Definition of Estimated of Chargeable Income (ECI) and When to File

What is ECI?

ECI is standing for Estimated Chargeable Income, as its name, is an estimate of your company’s taxable profits (after deducting tax-allowable expenses) for the fiscal year ended or  a Year of Assessment (YA). It is necessary for a business owner to file  ECI with IRAS because of the need of raising an early assessment.

Because this is an estimation, there’s no need for the figures to be strictly correct in ECI. If your chargeable income in ECI is different from the reality, IRAS will raise an amended assessment.

When to File ECI

All companies including new companies are required to file ECI within three months from the end of their financial year except for companies that qualify for the administrative concession and those that are specifically not required to file.

Companies will receive a notification from IRAS to file the ECI in the last month of its financial year. Companies should still proceed to file the ECI within three months from its financial year end even if they do not receive the ECI notification.

There will be cases when corporate failed to comply with the requirements after 3 month for filing, IRAS will issue a Notice of Assessment (NOA) based on its estimation of that particular company’s income. NOA might be the last assessment for consideration. Any disagree with the estimation of IRAS, companies have to lodge an objection with agency within one month from the date of NOA. You can either do this process by writing to the agency’s corporate tax division.

Examples of ECI Filing Deadlines Based on Different Financial Year Ends.

Advantages and tips of filing ECI

It is important for your company to file ECI if you are in the position of tax payable. IRAS will provide you with flexible payment options, for example, they permit you to pay tax in instalments if you file ECI early.During the last month of fiscal year, companies will receive a notification from IRAS, an ECI filing request,  Instead of paying all taxes totally, your company is able to pay its taxes over a few months. Your cash flows will literally improve its performance. This following table will show you detail:

As mentioned before, there are 2 ways you can have you ECI filed: e-filing or paper filling. Since it was announced in Budget 2016, in line with Government’s direction for more cost effective delivery of public services and the Smart Nation vision to harness technology to enhance productivity, e-Filing of corporate Income Tax Returns (Including ECI, Form C and Form C-S). Notes that only company with 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.

That’s why the e-filing is highly recommends by the Singapore Government. As you can see the advantages in the number of instalments your company should have if you file ECI on time and of course by e-filing.

Difference in amount declared as ECI and Chargeable Income reported in Form C-S/ C

The chargeable income reported in Form C-S might be different than the chargeable income estimated in ECI, the excess tax paid earlier will be refunded automatically. The additional tax must be paid within one month from the date of the NOA. Note that if there is a significant difference between the ECI reported earlier and the chargeable income reported in the Form C-S/S subsequently, IRAS may require the company to provide an explanation.

This is an overview of ECI, if there is any issue while gaining information in this field.

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