The Goods and Services Tax (GST) is a consumption tax levied on nearly all supplies of goods and services in Singapore, as well as goods imported into Singapore. GST is charged at the prevailing rate of 7% when customers buy taxable goods or services from GST-registered businesses. GST is an indirect tax and it is important to know that a company registered in Singapore is not automatically registered for GST, and GST registration in Singapore is not compulsory right after the business is incorporated.
Registering for GST is only compulsory when a company’s Total Taxable Turnover exceeds S$1 million over a 12-month period or is reasonably forecast to exceed S$1 million over a 12-month period, based on signed contracts and orders. A company must make a GST application to IRAS within 30 days from the time it is deemed liable to avoid a late submission penalty. However, there are also companies exempt from this procedure.
Not all companies are required to register for GST in Singapore. Exceptions include:
- companies with a taxable turnover obtained from a zero-rated supply of goods and services;
- companies subject to retrospective view GST registration provided that their annual turnover is not expected to exceed 1 million SGD;
- companies expecting their turnover to be lower due to specific reasons.
A company outsourcing bookkeeping and accounting functions to a Singapore Accounting Company will likely receive timely expert advice as to whether or when to register for GST and the formalities involved.
Accounting Services Provider Singapore
Applying for GST Registration
In Singapore, applicants submit their applications online via myTax Portal using their CorpPass with supporting documents such as the Accounting and Corporate Regulatory Authority (ACRA) Business Profile, or Certificate of Incorporation in English (if business is incorporated overseas). A list of industry specific GST guidelines is available from IRAS. Click HERE for more information or contact an accounting services provider Singapore for assistance in GST registration. IRAS will take about 10 working days to process the application. Additional supporting documents such as invoices and contracts might be requested during the review process.
IRAS will send a letter of notification, upon approval, which includes the GST registration number and effective date of GST registration (and collection).
Benefits of GST registration for companies in Singapore
The GST contributes significantly to the nation’s economy, even though it is an indirect tax, as it represents a steady income to the country’s Gross Domestic Product and is one of the most efficient taxes from an administration and collection point of view. GST can also offset the corporate and personal income taxes by encouraging foreign investments.
Large corporations choose to register for GST in Singapore, even when they are foreign businesses running local operations, for two main reasons: they can collect some of the tax they pay back through their tax returns and enjoy increased confidence from business partners and clients.
As for small and medium-sized companies (SMEs), whether it’s mandatory or voluntary GST registration, they will be able to access lower costs related to the administration of the operations due to the many incentives granted by the Singapore government, for example the Tourist Refund Scheme, Gross Margin Scheme, Zero GST Warehouse Scheme and Import GST Deferment Scheme.
Filing GST Returns
GST-registered businesses, from the effective date of GST registration, will need to charge and account for 7% GST for goods and services supplied in Singapore. GST returns must be accurately submitted within 1 month from the end of each accounting period. GST returns will comprise both output tax (the GST collected from customers) and input tax (the GST paid to suppliers). If output tax is higher than input tax, the difference will have to be paid to IRAS. If vice versa, IRAS will refund the difference.
GST-registered businesses must pay the GST due within one month after the end of the accounting period covered by the GST return. If payment is not received before the due date, a 5% late payment penalty will be imposed. Additional penalties of 2% per month may be imposed if the tax remains unpaid 60 days after the imposition of the 5% penalty. The 2% penalty will be imposed for each month that the tax remains unpaid and shall not exceed 50% of the unpaid tax. (Source: IRAS)