In Singapore, Goods & Service Tax or GST is levied on nearly every imported goods and service. While in several other countries, it is called VAT or Value-Added Tax. The IRAS [Inland Revenue Authority of Singapore] is responsible to administer, assess, collect, and enforcing tax payments.
Goods & Service Taxwas introduced to lower the corporate and personal IT rates and simultaneously maintain steady revenue for the Government. It is an indirect consumption because it taxes the expenses.
Currently, 7% tax is applied to registered Singapore business entities on the selling rates of goods and services. The end consumer has to pay, so the company does not have to bear the cost. The businesses act as collecting agents for the Singapore Tax Department.
GST exemptions are applied to –
- Digital payment tokens like cryptocurrency exchange for fiat currency
- Financial services provisions like loans, life insurance, banks, currency exchange, buy/sell of bonds/shares, etc.
- Unfurnished residential properties lease and sale.
- Investment precious metal [IPM] import and local supply.
- Out-of-scope supplies include goods sold not brought in Singapore – E.g. the local company has a shoe factory in India and sells it to a dealer in Europe. The order is shipped directly from India to Europe. So, the sale is regarded as an out-of-scope supply.
- Export of goods & international services has 0% Goods & Services.
When Does A Business Need GST Registration?
For filing GST in Singapore, you can contact professionals. Jazcorp is a reliable GST filing service that helps businesses in handling every aspect of IRAS-related activities.
Goods & Service registration can be categorized into –
- When business turnover goes above $1 within a year [called Retrospective Basis].
- Currently, your sales are reasonable and you expect them to exceed $1 million within the next one year [called Prospective Basis]. It includes contracts or agreements signed and the revenue expected in the upcoming 12 months will surpass $1 million.
If your business assessment indicates that your revenue will surpass the $1 million [SGD] limitations then you will mandatorily need to submit an application form within 30 days to the IRAS. If you fail registration within mentioned timeframe then you will get penalized. There are anti-avoidance stipulations to ensure that businesses are not started just to keep revenue less than the marked threshold to avoid registration.
If your business is not eligible for compulsory registration, you can choose voluntary registration based on your commercial operations. Your business may have planned to trade taxable supplies or have started selling in Singapore. There are some stipulations associated with voluntarily based Goods & Service registration. It includes remaining registered for a minimum of two years and adheres to the protocols. File returns every quarter as well as maintain a 5-years record even if the business is closed and GST deregistered.
Exemption from registration
If your business is associated with zero-rated supplies, then you need to apply for exemption from registration. It doesn’t matter if your taxable revenue is more than registration limits. You are eligible to get away from the GST registration governmental requirement and then Goods & Service filing every quarter. The IRAS approves exemption of 90%+ of total taxable supplies belonging to the zero-rated category. Besides, your input has to be greater than the output.
[The difference between input and output tax is net GST refundable by IRAS or payable to IRAS.]
The registration process will take a maximum of three weeks. You will receive a registration letter on approval. The letter includes the number, registration date, filing frequency, due dates, and special instructions. Goods & Service Tax returns have to be electronically filed.
How To Charge, Pay, And Implement GST?
- A registered business owner is responsible for Goods and Service charges on goods and services catered. The charged GST has to be sent to the IRAS via a Singapore Bank account.
- Choose to charge GST on top of the selling price or you can treat the selling rate as GST-inclusive.
- The prices displayed on the labels, advertisement, publishing, written and verbal quoting have to mention Goods & Service Tax inclusive. Failure to display the inclusive rates to the public is a crime. The service charges associated with the F&B sector the display of prices can be Goods & Service Taxexclusive.
- During billing, a business must issue a tax invoice to customers that are GST registered. The customer can use this as evidence to claim the input tax. IT includes details about what is sold and how it is charged. The tax invoice has to be documented for 5 years in your business records. However, a tax invoice is not necessary for exempt, zero-rated, and deemed supplies as well as to a non-GST registered client.
- Make input tax claims within the accounting period as per import permits or tax invoice date [generally within 30 days of supply].