Singapore Goods and Services Tax (GST) Guide
Goods and Services Tax (GST) is a tax on the supply of goods and services made in Singapore by a taxable person in the course or furtherance of any business carried on by him and on the importation of goods into Singapore. Every Singapore business must register for GST if their annual taxable turnover is more than S$1 million or currently making taxable supplies and the annual taxable turnover is expected to be more than S$1 million.
Taxable supplies cover both goods as well as services supplied in Singapore, goods supplied abroad from Singapore and any International services provided from Singapore. A Singapore business is expected to register for Singapore GST within thirty days from the time it is deemed liable.
After registration, businesses must charge and account for GST at the prevailing rate. This is known as output tax. GST registered businesses can also claim the GST incurred on their goods and services purchased assuming certain conditions are met. This is known as input tax. GST is also levied on the import of goods from overseas which is also claimed as input tax. Singapore Customs is responsible for collecting the import GST.
Rate of GST
The current rate of GST in Singapore is 7%.
Compulsory Registration for GST
Registration for GST is compulsory when
- The turnover of your business is more than S$1 million for the past 12 months; or
- You are currently making sales and you can reasonably expect the turnover of your business to be more than S$1 million for the next 12 months.
Voluntary Registering for GST
You may apply for voluntary GST registration even if you are currently not liable for compulsory registration. Criteria for voluntary GST registration
- You carry on a business and intend to make taxable supplies, or
- You make taxable supplies and your annual taxable turnover is not more than S$1 million, or
- You only supply goods outside Singapore (out-of-scope supplies), or
- You make exempt supplies of financial services that are also deemed as international services
Advantages of voluntary registration
You can enjoy the benefits of claiming input tax incurred in the course of your business. This is especially so when you make purely zero-rated supplies (exports or international services).
Conditions under voluntary registration
- Be on GIRO Scheme for payment and/or refund of GST; and
- Provide the security deposit as may be imposed by the Comptroller on a case-by-case basis.
- Attend the compulsory seminar “Introduction to GST” by IRAS within three months from the effective date of registration;
- Remain GST-registered for at least two years; and
- Comply fully with the Responsibilities and Obligations of a GST-registered person and any other conditions as may be imposed by the Comptroller.
Important information for voluntary registration
After going through the Responsibilities and Obligations, please do a cost-benefit analysis before applying for GST registration.
Do note that the administrative cost of being GST-registered may outweigh the benefits. For example, you need to consider the cash flow outlay you may face as you would have to account for and pay GST to the Comptroller even if you have not received payment from your customers. It is advisable to have a full-time accounting staff or engage professional accounting service.
Should your intention to make taxable supplies fail to materialise and the Comptroller is not satisfied that you have firm intention to make taxable supplies from the start, the input tax you have claimed previously may be withdrawn.
Why are there many conditions for voluntary registrants?
IRAS want to help businesses make informed decisions before registering for GST. Many businesses have the misconception that GST registration is part of setting up business and are unaware of the compliance costs associated with being GST-registered. There have been instances where newly GST-registered businesses requested the cancellation of GST within three months of registration after realising the administrative costs outweigh the benefits of being GST-registered.
GST registration is compulsory only for businesses that are currently making taxable supplies and with annual turnover more than or expected to be more than S$1 million. For businesses that are not liable for GST registration but opt for voluntary registration, they need to be fully aware of the consequences of GST registration.
The conditions are part of the Comptroller’s efforts to assist GST-registered businesses in meeting their responsibilities and obligations. The compulsory seminar “Introduction to GST” will equip business owners and GST preparers with basic knowledge of GST. Payment via GIRO will help businesses improve their cash flow as the deduction date falls on the 15th of the month after the GST returns are due. GIRO also helps businesses ensure they are timely in their tax payments and consequently, they can receive their GST refunds promptly.