A Complete Guide to SG GST-Exempt Goods and Services

Types of GST supplies in Singapore

Singapore’s GST isn’t uniform. Understanding these variations is vital for accurate tax compliance, smooth operations, and financial decisions. The Inland Revenue Authority of Singapore (IRAS) offers many resources on these nuances.

As we explore further, remember actual rules may differ. Check official sources about when to charge GST, exporting, claiming conditions, current GST rates, and supplies.

1. Standard-rated supplies

You’ll find most of the everyday things you buy and services you use here. If you buy something in a shop or pay for a service in Singapore, a 9% GST will be added to the price. This category encompasses the vast majority of domestic transactions, ranging from the sale of goods and services within the country to various forms of commercial activities. 

Think about your typical shopping trip:

• Groceries: Your milk, bread, veggies, and snacks all have GST.
• Clothes: That new shirt or those shoes you’ve been eyeing? GST applies.
• Electronics: Want a new phone, laptop, or TV? 9% GST will be added at checkout.
• Eating Out: Enjoying a meal at your favourite restaurant or grabbing a coffee? GST is included in the bill.
• Services: Getting a haircut, seeing a doctor, or hiring a lawyer? These services all include GST.

Most goods and services consumed in Singapore fall under this category.

2. Zero-rated supplies

Now, this is where things get a little interesting. Zero-rated supplies are still taxable, but the GST rate is 0%. This seems odd, but it makes sense.

The main purpose of zero-rating is to encourage exports. For example, imagine a company in Singapore that manufactures high-tech equipment. If it sells that equipment to a business in another country, it doesn’t have to charge GST, making its products more competitive globally.

Here are some examples of zero-rated supplies:

• Exported Goods: Anything sold to a customer overseas and shipped out of Singapore.
• International Services: International air travel and certain financial services provided to overseas clients.

3. GST exempt supplies

Exempt supplies refer to specific goods and services not subject to GST. Importantly, businesses making exempt supplies are not eligible to claim GST credits on inputs related to these supplies. This categorisation helps avoid cascading tax effects in sectors where accurately tracking and attributing input tax credits would be complicated or inefficient.

Here are some of the key exemptions:

• Residential Property: The sale and rental of unfurnished homes are exempt from GST. This helps keep housing costs more affordable.
• Financial Services: Many financial services, such as loans, insurance, and investment management, are exempt.
• Digital Payment Tokens: Cryptocurrencies like Bitcoin are exempt from GST.

4. Out-of-scope GST supplies

These supplies fall entirely outside of Singapore’s GST system. The easiest way to understand this is to imagine goods being shipped from one country to another, but they never actually enter Singapore. Since the transaction doesn’t involve Singapore, GST doesn’t apply.

Here are some examples:

• Goods in Transit: If goods are shipped from Malaysia to Australia and only pass through Singapore, that is considered out of scope.
• Private Transactions: If you sell your used bike to a friend, that’s a private transaction, and GST doesn’t apply.

Out-of-scope supplies are important to identify as they are not taxable under GST, and therefore, GST is neither charged on these supplies nor claimable. However, documentation and proper records are crucial to support the nature of these transactions as out-of-scope.

GST-exempt services in Singapore

In Singapore, GST-exempt services are specific types of services that are not subject to the Goods and Services Tax (GST). This exemption is significant because it affects how businesses involved in providing these services handle their pricing, tax filing, and overall financial reporting. Here’s a closer look at some of the key GST exempt services in Singapore:

Financial Services

This includes services such as the provision of loans, the exchange of currency, the issuance of debt securities, and life insurance contracts. Financial services are exempt because taxing them could lead to double taxation or distortion in financial markets.

Residential Leasing Services

Renting or leasing residential properties is GST exempt. This exemption is intended to keep residential housing affordable for the general population.

Healthcare Services

While medical and healthcare services are indeed a key area of GST exemption in Singapore, it’s important to be specific. The exemption primarily applies to publicly subsidised healthcare services. This includes:

• Treatment received at public hospitals and polyclinics.
• Medical procedures and services covered under MediShield Life.

However, private healthcare services and elective cosmetic procedures are generally subject to the 9% GST.

Educational Services

Educational services provided by registered institutions in Singapore are generally exempt from GST. This applies to a wide range of education, from preschool all the way to university and postgraduate studies.  

Here’s a more detailed look:

• Preschool: Kindergarten and childcare centers registered with the Early Childhood Development Agency (ECDA) are exempt.
• Primary and Secondary Schools: All government-funded and government-aided schools are exempt.
• Tertiary Education: Public universities and polytechnics are exempt. Private institutions may also be exempt if they meet certain criteria.
• Vocational and Technical Training: Courses provided by approved training providers, like those under the SkillsFuture initiative, are generally exempt.

Precious Metals

The importation and local supply of investment-grade precious metals (gold, silver, platinum) are GST exempt, provided they meet certain criteria such as purity standards. This is to enhance the competitiveness of Singapore’s precious metals sector.

The exemption of these services from GST is designed to reduce the cost burden on essential services, encourage specific industries, and maintain competitive pricing for services that have significant social impact. GST-registered businesses involved in these areas need to ensure they are compliant with GST regulations to avoid penalties and to ensure proper handling of their tax obligations.

GST registration and your business

Singapore businesses with taxable turnover exceeding S$1 million must register for GST. Special rules apply to certain sectors, and understanding services tax plays an important part in determining your GST registration obligations.

The timely and accurate filing of GST returns is crucial. Failing to do so can result in penalties, though reduced penalties may be available in certain circumstances for businesses that demonstrate genuine errors and a commitment to rectifying them. This promotes fairness and encourages tax compliance.

Singapore’s commitment to service excellence extends to its tax administration. The Inland Revenue Authority of Singapore (IRAS) provides comprehensive resources and support to help businesses understand and comply with GST regulations. This includes information on GST rate changes, which businesses need to be aware of to ensure accurate charging and reporting.

The government actively combats tax evasion to maintain a fair and transparent tax system. This is crucial for nation-building, as a robust tax system funds essential public services and infrastructure.

By analysing tax statistics, the government can identify trends, assess the effectiveness of tax policies, and make adjustments to support economic growth and social development. This data-driven approach helps ensure that Singapore’s tax system remains efficient and equitable, contributing to the nation’s overall progress.

Applying for GST exemption

If your business primarily involves zero-rated supplies (over 90%), you might be exempt from GST registration, even with a high turnover. Another criterion is if GST registration puts you in a net refundable position (receiving GST refunds from IRAS).

Market or business model changes can impact these percentages. Monitor your transactions, project future taxable activity for red flags, and stay proactive.

Impact of GST exemptions on pricing and costs

GST exemptions affect your pricing and costs. Customers aren’t charged GST, increasing appeal. However, you cannot claim input tax on related purchases, potentially raising costs. This impacts individual income and corporate income. Singapore accountants can greatly assist in understanding the complex calculations and requirements involved.

Balance selling costs with competitive pricing, factoring in the inability to claim input tax for exempt supplies. This might mean raising prices or reducing profit margins for competitive pricing.

GST and digital payment tokens

IRAS has specified GST treatment for digital payment tokens. Services like exchanges or wallets are taxable.

Exchanging tokens for fiat currency or digital payment token loans became GST-exempt on January 1, 2020. Mining isn’t taxable or exempt, but miners offering chargeable services alongside it are affected.

Residential property transactions

Residential property sales and leases in Singapore are generally GST-exempt. Multi-use buildings likely require apportionment.

IRAS guide scenarios like selling/renting assets to clear debt, where even unregistered individuals might charge and handle GST. Filing GST is an important step.

Approved Refiner and Consolidator Scheme (ARCS)

The ARCS offers GST-exempt relief and efficiency to businesses refining and selling investment-grade precious metals. It allows deferring input tax upon registration, easing cash flow challenges with upfront raw material costs and related exempt obligations.

Without ARCS, many refiners faced precarious finances with significant assets tied up as input tax claims. Some were forced to initially pay significant amounts upfront without recourse for sales or converting output tax equivalent. Being registered for ARCS impacts annual reports. The filing of GST is affected for dormant companies. These companies may also find GST schemes helpful. 

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