you to revise the ECI statements to reflect the new figures. The new figures can be filed in final tax filing of form C / C-S.

Do note that ECI estimates your company’s taxable income without deducting any exemption under the SUTE (Start-Up Tax Exemption) scheme or Partial Tax Exemption scheme. IRAS computes and allows the exemption automatically.

When must you file your ECI?

All the Singapore-based companies must file their ECI within 90 days from their FYE (Financial Year End).

Compulsory e-Filing

For all Singapore-registered companies, it has become mandatory to e-File their ECI with effect from YA 2020. Earlier, companies were allowed to submit their completed ECI form by post to IRAS.

However, after the government’s direction for more cost-effective public services delivery and the vision of a Smart Nation to enhance productivity by harnessing technology, e-Filing of Corporate Income Tax Returns became mandatory for CIT returns include ECI and Form C-S/C submission.

Guide on ECI - E-filling

Step 1

Before e-Filing, you must ensure that:

  • The company has authorized you as an ‘Approver’ in CorpPass for Corporate Tax (filing & applications)
  • You have your CorpPass ID, CorpPass password, and company’s tax reference number.

In case you need assistance with the CorpPass setup, you can refer to our CorpPass setup guide.


Guide on ECI - E-file

Step 2

You can proceed to e-File via mytax.iras.gov.sg.

Advantages of early ECI filing

Companies that e-File their ECI within three months from their FYE are given the option to pay their corporate taxes in the form of installments.

Guide on ECI - Eci Filling

Significance of GIRO

Companies that want to pay their taxes in installments must be on GIRO. All Singapore-incorporated companies qualify for GIRO installments.

If your company is not on GIRO, you must apply for the GIRO arrangement a minimum of three weeks before the e-Filing of your ECI. GIRO application must be approved before the payment due date, or else the company cannot opt to pay in installments. In that instance, the company will have to pay the total estimated tax by the due date.


Installment Options

To encourage the early filing of ECI, IRAS awards more number of installments the sooner you file your ECI. The following table will help you understand it further:

e-Filing of ECI

Installments

One month from FYE 10
Two months from FYE 8
Three months from FYE 6
After three months from FYE None

You must e-File by the 26th of a month to qualify for the maximum installments offered in that month.

Tax Notice and Estimated Tax Payment

Guide on ECI - Estimated Tax

The IRAS issues an NOA (Notice of Assessment) after processing your company’s ECI. NOA is an official notice stating the total tax to be paid.

The company must pay the tax within a month after the date of NOA. The NOA also states the tax payment methods.

Tax Payment Methods

The estimated tax can be paid in two ways:

  • GIRO payment option if you opt to pay in installments
  • Payment by electric mode like internet banking, NETS, etc

What if you fail to submit your ECI statement?

If you fail to e-File your ECI within the required period, IRAS issues an NOA based on its estimation of your company revenue. You only have one month from the NOA date to object if you do not agree with the estimated amount.

Guide on ECI - Submit ECI

The objection can be made in two ways:

  • Electronically via myTax Portal
  • Writing to the corporate tax division of the agency

Effects of no objection/failure to object within the time

In case you do not object or fail to object within the one month period, the estimated revenue in NOA will be treated as the final assessment of the company’s income even if the amount declared on Form C-S/C will be different.

The amount declared in ECI differs from the amount reported in Form C-S/C

ECI is an estimate of the company’s total revenue and taxable income. Hence, the amount declared in Form C-S/C and the amount claimed in ECI can differ on several occasions.

Guide on ECI - Declared in ECI

Estimated income in ECI is more than the chargeable income in Form C-S/C

In this scenario, the excess tax paid by the company earlier is automatically refunded to it.


Guide on ECI - Income in ECL

Estimated income in ECI is less than the chargeable income in Form C-S/C

In this scenario, the remaining excess tax must be paid within a month after the NOA’s date.

Suppose IRAS notices a significant difference between the ECI and the chargeable income declared in Form C-S/C. In that case, it may ask the company to provide a valid explanation for the same.

Exemption from filing ECI

In order to be exempted from filing the ECI, a company must fulfill specific conditions or fall within a particular category.

The ECI filing waiver

Your company does not need to submit its ECI statement for a specific YA if it fulfills both these conditions.

  • Its annual revenue is less than S$5 million for the respective FY
  • The company’s ECI is NIL for the respective FY

This table illustrates the ECI waiver criteria clearly:

FYE

YA 2021 Basis Period

ECI Due Date

ECI

Revenue

Qualifies for ECI waiver?

May 2020 June 2019 to May 2020 August 2020 S$200,000 S$5 million No
NIL S$7 million No
NIL S$5 million Yes

Singapore companies can self-assess if they fit the criteria for the ECI waiver or not. If they fulfill both the required conditions in a YA, they do not have to file an ECI. They do not even have to inform or seek confirmation from the IRAS.

However, once they fail to meet any one of the ECI waiver requirements in any YA, they must proceed to file an ECI for the respective YA.


Business entities that do not need to file their ECI statement

Guide on ECI -ECI statement

Some specific business entities are not required to file ECI as per Singapore company law. These entities are:

  • Foreign ship owners or charterers (local shipping agent submit their shipping return)
  • Approved CPF unit trusts and other designated unit trusts
  • Foreign universities
  • Real estate investment trusts with the tax treatment granted to them under Income Tax Act Section 43(2)
  • A particular case that is granted a waiver by IRAS

Benefits of outsourcing your ECI filing to a corporate service provider

Outsourcing your ECI filing to a reputable corporate service provider is highly recommended. A corporate service provider possesses the relevant knowledge and experience to assist you with:

Guide on ECI - Benefit of ECI
  • Determining the FY of the company
  • Preparing the ECI statement
  • Filing NIL ECI
  • Complete and file the income tax return form, i.e., Form C-S/C
  • E-Filing your ECI statement by obtaining online access codes

A corporate service provider always works in compliance with ACRA and IRAS. We at Epica assist our clients in fulfilling their statutory obligations like ECI filing. We provide cost-effective and error-free services so the businesses can focus on their expansion and growth without worrying about adhering to statutory compliances.

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