Singapore’s business-friendly approach underscores accurate financial reporting and tax duties. A key focus for all Singapore businesses, irrespective of size, is filing Estimated Chargeable Income (ECI). In this guide, we explore the importance of Singapore ECI filing, filing requirements, timing, procedures, benefits for small enterprises, exemptions, and how SJH Advisory’s tax services can support your compliance.
What is Singapore ECI filing (Estimated Chargeable Income)?
ECI stands for Estimated Chargeable Income, representing an estimate of a company’s taxable profits after deducting permissible expenses for a given Year of Assessment (YA). This computation forms the foundation for calculating a company’s tax obligations to the Inland Revenue Authority of Singapore (IRAS). Beyond compliance, Singapore ECI filing enables the government to precisely assess and collect corporate taxes, contributing to a transparent and organized taxation framework.
Who needs to file ECI?
The scope of Singapore ECI filing is comprehensive, encompassing all companies irrespective of their size or nature of business. Specifically, companies with an annual revenue exceeding S$5 million ; and there is estimated chargeable income must file ECI. This directive underscores the notion that even small businesses must adhere to this filing requirement. Therefore, whether your business is a start-up or an established entity, Singapore ECI filing remains a vital obligation to meet.
When do I need to file ECI?
Normally, IRAS alerts companies to file ECI in the final month of their financial year. Yet, if you don’t get the notification and aren’t exempt, your company must complete the Singapore ECI filing within three months from the financial year’s end. Exceptions include ECI filing waivers for eligible firms or particular non-filing entities.
How to file ECI?
Singapore ECI filing involves a systematic process broken down into two primary steps.
Step 1 - Authorization and Information Gathering
In Corppass, under Corporate Tax (Filing and Applications), ensure you’re authorized as an ‘Approver.’ Collect your Singpass credentials and the company’s UEN (Unique Entity Number)/Entity ID for access.
Step 2 - Singapore ECI Filing Process
Subsequently, you can file ECI through mytax.iras.gov.sg. Detailed guides are available for companies and tax agents to provide step-by-step assistance during filing.
Benefits of Singapore ECI Filing for Small Businesses
One advantage of Singapore ECI filing is its flexibility in tax payment. Companies that file ECI by the 26th of each month enjoy more installments for their estimated tax payments.
This structure incentivizes early filing, contributing to smoother financial planning for businesses. The number of installments varies depending on the timing of your Singapore ECI filing, with options ranging from 10 to 0 installments based on the months after the financial year-end.
- ECI filed within 1 month from financial year-end: 10 installments
- ECI filed within 2 months from financial year-end: 8 installments
- ECI filed within 3 months from financial year-end: 6 installments
- ECI filed after 3 months from financial year-end: 0 installments
Calculating and filing ECI
Calculating ECI involves adding up the revenue earned during the financial year and deducting allowable expenses. This figure represents the chargeable income based on the applicable taxes
How to calculate ECI
Calculating Estimated Chargeable Income (ECI) is crucial for meeting your taxation obligations in Singapore. Here’s how to do it accurately:
- Exclude Tax Exemptions – When calculating your ECI, remember not to include any tax exemptions meant for new start-up companies or partial tax exemptions. IRAS will automatically compute and apply these exemptions.
- Indicate Eligibility – Indicate if the company is qualified for the tax exemption scheme for new start-up companies when using the File ECI digital service.
- Property Developers: If you’re in the property development industry, follow the Completed Contracts Method. This approach involves recognizing revenue and costs based on contract completion. It’s a specialized method tailored to the unique nature of property development.
Exemptions from Singapore ECI filing
Certain situations allow businesses to skip filing Estimated Chargeable Income (ECI), making reporting easier. Here are the key exemptions to know:
ECI Filing Waiver
When both criteria are met:
- Your annual revenue must be $5 million or lower for the financial year; and
- Your ECI for the Year of Assessment (YA) should be nil before deducting exemptions.
Specific Exempt Categories
- Foreign Ship Owners or Charterers – No ECI filing if your shipping agent submits the Shipping Return.
- Designated Unit Trusts and Approved CPF Unit Trusts
- Foreign Universities
- Real Estate Investment Trusts (REITs) – REITs under specific tax treatment are exempt.
- Cases Granted Waiver by IRAS – Unique cases may receive waivers from IRAS.
How We Can Help: Our Taxation Service
Navigating the intricacies of Singapore ECI filing and taxation demands a comprehensive understanding of the country’s regulatory framework. At SJH Advisory, we bring a team of seasoned and accredited business consultants who specialize in providing expert guidance on taxation matters.
Our tailored solutions are designed to streamline the ECI filing process for your business, ensuring accurate compliance while allowing you to focus on your core operations. Whether you’re a start-up, a growing enterprise, or an established company, our consultants possess the expertise to assist you at every step of the ECI filing journey.
Partner with SJH Advisory to optimize your ECI filing experience and ensure your business fully complies with Singapore’s taxation regulations. Contact us today for a FREE consultation and discover how our taxation service can contribute to the growth and success of your business.
Singapore ECI Filing - Frequently Asked Questions
If the ECI is not submitted within the stipulated three months from your company’s financial year-end, a Notice of Assessment might be generated based on an approximation of your company’s income.
Yes, IRAS notifies companies of the requirement to file ECI before the conclusion of their fiscal year. Your business can forego submitting if it decides it is eligible for the Singapore ECI filing waiver.
For changes in financial year end that span two YAs (e.g., from 31 Dec 2021 to 31 Mar 2022), separate tax computations are required for each YA. Your company must file the ECI for each applicable YA, considering the corresponding basis periods.
As long as a Notice of Assessment for the pertinent YA has not been released, you may still submit the ECI. It’s important to remember that companies filing after the first three months won’t be eligible for installment payments for anticipated taxes.