What is ECI (Estimated Chargeable Income)?
3 minute read
Estimated Chargeable Income (ECI) is an estimate of your company’s taxable profits (after deducting tax-allowable expenses) for a Year of Assessment (YA). In order for you and your company to stay compliant with Inland Revenue Authority of Singapore (IRAS), every company is required to submit an ECI for the Year of Assessment.
Typically your accountant will do this on your behalf after you give them your management accounts. But if you’re on your own or you want a bit more detail on what it is, keep reading.
Who needs to file ECI?
Every company is required to submit an ECI for the Year of Assessment within three months after the financial year ends. If your company has no profits or incurred losses, you will still have to file a ‘NIL’ ECI.
|Financial year end||Due date for filing ECI||Period covered in the accounts||Year of Assessment (YA)||Due date for filing ECI for that particular YA|
|31 December||31 March of the following year||1 January 2018 to 31 December 2018||2019||31 March 2019|
|31 March||30 June||1 Apr 2017 to 31 Mar 2018||2019||30 June 2018|
Advantages of filing ECI
When you submit your ECI statements early, IRAS provides you with flexible payment options: more specifically, you may choose to pay your tax in installments. The earlier you submit your statement, the higher the number of installments are offered.
An example: If your company submits its ECI statement by 26th of the month immediately after your FYE, you can pay your taxes in 10 installments. If the ECI statement is filed on the 26th of the second month after your FYE, there are 8 payment installments offered, and 6 if you file your statement on the 26th of the third month.
Failure to comply
If your company has failed to comply with the requirements after the end of the three-month grace period, IRAS will issue a Notice of Assessment (NOA) based on its estimation of that particular company’s income. This NOA can be considered as the final assessment.
If you disagree with the estimate by IRAS, you would then need to lodge an objection with the agency within one month from the date of NOA. You can either do this process electronically via myTax Portal or by writing to the agency’s corporate tax division.
Filing of ECI
Typically, your accountants help with the filing of your ECI. If you do not have an accountant, you can also file your ECI statements on your own. It can either be done through e-Filing or paper filing. The Singapore government highly recommends e-Filing.
Advantages of e-Filing
You can enjoy instant acknowledgment upon successful e-Filing as well as greater number of installments to pay your company’s estimated tax.
When talking about installment payments, only companies that are on GIRO (automated electronic payment service) qualify for it. Companies that do not have an existing GIRO arrangement for Corporate Tax are advised to apply for GIRO at least two weeks before e-filing their ECI.
If you’re looking to get help with your ECI filing, get in touch with us. We offer no-nonsense accounting for companies looking to set themselves up in Singapore.
If you would like to do more readings on tax in Singapore, you can view our guides!
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