Filing corporate taxes is one of the most important steps involved when reaching the end of a company’s financial year. Keeping up with all the legislative changes can be time-consuming; yet, should you fail to do so, you may end up paying expensive penalties.
Whether you are a new business owner or not, it is without a doubt that Singapore corporate taxes can be a bit tricky to navigate. With many different requirements and documentations to complete, it helps from time to time to have a quick guide to help you with filing corporate taxes right.
Different Singapore Corporate Tax Submissions
Companies in Singapore are taxed on the income earned in the preceding financial year. For instance, this means that income earned in the financial year 2019 will be taxed in 2020. In tax terms, 2020 will then be considered as the Year of Assessment (YA).
There are two main submissions for annual corporate income tax filing: Estimated Chargeable Income (ECI) and Form C/C-S/C-S (Lite).
Estimated Chargeable Income (ECI)
The Inland Revenue Authority of Singapore (IRAS) requires an estimate of a company’s taxable income for a Year of Assessment (YA).
Income accrued or received in Singapore will be considered taxable. As a rough guide, taxable income includes:
- Gains or profits from any trade or business
- Income from investments such as dividends, interest, and rental
- Royalties, premiums, and any other profits from property
- Gains that are revenue in nature
Beyond providing taxable income, the ECI report should also declare the company’s revenue (gains on disposal of fixed assets are not considered).
If your company’s audited Financial Statements aren’t available, management accounts can also be used for the purpose of declaring your company’s revenue. Don’t worry if the revenue amount based on the audited financial statements is different from that declared in the ECI; if there are no changes in your ECI, you won’t need to revise the revenue figure.
Do I need to file for ECI?
All companies must file a Singapore corporate tax return called an Estimated Corporate Income Tax returns (ECI) within three months from the end of their financial year.
Exceptions are companies whose annual revenue doesn’t exceed $5 million for the financial year and their ECI is NIL for the year of assessment.
Calculating my ECI
In order to calculate your ECI, you’ll need to make certain adjustments to your accounting profit or loss. The main examples of these are non-taxable income, disallowable expenses and capital allowances.
There are many more adjustments to consider based on Singapore’s Income Tax Act, please contact us if you’d like assistance with your ECI calculation.
When do I file my ECI?
All companies are required to file ECI within three months from the end of their financial year. Here’s a rough calendar for ECI submissions.
IRAS will drop a reminder a month before the actual deadline, but we recommend getting your books ready before because when filing your corporate taxes on time, companies get the added benefit of being able to get more instalment options, such as:
- ECI filed 1 month from financial year-end – 10 instalments for e-file, 5 for paper filers
- ECI filed 2 months from financial year-end – 8 instalments for e-file, 4 for paper filers
- ECI filed 3 months from financial year-end – 6 instalments for e-file, 3 for paper files
- ECI filed 3+ months from financial year-end – No instalments
How do I file my ECI
When your Singapore corporate tax documents are ready, you’ll need to submit them electronically. As part of Singapore’s digitalisation efforts, E-Filing was made compulsory in 2020 to move away from traditional paper based mediums.
Chargeable Income (CI)
While the ECI is an estimate of your projected income, you’ll still have to declare your company’s final taxable income, referred to as your Chargeable Income (CI). And unlike the ECI, companies have to file their Form C/C-S even if they are making losses.
The submission of your company’s chargeable income is much more complex than the ECI, requiring a detailed tax computation and information on your tax deductions and adjustments. Based on certain criteria, you will either need to submit Form C, a simplified Form C-S, or the newly introduced Form C-S Lite (for companies with revenue under $200,000).
The difference in amount between ECI and Income reported in Form C/C-S
If the chargeable income reported in Form C/C-S is less than the chargeable income estimated in ECI, the excess tax paid earlier will be refunded automatically.
If the chargeable income reported in Form C/C-S is more than the chargeable income estimated in ECI, the additional tax must be paid within one month from the date of the Notice of Assessment.
It is important to make your ECI as accurate as possible, as significant underestimations of your ECI may result in questions from IRAS.
When do I file Form C/C-S?
- Form C-S and Form C are submitted near the end of the year
- E-Filing Deadline: 30th November of every year
What happens if you fail to file Form C/C-S
We mentioned the consequences of non-compliance. If the company does not file its Form C-S/ C by the due date, IRAS may issue a Notice of Assessment (NOA) based on their estimation of the company’s income. (Which may be quite hefty.) Moreover, the tax based on this assessment has to be paid within one month from the NOA’s issuance.
Hopefully, this article has given you a better understanding of the Singapore corporate taxes. If you need more assistance, contact us and our experienced accountants will help you complete your tax filing in (almost) no time at all.