What is Estimated Chargeable Income (ECI)?
ECI, as the name suggests, is the estimated income for the financial year ended. As a business owner, you need to file ECI with IRAS because they want to raise an early assessment. Since it is only estimated, you do not need to be 100% accurate. If your actual chargeable income is different, IRAS will raise an amended assessment.
The Importance of Filing ECI
Filing ECI is important if you are in a tax payable position. IRAS granted businesses which file ECI early instalments in their tax payments. Instead of paying a lump sum of taxes, you will be paying your taxes over a few months. This will help in your business cash flows. But do note that if you meet the following conditions, you do not have to file ECI:
1. Your ECI is nil.
2. Your revenue is less than $5 million.