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This guide provides an overview of the key concepts of Singapore’s Goods & Services Tax (GST) system as it relates to Singapore companies – definition of GST, registration requirements, advantages and disadvantages of GST registration, filing GST returns, and schemes to aid businesses.
Also known as Value Added Tax (VAT) in many other countries, Goods and Services Tax (GST) is a consumption tax that is levied on the supply of goods and services in Singapore and the import of goods into Singapore. GST is an indirect tax, expressed as a percentage (currently 7%) applied to the selling price of goods and services provided by GST registered business entities in Singapore.
GST tax is charged to the end consumer therefore GST normally does not become a cost to the company. Businesses merely act as collecting agents on behalf of Singapore tax department.
Registering for GST is compulsory when
When your revenue exceed S$1 million, you will need to submit the GST application to IRAS within 30 days. Failure to register your business with IRAS within the stipulated time frame will result in penalties. There are anti-avoidance provisions to ensure that entities are not established merely to keep turnovers less than the threshold and thereby avoid registration.
You may also voluntarily register for GST if you are not liable to compulsorily register, depending on your business operations. The business must have plans to do sales or have started doing sales in Singapore (taxable supplies). Please note that there are additional conditions if you choose to register for GST on a voluntary basis
Once you are registered voluntarily, you must remain registered for at least two years and comply with the GST regulations, filing the GST return on time on a quarterly basis and maintain all your records for at least five years, even after your business has ceased and you have deregistered from GST. You may also have to comply with any additional conditions that are imposed by the tax authority.
If you make only zero-rated supplies you can apply for an exemption from registration, even if your taxable turnover exceeds the registration limits. This allows you to escape from the administrative requirement of GST registration and subsequent quarterly GST filing. IRAS will approve the exemption, if more than 90% of your total taxable supplies are zero-rated and if your input tax is greater than your output tax.
You can cancel your registration when your business stops or when your business is sold as a whole to another person or when your sales figures do not exceed 1 million SGD. You must submit an application form, along with other relevant documents to the tax authority within 30 days from the date of cessation.
No. Your company is required to register for GST and collect GST only if its annual turnover exceeds S$1 million or if you have applied to become a GST registered company with IRAS.
Yes. The GST charged by a company to its customers is known as output tax whereas GST paid by the company to its suppliers is called input tax. What you pay to (or claim back from) the tax authorities is difference between your output and input tax.
No. Non–GST registered businesses are not allowed to charge GST. It is an offence to charge and collect GST if you are not a GST registered businesses.
No. Export goods and services are called zero rated supplies and GST tax is not applicable.
It depends. If you are required to register for GST, you have no choice. Otherwise however, you should consider the following pros and cons of GST registration:
To the government:
To businesses and individuals:
GST is charged on taxable supplies. A taxable supply, is a supply of goods or services made in Singapore, other than an exempt supply. A taxable supply can either be a standard rated (currently 7%) or zero-rated supply.
Most local sales of goods and provision of local services in Singapore are standard-rated supplies.
Zero-rated supplies of goods and services are subject to 0% GST. Exports of goods and provision of international services are mainly zero-rated supplies. A GST registered entity who makes zero-rated supplies is able to claim the input tax paid on purchases.
GST is not chargeable on exempt supplies, of which there are two categories – sale and lease of residential land; and financial services. Input tax incurred in making exempt supplies is not claimable.
Out of scope supplies refers to supplies which are outside the scope of the GST Act. In general, they are:
A Singapore Goods and Services registration form (GST F1) along with the necessary supporting documents must be sent to the tax authority. An additional form (GST F3), giving details of all the partners must be completed, in the case of partnerships. Separate application procedures/forms are available for overseas companies, group registration and divisional registration. Overseas registrants are expected to appoint a local agent who will act on its behalf and must include a letter, along with the application form, stating the same.
The registration process takes approximately 3 weeks. Upon successful GST registration, you will receive a Notification of GST Registration letter. This letter will contain your GST number, the effective date when your business become GST registered business, your filing frequency and filing due dates as well as any other special instructions. You must file your GST returns electronically.
As a GST registered entity, you are required to submit a return, (GST F5) to the tax authorities based on your accounting cycle, normally on a quarterly basis. In your return, you will indicate the total value of your local sales, exports and purchases from GST registered entities, the GST collected and GST claimed for that accounting period. GST Returns are now filed electronically. Once you have started to e-file your GST F5, your next GST return will be made available online by the end of each accounting period. You can e-file your GST F5 one day after the end of the accounting period. You must ensure that IRAS receives your return not later than one month after the end of your prescribed accounting period. If there is no tax due for the said period, you must still submit a ‘nil’ return. Penalties will be imposed if you file the GST return late. This is regardless of whether the net GST declared is a payable or refundable amount.
You must pay the net GST within 1 month after the end of your prescribed accounting period. Penalties will be imposed if you are late in making the GST payment. GST refunds will usually be made within 30 days from the date of receipt of the return.
The Singapore Government has introduced several assistance schemes relating to GST. These schemes generally help to ease the cash flow for businesses and help create a pro-business environment.
Singapore tax department has prepared the GST guides for each industry which provide you with specific information on how GST affects your sector.
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