Estimated Chargeable Income (ECI)
Estimated Chargeable Income (ECI) is an estimate of the company’s taxable income for a Year of Assessment (YA). It is calculated after deducting the tax-allowable expenses but before applying for any tax rebates or exemptions. Every company is required to submit an ECI to IRAS within three months from the end of their financial year.
What details are required while filing an ECI?
With effect from Jan 2017, it is also mandatory to declare the company’s revenue while filing the ECI. Revenue refers to a company’s main source of income and excludes items such as interest, dividend, and rental. You would need to include the audited financial statements to declare the revenue amount. In case it is not available, the company can declare the revenue based on the company’s management accounts. Once the actual revenue amount is reported based on the audited financial statements and it differs from what was declared in the ECI form, it need not be revised if there is no change in the ECI.
Who should submit an ECI?
Every company in Singapore needs to submit an ECI except if they qualify for the administrative concession or those that are specifically not required to file. Following companies need not file an ECI:
- Companies with annual returns less than $5 million for the financial year and whose ECI is nil for the YA, don’t need to file the ECI for that particular YA.
- Companies specifically not required to file the ECI:
- Foreign universities
- Foreign ship owners or charterers for whom the Shipping Return has been or will be submitted by the local shipping agent
- Designated unit trusts and approved CPF unit trusts
- Real estate investment trusts that have been granted the tax treatment under Section 43(2) of the Income Tax Act
- Any other specific case granted a waiver to furnish ECI by IRAS.
How are the discrepancies in the ECI and the actual chargeable income in the tax return adjusted?
After the company files the ECI, they need to submit Form C-S/ C. If there is any difference, the excess tax paid is refunded while the underestimated tax needs to be paid in full within 1 month from the date of the Notice of Assessment. If there is a significant deviation, the company may have to provide an explanation to IRAS before any adjustments can be made.