Singapore Goods and Services Tax (GST) Guide

1 April 1994, marked the beginning of a new era of the tax system in Singapore by introducing highly commendable Goods and Services Tax Singapore. GST is basically the tax levied by the government of Singapore on all the import of goods into Singapore and the supplies of goods and services in the country. Current GST rate in Singapore is 8%.

Goods and Service Tax (GST), also known as Value-Added Tax (VAT) in a few countries, is a new type of tax system, governed by the IRAS (Inland Revenue Authority of Singapore). GST was initially introduced with an aim to reduce the burden of paying corporate and personal income taxes. Apart from that, GST also plays an important role in maintaining a steady flow of revenue for the government.

 

What is GST?

Goods and service tax Singapore, in reality, is a consumption tax levied on import of goods in Singapore as well on the supply of all kinds of goods and services in Singapore, unless exempt or zero-rated. GST is nothing but an indirect tax, which is expressed as a percentage. In Singapore, GST is levied at the rate of 8% of the selling price of goods and services. The end-user is usually the ultimate payee of GST. Thus, GST never becomes or behaves as a cost to the company. On the contrary, businesses just act as the tax collecting agents on behalf of the Singaporean government.

 

GST for a Singapore Company

A GST registered company incurs goods on services tax on supplied or sold goods and services by charging 8% extra in the initial cost of the goods and services. For example – if a company charges S$100 for a service in Singapore, then it has to prepare a final bill of S$107 (including GST). The GST amount thus collected from customers is then passed on to the concerned tax authorities in Singapore. As per the ACRA and IRAS guidelines, all Singapore companies are mandated to file GST Singapore tax returns on a quarterly basis.

 

Goods and Services Tax: To Register or Not

GST registration is more of a self-assessed process. The companies need to constantly assess the parameters, and register for GST Singapore whenever applicable. They can also opt for GST as a matter of choice, even when they do not fall into the registering specifications. For the matter of convenience, GST registration falls in two categories – compulsory and voluntary.

Compulsory Registration

It becomes compulsory for the businesses to register for GST when-

Voluntary Registration

A company can register voluntarily for GST when-

Voluntary GST registration Singapore provides the benefits of claiming input tax incurred in the course of the business. This remains especially true in case of zero-rated supplies. If in the case, a business only provides zero-rated supplies, they can opt for exemption from registering for GST. Even when the turnover exceeds the registration cutoff.

Companies can even opt out of GST registration. However, this can happen only when the said business stops or sold-off to another person. Secondly, when the sales figure dips to less than 1 million SGD. The businesses are required to submit an application form along with other relevant documents.

The money paid as Singapore GST to the suppliers can offset the money collected as GST from the customers. What the business collects from the customer is known as output tax, and what it gives to its suppliers is known as input tax. Therefore, what the business pays or claims back from the authorities is the difference between the output and input tax.

 

Pros and Cons of Registering for GST

PROS – For the Government:

For Businesses and Individuals:

Normally only bigger companies with above average turnover are motivated to participate in the Singapore GST registration process. This specific requirement implies that the said business is of certain qualifying standards and the same impression is reflected on customers.

CONS:

GST registration Singapore brings in additional duties and responsibilities, which calls for extra administration duties.

 

Types of Goods and Services Subjected to GST

GST is always charged on taxable supplies. Goods and services that are made in either Singapore or are imported into Singapore imply the exact meaning of taxable supplies. These taxable supplies are again divided into two major categories standard rated and zero-rated.

The goods and services sold locally fall under the umbrella of standard-rated supplies. While, those that are exported fall under zero-rated supplies. The manufacturer of export goods is able to claim the input tax levied on purchase of inputs.

The exempt supplies is another category on which the Singapore GST is not charged. For example, sale and lease of residential land and financial services are business activities that are exempt from GST. The main difference between the zero-rated supplies and the exempt supplies is that the exempt supplies cannot claim the input tax.

Last are the out-of-scope supplies. These are the supplies, which are out of the scope of the GST. The ones included in the out-of-scope supplies are the ones which-

 

Process of GST Registration Singapore

There are various types of forms that need to be filled by the companies, who want to be registered for Singapore GST. GST F1 is a form that should be duly filled, and sent to the tax authorities. If the business entities comprise of partnerships, an additional form (GST F3) should be provided. This would give the details of all partners involved in running the business.

Similarly, different types of forms are available for overseas companies, group registration, and divisional registration. The overseas companies need to appoint a local agent to act on their behalf. Such registrants must include a letter along with the application form stating, the same.

It takes around 3 weeks to complete the registration process. After the successfully GST registration of the company, company or business owner receives a letter of ‘notification of GST registration’. This letter would include all the details like the GST registration number, the filing frequency, and filing due dates as well as other instructions. Taking technology in its laps, IRAS has made provisions for GST electronically.

 

The Process of Payment, Charging and Implementing GST

 

Process of Filing GST Returns

Based on the accounting cycle, a GST F5 has to be submitted to the tax authorities. Normally filing GST returns has to be done on the quarterly basis. The return documents must contain all the information, as if the total value of your local sales, exports, and purchases from GST registered entities, the GST collected as well as GST claimed for the subsequent accounting period

Nowadays IRAS accepts electronic GST filing. Once a company submits its GST F5, the next GST return will be made available at the end of each accounting period. E filing of GST can be accomplished right one day, after the accounting period ends. However, it is important to ensure that the GST return filing of the IRAS has to be completed no later than one month after the end of the prescribed accounting period.

Even if there is no tax due for a given period, a ‘nil’ return must be submitted. Upon late filing the GST returns provisions are made to impose Late fees or penalties. This remains valid, regardless of whether the net GST declared is a payable or refundable amount. GST refunds are usually made within 30 days from the date of receipt of the return.

 

Various Singapore GST Schemes to Help Businesses

• Major Exporter Scheme (MES): It helps to ease the cash flow of major exporters having considerable imports.
• Cash Accounting Scheme (CAS): To ease the cash flow of small businesses with the annual turnover under S$1 million.
• Goods and Services Tax Assistance Scheme: For small and medium sized enterprises (SMEs) voluntarily registering for GST Singapore.
• Third Party Logistics Scheme: The approved third parties need not pay GST, as they are providing logistic services to foreign clients, who thereby use Singapore for logistics purposes.
• Hand Carried Exports Scheme: Permits you avoid GST by hand carrying the goods out of Singapore via Changi International Airport.
• Zero-GST Warehouse Scheme: This will make your zero GST warehouses, approved by the Singapore customs department for the storage of non-dutiable goods, free of Goods and Services Tax.
• Tourist Refund Scheme: This scheme permits tourists to claim a refund on the GST paid by them at the time of the goods they purchased in Singapore.
• Approved Contract Manufacturer and Trader (ACMT) Scheme – In this, the entities cannot charge GST when instructed by an overseas customer to deliver your finished goods to his customers in Singapore.
• Approved Marine Fuel trader (MFT) Scheme – In this scheme, an entity is not required to pay GST on purchase of marine fuel oil from a local GST registered supplier.

At Singapore taxation services, we provide you with guidance and assistance services on the, GST calculation, GST form completion formalities and monthly/quarterly GST returns to IRAS. We thrive to make your GST Singapore registration process simple and convenient.

Please feel free to contact us on +65-6536 0036 or drop in an email at info@taxationservices.com.sg