Estimated Chargeable Income (ECI) refers to the estimation of a company’s chargeable income for a particular Year of Assessment (YA). It is important to note that capital gains and fixed asset disposal should not be included in the ECI.
Wondering if you are required to file an ECI? Registered companies in Singapore are required to file its ECI within three (3) months prior to its Financial Year-end (FYE), except when the company is given a waiver of the requirement to file an ECI. The Inland Revenue Authority of Singapore (IRAS) normally provides companies with a notification or reminder to file its ECI during the last month of its financial year.
Which companies are not required to file ECI?
Administrative Concession (Waiver of Requirement to File ECI)
Companies under Administrative Concession are not required to file ECI. In order to qualify, the following conditions must be fulfilled:
- The company’s annual revenue does not exceed $1 million for the financial year
- The company’s ECI is NIL.
The following entities are also not required to file ECI:
- Foreign universities
- Charterers/ owners of foreign ships with whom Shipping Return has either been submitted or would be submitted by local shipping agents.
- Real estate investment trusts granted with tax treatment under Income Tax Act
- Designated unit trusts along with approved CPF trusts
- Any other entity that has been given waiver to file ECI
For instances when a company has no estimated chargeable income for the entire financial year, the company still needs to file a ‘Nil’ ECI. The company may only be absolved of this requirement if it is qualified for the Administrative Concession.
Consequently, excess tax paid by the company will automatically be refunded if the ECI filed by the company is greater than the chargeable income reflected and reported in the company’s Form C/ Form C-S. On the other hand, additional tax must be paid if the filed ECI is lower than the actual chargeable income. Payment must be settled within one (1) month from the date the Notice of Assessment has been given. Take note that IRAS may require a company to deliver an explanation in the event that the filed ECI and the chargeable income stated reported in the Form C/ Form C-S is found to have a significant difference.
When should you file your ECI?
The ECI must be furnished by your company within three (3) months from its Financial Year-end (FYE). There is an advantage to timely submitting your company’s ECI. If you filed your ECI within the qualifying period you will be allowed to pay tax in installments. The earlier you can submit your company’s ECI, the better since the number of installments will also be higher.
IRAS encourages companies to electronically file their ECI instead of filling out printed ECI forms. Hence, companies who e-file their ECI will be entitled to an extension. As an example, you can file your company’s ECI on December 31 during that Year of Assessment (YE) instead of filing it on July 31. Meanwhile, if you failed to submit your company’s ECI within the stipulated period, the Comptroller may provide a Notice of Assessment which is based on an estimation of the company’s income. Should the company disagree with the Comptroller’s estimation, an objection must be filed within thirty (30) days from receiving the Notice of Assessment otherwise, it will be considered as final.