Should I Register My Company for GST?Download Now: FREE GST 2023 GuidebookDownload Now: FREE Employment Pass ChecklistDownload Now: Free Incorporation Checklist
A common concern for businesses in Singapore is that once they reach over 1 million Singapore dollars in revenue, they will have to register for GST. This pops up hundreds of questions in the entrepreneur's mind: How do I register? But what exactly is GST? And why would you need to register for it? Don't worry — we have answers!
What is GST?
Let’s address the elephant in the room: what is the meaning of GST?
GST (Goods and Services Tax) is a tax charged on the import of goods in Singapore, covering all taxable supplies — from computer software to raw materials. Introduced in 1994, it allows companies to cheapen their purchases while retaining more profit from their sales. This process is to be handled by the IRAS — the Inland Revenue Authority of Singapore. You will need to register for GST if your business makes over 1 million Singapore dollars from selling taxable goods and services. However, if your enterprise is smaller, you can also sign up voluntarily.
Why Should I Register My Business for GST?
Why would anyone sign up for it voluntarily? The key comes from three reasons, which could greatly benefit your business if you can take advantage of them.
- If a supplier is GST-registered, IRAS allows you to recover the extra cost you paid due to that tax. For example, if you paid S$8 of GST on a S$100 purchase, you’ll be able to recoup those exact S$8 back. However, to claim this benefit, you have to be GST-registered.
- A similar thing happens with clients — the GST-registered ones will be able to withstand higher prices due to them recovering part of the money. So you are not only able to recover money from purchases but also make more money selling.
- Finally, GST is also great for upping your business credibility. People unaware of the actual numbers behind the counter may believe that your enterprise registered due to making over a million dollars in revenue. Naturally, this gives confidence to suppliers and may help you land future customers.
Can I Voluntarily Register for GST?
GST registration will not be mandatory if your business does not make over 1 million dollars from taxable goods and services at the end of the year. However, you can still sign up for it voluntarily if you meet specific requirements that the Singapore government stated.
Your business qualifies for GST if you:
- Sell taxable goods or services
- Make only out-of-scope supplies
- Provide exempt supplies of international services
- Procure international services or import low-value goods
To qualify for GST voluntarily, you’ll be required to take and pass an online course called the “Overview of GST”. This course will give the user an overview of GST and explain the duties you must fulfill after your business is GST registered. You will not be required to take this course if:
- You had prior experience in managing a GST-registered business.
- You or your employee who is preparing the GST returns is an Accredited Tax Advisor (ATA) or Accredited Tax Practitioners (ATP)
- There are plans to register your business under the Overseas Vendor Simplified Pay-only Registered Regime.
For voluntary GST registrations, you have to apply for GIRO for payment for your GST payment and refunds. Also, provide the security deposit if the Comptroller requires it.
How do I Register for GST?
The GST registration process depends on your business's registration type and constitution. It can be either compulsory or voluntary, so you must ensure you know the kind of GST registration you are applying for and are qualified for it. After all the prerequisites are met, you can submit your GST registration to IRAS according to the following procedures:
- Step 1: Determine the type of GST registration
- Step 2: Complete the e-Learning course
- Step 3: Submit your application for GST registration
- Step 4: Processing of GST registration application
- Step 5: Receive notification of the effective date of registration
It is more straightforward process for compulsory GST registration as they are only required to attach a GST document checklist at the end of the process. However, do note that to access any digital GST services, you must be already authorised in Corppass.
What Happens After a Successful GST Application?
After a successful GST registration, you will receive a letter confirming your registration is approved. In the letter, IRAS will provide a GST registration number and the effective date of GST registration. The latter notifies you when you can start billing and collecting GST on taxable goods and services, while the initial should be printed on your company invoices, credit notes, and receipts.
Your company will continue being GST registered for at least two years. You must comply with the following conditions; failure to comply may cancel your GST registration.
- User GIRO for GST payments and refunds
- If the company did not have taxable supplies when they applied for GST, they have to do so within the next two years
- Ensure responsibilities of being GST registered is met
- Meet IRAS compliance and any new updated conditions stated by IRAS
Sprout With Us
After applying GST successfully, we will advise you to bookkeep tightly, allowing you to avoid penalties and disqualifies. What better way to do so than to outsource an accountant to keep all your books in check easily?
Book a complimentary consultation here to learn more about our services!