ECI is an estimate of the company's taxable income (after deducting tax-allowable expenses) for a Year of Assessment (YA).
Every company is required to file an ECI to the IRAS within three months from its financial year end.
Filing of ECI is not required only if the Company fulfilled both conditions for a waiver to submit ECI:
- Annual revenue of the Company is not more than S$5 million for the financial year; AND
- ECI is NIL for the YA. The ECI should be the amount before deducting the exempt amount under the partial tax exemption scheme or the tax exemption scheme for new start-up companies.
Upon furnishing the ECI and declaration of revenue to IRAS, an estimated tax will be raised. The Company can apply to pay the estimated tax by instalments provided the ECI is filed on time by the 26th of each qualifying month to enjoy the maximum number of instalments allowable for that month.
Regarding the instalment payment of tax based on the ECI submitted, only Singapore-registered companies that are on GIRO are allowed to pay their taxes in instalments. Companies that do not have an existing GIRO arrangement for Corporate Tax are encouraged to apply for GIRO at least 3 weeks before filing their ECI. If the GIRO arrangement is not approved before the payment due date, the company will not be eligible for instalment payment and will need to pay the full amount of estimated tax by the payment due date. The number of instalments allowed are as follows:
Tax payable on first ECI filed within:
- 1 month from financial year-end - 10 instalments allowed
- 2 months from financial year-end - 8 instalments allowed
- 3 months from financial year-end - 6 instalments allowed
- After 3 months from financial year-end - No instalments allowed
- The instalment plan is subject to a minimum monthly GIRO deduction amount of S$50.
- The first few instalments may be combined and deducted on the first GIRO deduction date, depending on the date of filing of ECI.
- IRAS may vary the instalment plan for companies that file revised ECIs.
Kindly also note that if the ECI is not submitted to the Comptroller of Income Tax (CIT) by due date, IRAS may raise an estimated Notice of Assessment (“NOA”) based on their judgement which may be excessive. Upon receipt of this assessment, objection has to be lodged within 30 days from the date of the assessment or the assessment may be regarded as final. You are required to pay the estimated tax payable within one month from the date of NOA unless instalment is arranged. Otherwise, late payment penalties (up to 17% of the outstanding tax) will be imposed.
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