Known as Value Added Tax (VAT) in many countries, GST is a consumption tax applicable to the supply of goods and services within Singapore and the import of goods into the country.
Acting as an indirect tax, it is expressed as a percentage (currently 9%) applied to the selling price of goods and services provided by GST-registered businesses in Singapore.
The end consumer bears the GST cost, making it a tax on expenditure. Businesses act as collecting agents, remitting the collected tax to the Singapore tax department.
Impact on Singapore Companies
For GST-registered companies, the obligation is to collect GST from customers for rendered goods and services, remitting the tax-to-tax authorities. This involves invoicing customers with the GST amount included.
Companies must apply to IRAS for GST registration, and it is not automatic.
Specific conditions must be met to charge and collect GST.
GST Registration Requirements
GST registration is compulsory or voluntary, based on certain conditions:
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Compulsory Registration: Required when taxable turnover exceeds SG$1 million at the end of the calendar year or is expected to exceed this threshold in the next 12 months.
- Voluntary Registration: Companies not liable for compulsory registration may voluntarily register, with a commitment to remain registered for at least two years. Exemption from registration is possible for entities making only zero-rated supplies.
Deregistration and Collection of GST
A company can apply for cancellation of your GST registration within 30 days when:
- It has stopped making taxable supplies and do not intend to make taxable supplies in future;
- Its business has ceased;
- Its business is transferred as a whole to another person (the buyer or transferee needs to determine if it is required to register for GST); or
- The form of its business entity has changed (e.g. from a general partnership to a limited liability partnership, or from a sole-proprietorship business converted to a private limited company). The company needs not inform the IRAS if its business has been amalgamated, or if a sole-proprietorship business has been converted to a partnership (or vice versa), as they will cancel the GST registration upon receiving the information from ACRA.
GST on Exported Goods and Services
No GST is applicable to exported goods and services, categorized as zero-rated supplies.
Goods and Services Subjected to GST
GST is charged on taxable supplies, categorized as standard-rated (8%) or zero-rated supplies. Most local sales of goods and services fall under standard-rated supplies.
GST Registration Procedure
The GST registration process involves submitting the GST F1 form along with supporting documents to the tax authority. Overseas registrants must appoint a local agent. Registration takes about three weeks, and successful registration results in a Notification of GST Registration letter.
Filing GST Returns
GST-registered entities must submit GST returns (GST F5) on a quarterly basis, indicating values of local sales, exports, purchases from GST-registered entities, GST collected, and GST claimed. Returns are filed electronically, and net GST must be paid within one month after the accounting period ends.
GST Assistance Schemes
The Singapore Government offers various schemes to assist businesses dealing with GST, promoting cash flow and a pro-business environment. These include the Tourist Refund Scheme, Cash Accounting Scheme, Gross Margin Scheme, Major Exporter Scheme, and several industry-specific schemes.
Conclusion
To sum up, enterprises must understand the complexity of Singapore's Goods and Services Tax system in order to comply with the tax laws that are always changing and to make informed business decisions.