GST in Singapore
4 minute read
Goods and Services Tax (GST) in Singapore is a tax on consumer spending. GST is collected on the sale of goods and services to customers or another business. Since it is a consumption tax, GST is one of the four pillars of the Singapore tax structure, including corporate tax, personal tax, and property tax. The present GST rate in Singapore is 7%.
Each business in the supply chain charges GST on sales. They deduct GST from this amount that was paid on the purchase. Several goods and services are exempt from GST in Singapore. Key characteristics of GST include:
- GST is applicable only to GST-registered businesses. Unregistered businesses cannot collect this tax.
- GST-registered businesses alone can charge goods and services tax. In Singapore, if the annual turnover of a business is more than S$1 million, it must register for GST. For small businesses with less yearly turnover, GST registration is not mandatory.
- Singapore Customs collects GST on the import of goods.
- Not all goods and services come under the scope of GST. This includes the sale of residential units, most financial services, and import of precious metals for investment purpose.
- No GST is charged on exported goods and services.
In Singapore, a GST-registered business can file a credit claim for input tax and counterbalance it against the Output Tax – the GST collected from customers. Such a business pays GST on the amount of value addition to its goods.
Singapore GST registration requirements
A GST-registered company remains registered for 2 years. When a company is registered for GST, it must charge the tax on supplies at the prevailing rate, excluding relevant supplies subject to customer accounting. This is the output tax paid to IRAS.
On the other hand, input tax is the GST incurred on business purchases and expenses. A business that meets the criteria for claiming input tax is eligible to claim input tax on the purchases and expenses.
This means that only the value added is taxable at each stage of the supply chain.
All GST-registered companies must levy GST and file returns when:
- Their total taxable turnover exceeds S$1m for 12 months. That means the total value of all taxable supplies in Singapore exceeds S$1m in that quarter as well as the previous 3 quarters. However, if the value of taxable supplies is not expected to be less than S$1m in the next 4 quarters, there is no need for GST registration.
- Their taxable turnover is expected to exceed S$1 million in the coming 12 months.
- For periods on or after 1 Jan 2019, taxable turnover will be computed on a calendar year basis for the purpose of determining registration liability. You have to monitor at the end of every calendar year (i.e. 31 Dec) and register for GST if your annual taxable turnover exceeds S$1 million. You are encouraged to use the GST Registration calculator (from 2019) to assist you in determining your GST registration liability.
Exemption from registration
In Singapore, there is a provision for exemption from GST registration. A company can apply with the Inland Revenue Authority of Singapore (IRAS) for exemption if it meets the following criteria:
- It has a negative net balance of goods and services tax collected for supplies versus the tax paid for purchases. This means the company has received a refund from IRAS.
- At least 90% of its total revenue comes from supplies not subject to GST. These exempt supplies are known as zero-rated supplies.
- Out of scope, supplies are supplies that do not fall within the scope of the GST Act.
- Sales made within Zero GST Warehouse.
Companies that are exempted cannot file a claim for the GST incurred on purchases for the business. A business must register for GST if it is expected that it will get a credit for the paid goods and services tax.
How to register for GST
Before registering in Singapore, you should have the following information:
- Name and registration number
- Financial year-end
- Business activities
- Size of the company
- Issued capital
- Paid-up capital
The process involves the following steps:
- Filing a paper or e-application with IRAS for GST registration. Submit online applications on the myTax Portal. Any written applications must be shipped to the physical address of IRAS in Singapore.
- Receiving notification of GST registration from IRAS. The confirmation letter will include – GST Registration Number and Date of registration.
Filing GST tax returns
A GST registered company must file an F5 tax return. If the company does not have any GST transactions during the period, it must file a nil return.
The tax money must be paid to IRAS within 30 days after the return is filed. It is important for a GST-registered business to report input and output tax. While filing an F5 return, the business should compute its net GST. Subtracting output GST from input GST gives the net GST figure.
A business can cancel its GST registration when it stops or is sold to another person. It must submit an application form and required documents to the IRAS within 30 days of cessation.
- A company that is not Singapore-GST registered cannot collect GST.
- Exports are categorised as zero-rated supplies and cannot be charged GST.
Benefits of GST registration
- Registering your company for GST is proof that it is an established business.
- GST is charged on self-employed only when money is spent.
- The tax is levied on the consumption of goods.
- GST excludes savings and investment.
- The end-user is the real taxpayer, so businesses do not bear the tax cost.
GST refund in Singapore
If companies incur more expenses than revenue initially, the company can claim GST refund if it is registered with the IRAS.
Businesses in the export business may claim GST on expenditure. However, exports will be categorised as zero-rated supplies under the GST scheme. As a result, they can claim GST refund in Singapore.
There is a tourist refund scheme for Singapore tourists who make purchases from participating GST registered retailers. Under the scheme, they can claim a refund of the GST paid on the goods carried out of Singapore.
Filing GST Return
A GST-registered company must submit a return to the taxation authority based on the accounting cycle. This is done on a quarterly basis. A GST return indicates the value of sales, exports, and purchases from companies registered for GST in Singapore. It also includes GST collected and claimed during the accounting period.
You can file GST returns electronically. After filing your GST F5 online, your next GST return will be available online before the accounting period ends.
A business can file GST F5 electronically a day after the accounting period ends. IRAS must receive your GST return within one month after the end of this period. It shouldn’t be delayed beyond this.
Submit a NIL return if you do not have any tax due for the period. For delayed filing of returns, a business will face penalties, irrespective of the fact whether the net GST is payable or refundable.
When can I get GST Voucher 2020?
In January 2020, all eligible Singaporean households will receive a GST Voucher of up to $100. You can get GST voucher:
- In the form of direct crediting to your savings/current bank account
- Via check
GST Voucher − Cash can be credited only at a local UOB, OCBC, DBS, or POSB bank. Payment by check may take 15 days. Opting for cash gives you a chance to get the money credited quicker to your account than by check.
- Be a Singaporean residing in Singapore
- Be aged more than 21 years
- Be an owner of not more than one property
- 2017 income as per the IRAS assessment
- Annual Value of Home or probable annual rental of property by 31 December 2018
GST schemes for businesses
There are several government-run assistance schemes in Singapore when it comes to GST. Such GST schemes are designed to facilitate cash flow for businesses.
- Tourist refund scheme is meant to let tourists claim a refund on goods bought from GST registered Singapore retailers, provided the goods are taken to another country.
- The cash accounting scheme is meant for small businesses with annual sales of less than SGD 1 million.
- Major Exporter Scheme is meant to facilitate the cash flow of major exporters with significant imports.
- Under the Gross Margin Scheme, GST is charged on the gross margin of goods.
- Under the Zero GST Warehouse Scheme, a GST-registered business can transform its warehouse into a zero-GST warehouse to bypass the GST process.
- Under the Hand-Carried Exports Scheme, you are eligible to zero-rate the goods supplied to an overseas customer if the goods are carried from Singapore via Changi International Airport.
- Under the Import GST Deferment Scheme, a business can pay GST on imports when its monthly GST returns are due. That means it does not need to pay GST at the point of import.
How to pay
A GST registered business must quote GST-inclusive prices on its displayed, verbally quoted, published, or advertised prices. A business that fails to display GST-inclusive price will be faced with a penalty.
When billing customers, a business must issue a tax invoice when the customer is registered for GST. This enables the customer to use it as a supporting document for filing a claim for input tax on its standard-rated supplies. The document comprises information on the product being sold along with the GST charged.
The tax invoice is not required for submission along with GST returns. Typically it should be issued within 30 days since the supply time. Additionally, a GST-registered business is not required to issue a tax invoice for deemed, zero-rated, and exempt supplies.
It is important to keep all records of your business transactions related to GST. Make your claims on input tax during the accounting period as per the date of the tax invoice.
As a GST-registered Singapore company, you should submit a GST return based on your accounting period. The business must start collecting GST from the effective date of registration.
Save on your costs and time and be able to focus on your business by outsourcing your bookkeeping requirements to us. Contact us now to find out more!