What Is Estimated Chargeable Income (ECI)?

What is Estimated Chargeable Income (ECI)?

Estimated chargeable income (ECI) is an estimate of the company’s taxable income after deducting eligible expenses.

Starting from YA 2020, all companies are required to e-file their estimated chargeable income (ECI). They can do this within 3 months from the end of the financial year of the company. This is in addition to the yearly corporate tax filing that the company needs to do by the 15th December of every year.

Who Needs To File ECI?

Your company may excuse itself from filing ECI for the immediately ended YA if:

• Annual revenue is not more than S$5 million for the financial year and;
• ECI is nil for the YA

If your company for the particular financial year meets both of the conditions above, then your company may exempt itself from filing ECI. However, do note that the year-end corporate tax filing is still compulsory.

The following foreign entities can excused themselves from filing ECI:

1. Foreign ship owners or charterers for whom the Shipping Return (PDF, 145KB) has been or will be submitted by the local shipping agent;
2. Foreign universities;
3. Designated unit trusts and approved CPF unit trusts^#
4. Real estate investment trusts that have been granted the tax treatment under Section 43(2) of the Income Tax Act; and
5. Any other specific case granted a waiver to furnish ECI by IRAS, e.g. via an advance ruling issued.

Benefits Of Filing ECI Early

Companies that file their estimated chargeable income (ECI) within the stipulated 3 months get to enjoy the privilege of paying their corporate tax via instalments. The privileges depend on the point of filing your ECI:

• 1 month from financial year-end – 10 months instalments
• 2 months from financial year-end – 8 months instalments
• 3 months from financial year-end – 6 months instalments
• 3 months after financial year-end – No instalments allowed

What Happens If The ECI Amount Is Different From Form C/C-S?

For any difference between the amount declared in ECI versus that of Form C/C-S, the excess (if any) will be refunded automatically. If there is a shortfall, the company will have to top up the difference within 1 month from the date of Notice of Assessment.

How To Compute and File ECI?

Prior to filing ECI, the company must have their financial statements (profit and loss statement) ready. The company can then either appoint someone internally to prepare and file the tax on behalf or hire a professional accountant to assist.

Need assistance to file estimated chargeable income for your company? Get in touch with us today!

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