Confused about the mandatory Estimated Chargeable Income (ECI) filling requirement? Read on to learn the Who What Where When Why (and How) of ECI brought to you by LOL.
WHAT is ECI?
ECI stands for Estimated Chargeable Income and is an estimate of a company’s chargeable/taxable income for a Year of Assessment (YA) after deducting tax-allowable expenses but before applying any applicable tax exemptions (e.g. start up tax exemption or partial tax exemption) or any tax rebates. Along with the chargeable income a company also has to declare it’s revenue in the ECI form. Revenue refers to a company’s main source of income and excludes items like gain on disposal of fixed assets. Where audited financial statements are not available, a company may obtain the revenue amount from management accounts.
WHEN does ECI have to be filed?
Companies have to submit their ECI within three months after the end of the financial year. If the company has no profit in the year a NIL ECI still has to be submitted.
WHO has to file ECI?
All companies including new companies are required to file ECI except those that qualify for a waiver to file ECI. Criteria to qualify for a waiver if the ECI is NIL AND annual revenue is not more than S$ 5 million. (For financial years ending in or before Jun 2017 the criteria is if the ECI is NIL AND annual revenue is not more than S$ 1 million.)
WHY should we file ECI?
The advantage of filling ECI within the timeline is the option to pay corporate taxes by instalments. In fact, the earlier you file ECI, the higher the number of instalments that are offered.
WHERE to do ECI filling?
You can file your ECI electronically on the IRAS mytax portal or by using a paper form. For YA 2019, e-filling is mandatory for all companies that had revenue greater than S$ 1 million in YA 2018. With effect from YA 2020, e-filling will be mandatory for all companies. For e-filling you will need a CorpPass set up with the required authorisations.
HOW to do ECI the filling?
Still not sure on the how? Let us file your ECI for you. Check out our simple all-in-one compliance plan which includes ECI filling also.
(Bonus Question) WHAT IF there is a difference in ECI?
If the ECI is more than the chargeable income in the actual tax return, the excess tax paid earlier will be refunded automatically. If the ECI is less, the additional tax must be paid within one month from date of Notice of Assessment. Note that if there is a significant difference between the two, IRAS may require an explanation from the company.