Corporate Compliance Requirement | IRAS Compliance
Annual Filing Requirements with the Inland Revenue Authority of Singapore (IRAS)
As part of statutory compliance, all registered companies in Singapore must submit an ECI and Form C annual tax return to IRAS.
Estimated Chargeable Income
ECI is an estimate of a company’s chargeable income for a Year of Assessment (YA). IRAS requires each company to submit an ECI for the Year of Assessment within three months after the financial year ends.
You are exempted to file ECI for a financial year ends in or before Jun 2017 if:
– Your annual revenue is not more than $1 million for the financial year; and
– Your ECI is NIL.
You are exempted to file ECI for a financial year ends in or after Jul 2017 if:
– Your annual revenue is not more than $5 million for the financial year; and
– Your ECI is NIL.
Understanding the Estimated Chargeable Income (ECI)
IRAS defines Estimated Chargeable Income as the appraisement of a company’s chargeable income for Year of Assessment [YA], which is unique of every company. Included in the ECI statement is the company’s revenues, excluding items such as gain on disposal of fixed assets. Thus, should a company be an investment holding company, its principal source of income is the investment income.
Companies have been disclosing revenue data in your Income Tax Return (Form C). From 1 Jan 2009, companies will also be required to declare the revenue amount in the ECI Form. Information on the revenue of businesses is one of the key economic data used for policy-making, as well as for regular assessment of performance and development of industries and businesses. There is also an increasing need for more frequent and timely collation of comprehensive economic data in view of the rapid economic changes in recent years. Instead of imposing additional survey reporting on businesses, it is more efficient and cost effective to collect such economic data through existing channels such as the ECI Form.
Where the audited accounts are not available, you can refer to the company’s management accounts for the purpose of declaring the revenue amount. Should the revenue amount based on audited accounts be different from that declared in the ECI Form, and there is no change in your ECI, you are not required to revise the revenue figure.
Who needs to file?
A company has to furnish Estimated Chargeable Income (ECI) within three months after the end of its financial year end, even if the company estimates its chargeable income as zero, it still has to file a “Nil” ECI return.
Advantage of Filing ECI
IRAS provides flexible payment options for companies that submit early their ECI statements. They can pay their tax in installments. The earlier the ECI statement is submitted, the higher the number of payment installments are bestowed. Companies, e-filing their ECI by 26th of the month immediately after the financial year-end, for example, can pay their taxes in 10 installments. If the ECI is filed on the 26th of the second month after the financial year-end, there are 8 payment installments awarded to that company, and 6 for companies filing their ECI on the 26th of the third month.
Failure to comply with filing of ECI
After the three-month grace period has elapsed and the company failed to comply with such requirement, IRAS shall issue a Notice of Assessment (NOA) based on its estimation of that particular company’s income. The company then has one month from the date of IRAS’ NOA to submit its written objection should it not agree with IRAS’ estimated assessment. Otherwise, the NOA is recognized as final and the same holds true despite differences on the information of revenues declared on it is Form C and the accounts submitted subsequently.
All Singapore companies must prepare their accounts and reports, which must consist of the Profit and Loss Account, Balance Sheet, Cash Flow Statement, and Equity Statement in accordance with the Singapore financial reporting standard (SFRS). The accounting records must be kept for five years.
Tax Return Filing
The filing deadline for corporate income tax return is 30 November. Documents to be submitted are the Audited or Unaudited Report and Tax Computation (Form C).
Simplified Tax Filing with Form C-S
From Year of Assessment (YA) 2012, to simplify the filing procedure for small companies, IRAS introduced Form C-S – an Income Tax Return form shortened to three pages for qualifying small companies to report their income to IRAS.
From YA 2017, companies will qualify to file Form C-S if they meet all of the following conditions:
1. The company must be incorporated in Singapore;
2. The company must have an annual revenue of $5 million or below
3. The company only derives income taxable at the prevailing corporate tax rate of 17%; and
4. The company is not claiming any of the following in the YA:
- Carry-back of Current Year Capital Allowances/ Losses
- Group Relief
- Investment Allowance
- Foreign Tax Credit and Tax Deducted at Source
Submission of Financial Reports – Audited and Unaudited
Every company is required to submit a Financial Report. The report consists of financial statements such as Balance Sheets and Income Statements; supporting notes and disclosure of significant accounting policies applied by the company; disclosure of company’s operations; and shareholders and directors’ interests.
A company is not required to prepare an Audited Report if:
For a company with its financial year beginning prior to 1 July 2015:
- The company does not have any corporate shareholders;
- The total number of individual shareholders must be less than 20; and
- Annual turnover of the company must be less than S$5 million.
For a company with its financial year beginning on or after 1 July 2015, the Company must qualify as a small company for the immediate past two consecutive financial years.
A company qualifies as a small company if (a) it is a private company in the financial year in question; and (b) it meets at least 2 of 3 following criteria for immediate past two consecutive financial years:
(i) total annual revenue is not more than $10m;
(ii) total assets is not more than $10m;
(iii) no. of employees is not more than 50.
For a company which is part of a group, to qualify to the audit exemption:
(a) the company must qualify as a small company; and
(b) the entire group must be a “small group”
For a group to be a small group, it must meet at least 2 of the 3 quantitative criteria on a consolidated basis for the immediate past two consecutive financial years
A company must audit its accounts, if the company did not qualify as a small company and if it is part of a group, the entire group does not qualify as a small group.
Failure for Noncompliance
Failure to comply with any of the above requirements will incur penalties and/or court prosecution.
Introducing mandatory electronic-filing (“e-Filing”) for CIT returns (including Estimated Chargeable Income, Form C and Form C-S)
In line with Government’s direction for more effective delivery of public services and to be aligned with the Smart Nation vision to harness technology to enhance productivity, mandatory e-Filing of CIT returns will be implemented in stages as follows:
YA 2018 – Companies with turnover of more than $10mil in YA 2017
YA 2019 – Companies with turnover of more than $1mil in YA 2018
YA 2020 – All companies