So, you have heard how the flexible Singapore taxation system is; but have you heard how difficult it is to comply with the taxation laws in Singapore. Well! Apart from so many laws to comply with, IRAS implies that it is mandatory for each Singapore Company to file their Estimated Chargeable Income (ECI) within three months starting from the end of the financial year.

What actually is ECI?

Estimated Chargeable Income is the full form of ECI and is the net chargeable income for a company in a single Year of Assessment (YA). Out of so many corporate compliance requirements, filing estimated chargeable income is one of the necessary IRAS compliance guidelines. IRAS has specifically mandated that it is necessary for every Singapore incorporated business to submit an ECI for the next YA within three months after the end of previous financial year. By any chance there happens to be any company having a net income in any YA then such companies will have to file a ‘NIL’ ECI.

Who Is Eligible to File an ECI?

All the companies incorporated in Singapore need to submit their Estimated Chargeable Income irrespective of their size, type or status.

Usually IRAS sends a notification to all the eligible companies for filing their ECI at the end, i.e. in the last month (December) of the financial year. By any reason, if any company does not receive ECI Filing notification from IRAS, it is expected that such companies proactively submit their Estimated Chargeable Income within three months after starting the new financial year.

It happens that due to different reasons chargeable income of a company is zero in a specific financial year. Still, such companies are required to file a NIL ECI except if the company has qualified for any administrative concession.

What happens if your Company has submitted more/less ECI than the Actual Chargeable Income?

Possibilities can’t be denied that some companies submit more ECI than the actual chargeable income reported in their Form C or Form C-S. In such scenario, the excess tax paid earlier by those companies will automatically be refunded back to them.

On the contrary, ECI submitted by some companies often turns out to be less than the actual chargeable income reported in their Form c or Form C-S. Such companies need to pay their additional taxes within 30 days from the notice of assessment date.

IRAS further makes it clear that if there happens to be a significant difference between submitted ECI and the chargeable income mentioned in Form C or Form C-S then, such companies will have to provide a satisfactory explanation.

Analyzing and Understanding the Estimated Chargeable income

According to IRAS, “Estimated Chargeable Income is the appraisement of a company’s chargeable income for the concerned Year of Assessment that is considered unique for every Singapore Company Setup”. A well-furbished ECI statement contains no mention of gained or disposed fixed assets, but only estimated revenue company will be generating in the current fiscal year.

Usually, Singapore companies were disclosing their taxable income or the net generated revenue for their Income Tax Returns (Form-C). Since 1 January 2009, IRAS made it mandatory for the companies to mention possible revenue amount in the ECI form as well.

IRAS thinks that submitting ECI is like predicting the annual performance of the company and this key economical data helps IRAS to plan and strategize the further development of businesses and industries in Singapore.

Administrative Concession or Waiving Requirement to File ECI

Criteria for Companies to Qualify

Upon meeting below two conditions, companies are not required to file their Estimated Chargeable Income

-> If annual revenue of your company is less than $1 million in a specific financial year

-> If your ECI is Nil

Criteria for Other Entities to Qualify

Entities that are exempt from filing ECI are as follows

-> Foreign ship owners or Charterers for whom the local shipping agent has or will be submitting

-> Foreign universities Designated Unite Trusts and Approved CPF unit Trusts

-> Real Estate Investment Trusts having earned tax treatment under Section 43(2) of the Income Tax Act

-> Other special entities granted waiver to submit ECI by IRAS like issuance of advance ruling

What Advantages Companies Get For Filing ECI

– Companies submitting their ECI earlier receive a complementary gift from IRAS wherein they are provided with an option of a flexible payment scheme to pay their taxes.

– Earlier the submissions of ECI, higher are the chances of bestowing payment installments.

– For example, the company’s e-filing their ECI until 26th in the first month of the new financial year receive almost 10 payment installments for paying their taxes. If the ECI is filed by 26 of the second month in the new financial year; then, such companies get 8 installments to pay their taxes and 6 installments for the companies filing their ECI on the 26th of the third month in the new financial year.

It is necessary that every Singapore business incorporation to file their ECI in time if they are looking forward to flourish their business without being caught in the web of non-compliance. In fact filing an ECI is like predicting how much revenue you are targeting to generate in the current financial year. The best way to submit an ECI is by referring to the audited accounts of the company and if they are not available then, the management accounts. By any chance, if you do not understand or are wary of submitting ECI Filing, please visit the best Singapore Tax Filing Firm to solve your query and file your companies ECI on your behalf.

It is necessary that every Singapore business incorporation to file their ECI in time if they are looking forward to flourish their business without being caught in the web of non-compliance. In fact filing an ECI is like predicting how much revenue you are targeting to generate in the current financial year. The best way to submit an ECI is by referring to the audited accounts of the company and if they are not available then, the management accounts. By any chance, if you do not understand or are wary of submitting http://www.sbsgroup.com.sg/singapore-estimated-chargeable-income-eci/ ECI Filing, please visit the best http://www.sbsgroup.com.sg/singapore-tax-services/ Singapore Tax Filing Firm to solve your query and file your companies ECI on your behalf.

Author Bio: It is necessary that every Singapore business incorporation to file their ECI in time if they are looking forward to flourish their business without being caught in the web of non-compliance. In fact filing an ECI is like predicting how much revenue you are targeting to generate in the current financial year. The best way to submit an ECI is by referring to the audited accounts of the company and if they are not available then, the management accounts. By any chance, if you do not understand or are wary of submitting ECI Filing, please visit the best Singapore Tax Filing Firm to solve your query and file your companies ECI on your behalf.

Category: Business
Keywords: tax services Singapore, GST filing