A Guide to Filing Estimated Chargeable Income (ECI) with IRAS

Filing of Estimated Chargeable Income (ECI) is one of the essential requirements that Singapore-incorporated companies must fulfill at their financial year-end (FYE). As the preparation and filing of this tax can be pretty overwhelming, especially for newly registered companies, it is best to engage a corporate service provider to guide you through the process. This article provides details on what ECI is, who needs to file it and who can be exempted from filing it, when and how to file it, and what penalties you can get from failing to file it. 

What is Estimated Chargeable Income (ECI)?

Estimated Chargeable Income (ECI) is an estimate of your company’s taxable profits (after deducting tax-allowable expenses) for a Year of Assessment (YA).  It must be filed with the Inland Revenue Authority of Singapore (IRAS) within three months from the end of your company’s financial year-end.

Income earned or received in Singapore will be considered taxable. Roughly speaking, taxable income includes:

• Profits or gains from any trade or business
• Income from investments such as dividends, interest, and rental
• Royalties, premiums, and other profits of property
• Gains that are revenue in nature

Who needs to file Estimated Chargeable Income?

Whether your company is newly incorporated or has been around for years, it will need to file ECI unless:

• It qualifies for the ECI filing waiver; or
• It is specifically not required to file ECI. 

Who does not need to file ECI?

Companies that meet the following criteria do not need to file ECI in any Year of Assessment (YA):

• Annual revenue is $5 million or below for the financial year; and
• 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 startups.

In addition, companies that fall within one of the following categories do not need to file ECI:

• Foreign ship owners or charterers whose local shipping agent has submitted/will submit the Shipping Return;
• Foreign universities;
• Designated unit trusts and approved CPF unit trusts;
• Real estate investment trusts that have been granted the tax treatment under Section 43(2) of the Income Tax Act; and
• Cases specifically granted the waiver to furnish ECI by IRAS.

When to file Estimated Chargeable Income 

Your company will receive notification from IRAS to file its ECI in the last month of its financial year. However, if it does not receive a notice and does not meet the requirements to be exempted from ECI filing, your company must still file within three months of the end of its financial year.

Below are a few examples of ECI filing deadlines based on different financial year ends.

Why you should file ECI early

Companies that e-file their ECI statements by the 26th of each qualifying month can enjoy the maximum number of installments. In addition, the earlier your company files, the greater the number of installments it can enjoy. Butt first you must fulfill the following conditions:

• Your company is registered in Singapore, and
• Your company is already on GIRO. If you do not have an existing GIRO arrangement for corporate tax, you can apply for it at least three weeks before e-filing your ECI.

Below is an example of several payment installments a company whose financial year ends in December can enjoy.

*The first installment may be combined with the second installment, depending on the ECI filing date.

What to declare in the ECI statement

You must declare your company’s revenue in the ECI statement. Your company’s revenue is the company’s main source of income and excludes items such as gain on disposal of fixed assets. If your company is an investment holding company, its main source of income will be its investment income (e.g., interest income and dividends).

If audited financial statements are not yet available, you can refer to the company’s management account to state the amount of revenue. If the actual income amount based on the audited financial statements differs from that stated during the ECI filing, but there is no change in your ECI, you do not need to revise the earnings amount.

How to file Estimated Chargeable Income 

A corporate service provider can help you file ECI (as suggested by the authority) 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 how to file it, here are the steps:

1. Make sure that you are authorized by your company as an ‘Approver’ for the Corporate Tax (Filing and Applications) on Corppass
2. Have your Singpass and your company’s Unique Entity Number (UEN)/ Entity ID
3. File ECI via mytax.iras.gov.sg

To save your time and ensure your compliance without last-minute worries, you can trust Biz Atom to help you:

• Determine your company’s FYE;
• Prepare the ECI statement; and
• Get the online access code to e-file your ECI with IRAS.

Failure to file ECI

If your company is late in filing or fails to file its ECI, an estimated Notice of Assessment (NOA) may be issued based on its last year’s earnings or other information available to IRAS. Moreover, your company will have to pay the full amount of tax within one month from the date of NOA, and it will not enjoy installment payments. If payment is not received by the due date, late payment penalties will be imposed, and enforcement actions may be taken.

If you’re at your wits’ end and need to unpack the work of calculating and filing your ECI, we can help you with it. We can also take over all your paperwork for tasks like bookkeeping and corporate secretary duties in Singapore so you can focus on growing your business.

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