To reduce the compliance cost of businesses, IRAS has revised the criteria for ECI waiver as follows:
* 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.
Companies must meet both criteria 1 and 2 to qualify for the waiver to file ECI.
UpdatedExamples of how the ECI waiver criteria is applied
Companies are required to self-assess if they meet the criteria for the waiver to file ECI. New companies that have yet to file their first Corporate Tax Return (Form C-S/ C) can use The New Company Start-Up Kit to better understand their corporate tax obligations, including if they meet the criteria for the waiver to file ECI.
Companies that meet the criteria do not need to file their ECI for that particular YA, even though the company’s ECI filing status for the YA at myTax Portal shows “Ready to File”. There is no need to seek confirmation from or inform IRAS.
If they do not meet any of the criteria 1 and 2, they will need to file their ECI for that particular YA.
For details, please refer to the FAQs section below on the Waiver to File ECI.
The following entities do not need to file ECI
#As approved under Section 35(14) of the Income Tax Act and for the purposes of any investment scheme under the Central Provident Fund Act respectively. For these unit trusts, the income listed under Sections 35(12) and 35(12A) of the Income Tax Act is not taxed at the trustee level. Other income not covered by these Sections is likely to be negligible and hence there is no need for these unit trusts to furnish ECI.
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Revenue refers to a company's main source of income and excludes separate source income such as interest, dividend and rental, which do not arise from its principal activity.
In the case of an investment holding company, the revenue would be its investment income (e.g. dividend income and interest income).
You do not need to file an ECI for your company if it is nil and if your company meets the following annual revenue threshold for the Waiver to File ECI:
If your company's ECI is more than zero, it will be required to file its ECI regardless of annual revenue.
$90,000
$0
No, the company's ECI before the tax exemption under the tax exemption scheme for new start-up companies must be zero in order for the Nil ECI condition to be met. As the company's ECI before exempt amount is not zero, the company has not met the "ECI nil" condition and is thus required to file its ECI even though it is in a non-tax position.
Please note that IRAS may raise estimated assessments on companies which we think may not have met the ECI Waiver conditions. IRAS will rely on information available to us (e.g. past years' tax filings, GST returns, rental records) to identify such companies. Such situations are rare.
In the rare instance where your company met the ECI Waiver conditions but was issued with an estimated assessment by IRAS, please write in to inform IRAS at myTax Mail before the payment due date of the estimated tax to confirm that your company's annual revenue is not more than $5 million (for financial year ending in or after Jul 2017) or $1 million (for financial year ending in or before Jun 2017), and the ECI is nil for the said Year of Assessment. IRAS will amend the assessment accordingly so that enforcement action will not be taken for non-payment of the estimated taxes.