GST, introduced in Singapore on April 1, 1994, is a consumption tax levied on the supply of goods and services within Singapore, as well as on imported goods. In many countries, this type of indirect tax is referred to as Value Added Tax (VAT). GST is calculated as a percentage of the selling price of goods and services provided by GST-registered businesses in Singapore.
How GST Works
GST-registered companies charge this tax on the goods and services they sell to customers and then remit the collected tax to the tax authorities. Businesses essentially act as collecting agents on behalf of the tax authorities, and the GST collected is not considered a cost to the company.
Types of GST Registration
Compulsory Registration
A company must register for GST retrospectively if its revenue exceeds SGD 1 million in the last 12 months or if it expects future sales or turnover to exceed SGD 1 million in the next 12 months.
Voluntary Registration
A company can opt for voluntary registration if it plans to sell taxable goods or has already started doing so, even if it doesn’t meet the compulsory registration criteria. Voluntary registration requires a commitment of at least two years.
Exemption from Registration
Certain financial services, the supply of digital payment tokens, the sale and lease of residential properties, and the importation and local supply of investment precious metals are exempted from GST. Companies supplying zero-rated goods and services can also apply for exemption from registration, even if their taxable turnover exceeds the registration limit.
Taxable Supplies
GST applies to both standard-rated supplies (7% GST) and zero-rated supplies (0% GST) for goods and services.
Non-Taxable Supplies
Exempt supplies (GST not applicable) and out-of-scope supplies (0% GST) include specific categories of goods and services.
Paying Output Tax and Claiming Input Tax
GST-registered businesses need to follow certain steps, including submitting GST returns, reporting both output tax and input tax, and settling the net GST payable to or refundable by IRAS (Inland Revenue Authority of Singapore).
Filing GST Tax Returns
GST returns can be filed monthly or quarterly through myTax Portal. Even if a company has no GST transactions during an accounting period, it must file a nil return. Net GST must be paid to IRAS within one month after filing the return.
De-registration
Registered companies can request GST registration cancellation within 30 days if their business operations cease, the business is sold to another entity, or sales revenue falls below SGD 1 million.
In conclusion, Singapore’s GST system plays a vital role in the country’s economy, mirroring VAT systems worldwide. Understanding the nuances of GST registration, exemptions, and compliance is crucial for businesses. However, grappling with these intricacies can be time-consuming. At Growth Partners, we specialise in simplifying tax-related complexities and offering comprehensive financial solutions. Let us handle your GST and other financial needs, allowing you to dedicate your time and efforts to growing your business. Schedule a consultation today to streamline your financial processes with Growth Partners by your side.
