Introduction to Estimated Chargeable Income (ECI)
ECI is the estimated calculation of a company’s taxable income (after the allowable tax expenses are deducted and before deducting the exempt amount) for a Year of Assessment (YA).
Essentially, it is paying for your company’s corporate tax in advance, for the corresponding YA. For example, corporate taxes (Form C / Form C-S) are due every YA, by 30th November, or 15th December if e-filing. Your company must file and pay its ECI within 3 months from the end of its financial year end.
If you have over, or underpaid your ECI – with reference to your actual Form C / Form C-S for that YA; IRAS will either issue you a refund (if overpaid), or demand additional payment (if underpaid).
Unless you meet the waiver criteria to file ECI listed below, most companies regardless of size are required to file ECI within three months from the end of their financial year.
Waiver of ECI
- Annual revenue is not more than $5 million for the financial year; and
- ECI is NIL for the corresponding YA.
Both criteria 1. and 2. must be met in order to be granted Waiver to file ECI.
Advantages of Filing ECI On-Time
IRAS has incentivised prompt filing of ECI by allowing:
1. Payment of Taxes by Instalment
Companies that submit their ECI within the qualifying period may opt to pay corporate taxes by instalments. To encourage early filing, the earlier a company files, the greater the number of instalments they will be given.
2. Greater Number of Instalments for e-Filing
Companies that e-file early will enjoy a greater number of instalments.
Difference in amount between ECI and Chargeable Income reported in Form C/C-S
If the chargeable income reported in Form C-S/ C is less than reported in ECI:
- the excess tax paid earlier will be refunded automatically.
If the chargeable income reported in Form C-S/ C is more than reported in ECI:
- The additional tax must be paid within one month from the date of the Notice of Assessment.
- Please note that if there is a significant difference between the ECI reported earlier and the chargeable income reported in the Form C-S/ C subsequently, IRAS may require the company to provide an explanation.