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Goods and Services Tax ("GST") in Singapore

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What is GST?

GST is a broad-based tax on domestic consumption, it is also known as value added tax (VAT) in other jurisdictions. GST is charged to the end customer and the business selling the goods or services is responsible for charging and collecting the the tax from its customers as well as paying the tax to the IRAS, effectively, the business acts as a  collection agent for IRAS.  The tax is applied at the prevailing GST rate. The current rate in Singapore is 7%, although the Government has announced an intention to hike the rate to 9% in the near future. 


There are certain services exemptions such as the provision of most financial services, supply of digital payment tokens, the sale and lease of residential properties and trading of investment precious metals.. GST is also levied on imported goods while export of goods and certain types of services provided to overseas clients are not charged GST. 

Who is Required to Register for GST

GST can only be charged by GST registered businesses. Only businesses that exceed S$1 million in annual taxable turnover are required to be registered. However, companies with revenues below this threshold can voluntarily register as well. 


The GST that a business collects from customers is called output tax. Conversely, GST paid on a business's purchases or paid to its suppliers is called input tax. A GST-registered business can claim credit for its GST input tax thereby only paying GST on the amount of value-add, which is calculated as the difference between its output and input tax. This allows companies to lower its cost by claiming credit on its input tax as  output tax are eventually pass on to the end customer. 

 

Why should a business voluntarily register for GST?

A business may wish to consider the following: 

  • turnover is near S$ 1 million: it takes away the burden of monitoring turnover constantly.
  • cost and responsibilities of GST submission, including filing tax return monthly or quarterly
  • significant purchases from suppliers who are GST-registered. The ability to claim input tax will improve profitability.
  • GST-registered customers will prefer the business to be GST-registered in order for the customers to be able to claim input tax.
  • however, if customers are not GST-registered, increasing selling price to include GST may make the business' products or services uncompetitive.
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Reach out to make an appointment where we will provide a complimentary consultation on your GST situation. 

GST Registration

Mandatory Registration

Companies are required to register to be a GST-registered business if:

  1. Retrospective View: the taxable turnover at the end of any calendar year is more than S$1 million.
  2. Prospective VIew: if any time, the taxable turnover in the next 12 months can be reasonably expected to exceed S$1 million. 


Exemption: 

A company may apply for exemption from registration if;

  1.  The company's proportion of zero-rated supplies over total taxable supplies exceeds 90%
  2. The company is in a net refundable position had the company registered for GST. 

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A company may not need to register if the company is liable under the Retrospective View but not under the Prospective View due to taxable turnover for the next 12 months projected to not exceed S$1 million, or the taxable turnover is projected to be lower due to specific circumstances such as lorge-scale down-sizing of business. However, the company should continue to monitor its taxable turnover and have supporting documents to substantiate its projections. 


New! GST on Digital Goods and Services 

From 1 Jan 2020, 2 new regimes have been implemented to tax imported services. This new measure is targeted at the supply of digital services such as mobile apps, ebooks, software, online newspapers, online music, films, games, supply of online courses, website supply, web-hosting. The two regimes are: 

1. the Reverse Charge Regime for Business-to-Business ("B2B") supplies of imported services.

  • GST-registered companies will be required to account for GST on all services procured from overseas supplier as if the company is the supplier. 
  • Non GST-registered companies where the total value of imported services for a 12-month period exceeds S$1 million may become liable for registration.  

2. the Overseas Vendor Registration Regime for Business-to-Consumer ("B2C") supplies of digital services.

  • Foreign business will be required to registered for GST in Singapore if the business has a global turnover exceeding S$1 million and the business makes B2C supplies of digital services to customers in Singapore exceeding S$100,000  
  • Electronic marketplace operators may be regarded as the supplier of the digital services made by the overseas suppliers through the marketplace. 

GST Submission

GST registered businesses must file a GST Form 5 tax return to IRAS on a monthly or quarterly basis, even if there are no GST transactions, the business must still file a nil return. In the tax return, companies must report both their input tax and output tax. If the output tax is greater than the input tax, then the company must pay the net amount to IRAS, on the other hand, IRAS owes the company a refund if the input tax is greater than the output tax. Companies must pay the tax to IRAS within 1 month after filing a Form 5 tax return. IRAS imposes penalties for late submission and late payment! It is typically worthwhile to get an accounting firm or tax adviser to ensure that filing is accurate and timely!


How Can Sprout Help?

 

GST Services

Speak to us for customised packages for your business.

Bookkeeping + GST Support

Our monthly bookkeeping packages starts from S$80 / month. We'll be able to help you ensure that your GST submission are on time and accurate,. Pricing varies based on the system you use and the number of transactions. Speak to us to get best value on your bundle!

Contact us for a quotation

GST Registration

We support your registration for a flat fee. 

S$250

Frequently Asked Questions

When must I register for GST?


A business must register within 30 days the business becomes liable for GST collection and payment

When must I register for GST?


A business must register within 30 days the business becomes liable for GST collection and payment

What are the penalties for late registration?


Businesses that fail to register for GST in time will be subject to 5% late payment penalty. If the business fails to make payment after 60 days of the first demand note is issued, another 2% penalty will be impose for each month that the tax is outstanding. This 2% penalty is subject to a cap of 50% such that the maximum penalty is 55%

What are the common GST input tax claims which are disallowed?


  • Benefits provided to family members or relatives of staff
  • Cost and running expenses incurred on motor cars
  • Club subscription fees (including transfer fees) charged by sports and recreation clubs
  • Medical expenses, medical and accident insurance premiums incurred for staff unless they are obligatory under the Work Injury Compensation Act or any collective agreement under the Industrial Relations Act
  • Any transaction involving betting, sweepstakes, lotteries, fruit machines or games of chance

What are difference between exempt and zero-rated supplies?


In the case of zero-rated supplies, the sale is still a rated GST except that the applied rate is 0%. The generated revenue will still be included in turnover for the consideration of GST registration and the business can claim credits for the GST paid on inputs. On the other hand, exempt supplies are not subject to GST and the business cannot claim credit for the GST paid on inputs.

Can a business voluntarily cancel GST registration?


It is possible if the business is no longer liable for registration, such as having certainty that the taxable turnover for the next 12 months will fall below S$1 million, or if there is specific circumstances resulting in the decline of business such as loss of major contracts or large-scale downsizing. Supporting documents must be provided to substantiate the projection.


However, if the GST registration voluntary, the business is required to remain registered for at least 2 years before cancellation. 

Should sale of capital assets be included in taxable turnover for GST?


The sale of capital assets should not be included if the business is not in the business of trading capital assets. 

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