ECI
Estimated Chargeable Income (ECI) — the income of a company after deducting tax-allowable expenses. ECI is a necessary piece of data a company submits to IRAS within 3 months from the end of their financial year. It is then compared to the chargeable income stated in Form C-S/ C and either the excess tax is refunded, or you must pay the remaining tax within 1 month. It is your Singapore accounting and bookkeeping services provider who is in charge of ECI.
How to calculate ECI: Step 1 | Net profit before tax example
| Line | S$ |
|---|---|
| Sales | S$ 100,000 |
| Less: Cost of goods sold | S$(40,000) |
| Rental Income | S$ 2,000 |
| Gross Profit | S$ 60,000 |
| Advertisement | S$(10,000) |
| Depreciation | S$(500) |
| Directors’ fees | S$(12,000) |
| Printing and Stationery | S$(100) |
| Property Tax (rental property) | S$(400) |
| Salaries | S$(26,000) |
| Secretarial Fees | S$(300) |
| Water & Electricity | S$(1,000) |
| Net Profit before Tax | S$ 11,700 |
How to calculate ECI: Step 2 | ECI example
Let's assume your company bought S$500 worth of desks for the office and a S$1,500 laptop.
| Line | S$ |
|---|---|
| Net Profit before Tax | S$ 11,700 |
| Rental Income | S$ 2,000 |
| Depreciation | S$ 500 |
| Property Tax (rental property) | S$ 400 |
| Adjusted profit before Capital Allowances | S$ 10,600 |
| 100% Write-Off for Low-Value Asset - desks | S$ 500 |
| 100% Write-Off in One Year for Laptop | S$(1,500) |
| Adjusted profit after Capital Allowances | S$ 8,600 |
| Rental income (net of Property Tax for rental income) | S$ 1,600 |
| Estimated Chargeable Income (before exempt amount) | S$ 10,200 |
Why do I need to file ECI?
ECI filing is mandatory. The process helps the IRAS conduct an early evaluation of corporate performance. Moreover, this information is of use to the Singaporean government as they can keep an eye on business health and make sure the company is being taxed fairly.
How to file my ECI
Our advice is to start the process of ECI filing as early as possible.
First, you go to my Tax Portal
Next, you need:
- Your company’s authorisation and approval
- Your company’s Tax Reference Number
- Your CorpPass ID and password
Tip
It is possible to file for your ECI offline in a form of a hardcopy. However, IRAS tries to encourage e-filing and allows more installments to early e-filers, not to mention the fact that it’s a faster procedure.
What if I don't file ECI
Failure to comply with filing of ECI when you are required to by law will result in the IRAS releasing a Notice of Assessment, or NOA. It will be based on their own estimation of your business's income. If you fail to object to this assessment, the NOA will be recognised as final.
