Everything you need to know about Estimated Chargeable Income ECI

What is ECI?

Estimated Chargeable Income (ECI) is your company's estimated taxable profit (net of taxable expenses) for the valuation year. To keep you and your company compliant with the Inland Revenue Authority of Singapore (IRAS), each company is required to submit an ECI for the assessment year.

Understanding ECI

IRAS defines ECI as an assessment of the company's chargeable revenue for the valuation year, which is unique to each company. Included in the ECI statement are company revenues, excluding items such as gains on disposal of property, plant and equipment. Thus, if a company becomes an investment holding company, its main source of income is investment income.

The revenue figures have been revealed by the corporation in your tax return (Form C). Companies will also be required to indicate the amount of income on the ECI Form beginning 1 January 2009. Business revenue data is one of the most important economic data sources for policymakers, as well as for regular reviews of industry and business performance and development. Given the recent fast economic developments, there is also a rising demand for more regular and timely collecting of comprehensive economic data. Rather than imposing new survey reporting requirements on firms, it is more efficient and cost effective to gather such economic data through current channels such as ECI Forms.

If you don't have access to the audited account, you can estimate revenue using the company's management account. If the amount of income based on the audited account differs from the amount indicated on the ECI Form and your ECI does not change, you do not need to adjust the income figure.

Who needs to be enrolled in ECI and why is ECI compulsory for Singapore companies?

All companies in Singapore must submit their ECI to IRAS within 90 days of the end of their financial year. As of 2013, companies with a financial year ending October 2012 or later will not be required to apply for an ECI for a given financial year if they meet the following conditions under the administrative concession scheme:

• Companies with annual revenues of less than SG$1 million for the financial year; and

• ECI* is NIL.

*ECI refers to the amount before deducting the amount exempt under partial tax exemption schemes or tax exemption schemes for new companies.

Which companies do not need to apply?

You must apply for an ECI even if your firm has a "NIL" ECI for the relevant valuation year – that is, you are not earning a profit or your company is dormant. Unless your business is:

• owner or charterer of the foreign vessel, for which the Shipping Return has been submitted by the shipping agent;

• foreign university designated unit trust, or approved CPF unit trust;

• Real Estate Investment Trusts (REITs) providing special tax treatment under section 43(2) of the Income Tax Act; or

• Specifically granted waivers from granting ECIs by IRAS – such as through advance decisions.

On the IRAS website, you may learn more about these restrictions and exclusions.

You can utilise IRAS' New Enterprise Startup Kit to determine whether you should apply.

The IRAS requires ECIs to be reported in order to enhance their initial evaluation of firm performance, and the Government of Singapore utilises this information to track the health of enterprises on a macro level. Essentially, it aids in tracking the financial success of Singapore and its enterprises, as well as ensuring that your organisation is properly taxed.

ECI must be filed annually for every company, unless you are exempted from a waiver, which we will discuss further below.

Failing to file an ECI when you are required by law will result in the IRAS releasing a Notice of Assessment, or NOA, based on their own estimate of your company's earnings. Failure to reject this assessment will result in the NOA being recognised as final.