What do you think about How to File Estimated Chargeable Income (ECI) and Paying Estimated Taxes in Singapore?

It is compulsory for all companies to file Singapore estimated chargeable income (ECI) statements to the IRAS.

Even if the company predicts a zero chargeable income, it still has to file a statement that says ‘nil’ ECI. Our team of experts will be more than happy to help you with all the information related to Singapore ECI.

ECI stands for Estimated Chargeable Income, is an estimation of an organization’s chargeable income for a given year of Assessment (YA). According to Singapore’s regulation, it is compulsory for all companies to file ECI statement with IRAS (Inland Revenue Authority of Singapore) within 3 months after the end of their financial year. The companies with no chargeable income (zero income) should file ‘Zero’ or ‘Nil’ ECI with IRAS unless the company qualifies for the administrative concession (which came into effect from YA 2013).

Who needs to file Estimated Chargeable Income (ECI)?

The ECI statement must include the revenue (the main source of income) of company excluding items such as gain on disposal of the fixed asset. For instance, if you own an investment holding company, the main source of your revenue will be your investment income.

In the event of unavailability of audited accounts at the time of ECI filing, you can refer to the management accounts of your company in order to declare the revenue amount. When the audited account come into effect and if it differs from the declared amount in the estimated chargeable income form, there will be no change in your ECI, you are not required to revise the figure of revenue.

All Singapore incorporated companies must file their ECI statement with IRAS unless the company is exempted under administrative concessions that came into effect from YA 2013. Even if the companies chargeable income is zero, it still has to file ‘NIL’ ECI with the authorities.

Companies that Do Not Need to File their ECI Statement

IRAS, generally, sends ECI notifications to the companies. However, not all of them have to file Estimated Chargeable Income statement. The companies have to self-assess whether they need to file ECI or they qualify for ECI filing waiver. The provision allows them to reduce their cost of compliance.

The IRAS has grated a few administrative concessions that free companies from filing their ECI. Companies that observe criteria 1 & 2 to qualify for the ECI waiver. The revised criteria for ECI exemption is as follows:

Criteria for ECI Waiver for Singapore Company

Financial Year Ends

Criteria for ECI waiver

In or before Jun 2017

  • Annual revenue is not more than $1 million for the financial year; and
  • ECI* is NIL for the YA.

In or after Jul 2017

 

 

  • Annual revenue is not more than $5 million 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 start-up companies.

Compulsory e-Filing ECI Statement

A company can either e-file or paper-file its ECI. The point to be noted is that the government has decreed that all companies need to e-file their corporate income tax returns starting with 2020.

E-Filing

Before e-filing your company's ECI, you need to ensure that,

  • The company has authorized you as an "Approver" for Corporate Tax matters (via e-Services Authorisation System (EASY); and
  • You have the tax reference number of your company & your SingPass or IRAS PIN
  • E-File by 26th of each qualifying month.

Paper-Filing

  • Paper file by 24th of each qualifying month.
  • Post completed ECI Form to IRAS.

You should use the following address.

Inland Revenue Authority of Singapore. 55 Newton Road, Revenue House, Singapore 307987

Phased Approach for E-Filing of Corporate Tax Returns

YA

Companies Targeted

2018

 

Companies having more than $10 million in revenue in YA 2017

2019

 

Companies having more than $1 million in revenue in YA 2018

2020

All companies

E-Filing of ECI is beneficial for the businesses. The IRAS provides them with an instant acknowledgment upon successful e-Filing. They also get to pay their estimated tax using a greater number of installments. It is a great opportunity open for the businesses that want to spread their expenses over a period rather than pay their tax in a lump sum amount.

However, the option of installments is only available to the companies that are on GIRO (automated electronic payment service). The companies that want to pay their corporate tax using GIRO should fill the application form and set up a GIRO agreement. They need to do so least 14 days before e-filing their ECI.

If the GIRO arrangement is not approved before the payment due date, the company will need to pay the estimated tax in full without the benefit of installments. You can check the status of your company's GIRO application through the Corporate Tax integrated phone service

The Advantages of Early ECI Filing

IRAS provides flexible payment options to the companies that file ECI early. They will be awarded a number of installments options. The earlier you file, the more will be the number of installments. For instance, please refer to the below table:

ECI filed within

e-filers (no. of Installments)

Paper-filers (no. of Installments)

1 month from financial year-end

10

5

2 months from financial year-end

8

4

3 months from financial year-end

6

3

More than 3 months from financial year-end

NA

NA

CIT Rebate on ECI Filed for YA 2018 and YA 2019

The Budget 2018 increased the cap for the corporate tax rebate for YA 2018 to 40% from 20%, capped at $15,000. For the YA 2019, the rebate will be 20% of the corporate tax payable, capped at $10,000.

IRAS has initiated the process for revising the tax assessments of businesses that have already filed their ECI for YA 2018 and YA 2019. These companies will receive revised Notices of Assessment taking into consideration the CIT Rebate changes. If they have paid in excess, they will get the refund. If they are using installments to pay the tax on ECI, they will soon get the revised installment plan.

How to Calculate ECI for Your Singapore Company

The companies, while filing their ECI, should not take into account the Tax Exemption Scheme for New Start-Up Companies/ Partial Tax exemption or the Corporate Income Tax (CIT) rebate. IRAS will compute these amounts automatically.

Result of Non-compliance

If a company fails to submit its ECI to IRAS within 3 months of its financial year-end, the company will receive a Notice of Assessment (NOA) from IRAS based on their estimate of the company’s revenue. In the case, the company disagrees with the estimation amount of IRAS, they have one month to lodge a written objection online via the myTax portal or it can send written application to the corporate division of IRAS. Otherwise, the amount stated in the NOA is declared as the final assessment.

Revising Estimated Chargeable Income (ECI) Amount after Filing

Sometimes it happens that, the companies want to revise their ECI. They must do so by submitting an ECI form. They need to e-file to revise the amount via mytax.iras.gov.sg, or they can write to IRAS.

How to Submit Revised ECI

The companies may change their ECI statement by:

E-Filing the updated ECI amount on the myTax portal after choosing the 'Revise/ Object to Assessment' option. You need to be an 'Approver' for 'Corporate tax matters' to be able to do so;

ECI submission (regardless of previous ECI submitted using the e-Filing or the Estimated Chargeable Income Form); or

Sending a letter to IRAS for the revised ECI amount and the reasons for the revision.

Comments

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Richard
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609 comments
18 December 2018
What fantastic information, had no idea. Thanks for sharing the article.

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