A Comprehensive Guide to
Estimated Chargeable Income (ECI) Filing in Singapore
JULY 3, 2023
3 Mins Read
A Comprehensive Guide to Estimated Chargeable Income (ECI) Filing in Singapore
Estimated Chargeable Income (ECI) filing is an important process for companies in Singapore. It allows businesses to provide an estimate of their taxable profits for a specific Year of Assessment (YA) to the Inland Revenue Authority of Singapore (IRAS). In this blog, we will explore the key aspects of ECI filing, including its purpose, filing requirements, advantages, and important deadlines.
What is ECI?
ECI is an estimation of a company’s taxable profits after deducting tax-allowable expenses for a particular YA. It serves as an advance notice to IRAS about a company’s expected income and taxes payable. By filing ECI, companies provide early tax assessment information to facilitate efficient tax planning.
Who needs to file ECI?
In general, companies are required to file ECI within three months from the end of their financial year, unless they meet specific criteria for exemption. However, certain entities, such as foreign ship owners or charterers, foreign universities, designated unit trusts, and real estate investment trusts with specific tax treatment, may be exempt from filing ECI.
Your company does not need to file ECI in any Year of Assessment (YA) when both criteria are met:
1. Annual revenue1 is $5 million or below for the financial year; and
2. ECI is nil for the YA. The ECI should be the amount before deducting the exempt amount under the partial tax exemption scheme or the tax exemption scheme for new start-up companies.
Not sure if your company qualifies for exemptions? Get in touch with Acconate.
Advantages of Filing ECI:
Filing ECI early offers several advantages for businesses in Singapore:
- Early Tax Assessment: Filing ECI provides an early assessment of tax payable, allowing companies to plan their finances more effectively and budget for tax obligations.
- Greater Number of Instalments: Below table illustrates the number of instalments a company can enjoy based on when they file their ECI. Early filing of ECI enables businesses to enjoy a higher number of instalments for tax payment, resulting in improved cash flow management. The number of instalments granted depends on the timing of ECI filing.
- Streamlined Tax Compliance: Early ECI filing simplifies the tax compliance process, providing businesses with more time to gather relevant information and meet their tax obligations accurately.
- Reduced Risk of Penalties: Filing ECI within the stipulated timeframe helps businesses avoid penalties for late or non-compliance.
Example of Instalment Schedule:
Filing Timing | Number of Instalments |
Within 1 month from financial year end | 10 |
Within 2 months from financial year end | 8 |
Within 3 months from financial year end | 6 |
After 3 months from financial year end | No instalments |
When to File ECI?
Companies should file ECI within three months from the end of their financial year. IRAS will send a notification to remind companies to file their ECI in the last month of their financial year. If a company does not receive the notification and is not exempt from ECI filing, it is still required to file within the specified timeframe.
How to Calculate ECI and File ECI?
To calculate ECI accurately, businesses need to determine their taxable income and tax-allowable expenses. The actual filing of ECI can be done through the mytax.iras.gov.sg portal. Before filing, ensure that you have the necessary authorization and company details, such as the Unique Entity Number (UEN)/Entity ID.
Payment of Estimated Tax:
Once the ECI filing is processed by IRAS, businesses can view their Notice of Assessment (NOA) on the mytax.iras.gov.sg portal. The NOA states the amount of tax payable by the company based on the ECI filed. Companies are required to make payment of the estimated tax within one month from the date of the NOA or by the 15th of the fourth month from the financial year end, whichever is earlier.
Failure to pay the estimated tax by the due date may result in penalties and interest charges. Therefore, it is essential to fulfill the tax payment obligations promptly to avoid any complications.
Key Dates and Deadlines:
To ensure a smooth ECI filing process, it is important to be aware of the key dates and deadlines. Here are the important timelines to keep in mind:
- Financial Year End: This is the end date of a company’s financial year. It determines the deadline for filing ECI.
- ECI Filing Due Date: ECI must be filed within three months from the financial year end unless the company is exempt.
- Notification of ECI Filing: IRAS sends a notification to companies in the last month of their financial year to remind them of the upcoming ECI filing requirement.
- Payment Due Date: After filing ECI and receiving the NOA, companies must make payment of the estimated tax within one month from the date of the NOA or by the 15th of the fourth month from the financial year end, whichever is earlier.
Conclusion:
To ensure a smooth ECI filing experience, businesses should familiarize themselves with the ECI filing requirements, accurately calculate their taxable income and tax-allowable expenses, and file within the stipulated timeframe. Prompt payment of the estimated tax based on the Notice of Assessment (NOA) is crucial to avoid penalties and interest charges.
If you need any assistance With ECI or have any queries, please contact us for free consultation.
About Acconate
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