Estimated Chargeable Income (ECI)
Tax services
ECI must be filed within 3 months of your company’s financial year-end. This is done by completing and submitting the ECI Form. It is important to note that you must file an ECI regardless of income. If your company did not make any income in a certain financial year, you must file a ‘nil’ ECI.
When to file your ECI?
Your company’s financial year has ended.
Your first tax obligation is to file your Estimated Chargeable Income (ECI).
According to the IRAS, “ECI is an estimate of the company’s taxable income (after deducting tax-allowable expenses) for a Year of Assessment (YA).” Since it is only estimated, you do not need to be 100% accurate. If your actual chargeable income is different, IRAS will raise an amended assessment.
Steps to calculating and filing ECI
To calculate your ECI, you need to have your year-end accounts in place. These items need not be final. In particular, you should have the following documents:
- Statement of Profit and Loss;
- Fixed Assets Addition and Disposal; and
- Previous Year Tax Computation and Notice of Assessment
Generally, the following are the 8 sequential steps for calculating ECI for your company:
1. Calculating your net profit before tax
2. Adding Back Non-Tax Deductible Items
3. Deduct Nontaxable Income
4. Deduct Further and Enhanced Deductions
5. Calculate and Deduct Your Capital Allowances
6. Add Past Year Capital Allowances (Optional)
7. Add Back or Deduct Balancing Allowances and Balancing Charges
8. Deduct any unutilized capital allowances, unutilized losses, unutilized donations and donations.
Benefits of early filing of your ECI
If your company files its ECI early enough, the IRAS usually offers flexible ways of paying tax in instalments. The bottom line is that the earlier you submit the ECI statement for your company, the higher the number of payment instalments you will receive.
For instance, if you file the ECI of your company:
- 1 month after the end of the financial year, the IRAS allows you to pay taxes in 10 instalments for e-filers or 5 instalments for paper-filers;
- 2 months after the end of the financial year, the IRAS allows you to pay taxes in 8 instalments for e-filers or 4 instalments for paper-filers;
- 3 months after the end of the financial year, the IRAS allows you to pay taxes in 6 instalments for e-filers or 3 instalments for paper-filers.
The below table summarizes the above information.
| No. of Instalments Given (See Note 1-3) | |
Tax Payable on First ECI Filled Within | e-filers | Paper-fillers |
1 month after the end of the financial year | 10 | 5 |
2 months after the end of the financial year | 8 | 4 |
3 months after the end of the financial year | 6 | 3 |
After 3 months | Pay in Full | |
Notes:
- The instalment plan is subject to a minimum monthly General Interbank Recurring Order (GIRO) of S$50
- The first few instalments can be combined and the first GIRO deducted as per dates of the ECI filing.
- IRAS reserves the right to vary instalment plans or companies with revised ECIs.
Filing your ECI form
In Singapore, companies begin the process of paying corporate taxes by filing the ECI form with IRAS within 3 months from the end of their financial year. For example, if your financial year end is September 2019, you will have to file your ECI by December 2019.
You can file your ECI form through myTax Portal at https://mytax.iras.gov.sg. ECI is a company’s taxable income after deducting tax-allowable expenses. All companies MUST file an ECI with effect from YA2020 even if your company is dormant. YA2020 means your financial year ends in 2019.
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