What exactly is Goods and Services Tax (GST) in Singapore? It was first implemented in 1994 and modeled off the UK VAT and New Zealand GST legislation. The Inland Revenue Authority of Singapore manages, assesses, collects, and enforces payment of GST. When first introduced, the Singapore GST system is used to lower direct taxation and increase indirect taxes. During the introduction of GST, both personal and corporate income tax rates were lowered. Currently, the Goods and Services Tax is 8%.
What is Goods and Services Tax (GST)?
It is more widely known as VAT in many other countries. GST is a consumption tax that is levied on the supply of goods and services, and the importation of goods into Singapore. As mentioned, GST is an indirect tax, being applied to the bill for goods and services provided by GST registered businesses in Singapore.
For example, Danny went to Store ABC, he purchased a phone for $1,000. Store ABC is a GST registered business, thus, the total bill will be $1,080 due to the GST tax of 8% being added to the total bill.
GST is charged to the end consumers and not to the businesses. Therefore, it does not become a cost to the company and is merely acting as a collecting agent on behalf of IRAS.
Is My Company Required to Register for GST?
Singapore companies are not automatically registered to charge GST. Companies that meet certain requirements have to apply to IRAS to become a GST registered business before it is allowed to charge and collect GST.
GST is considered a self-assessed tax. It is a business's responsibility to continually assess the need to be registered for GST. Companies in Singapore either go through registration voluntarily or are deemed compulsory.
Compulsory Registration for Goods and Services Tax
- Retrospective view - If your taxable turnover at the end of the calendar year is more than SG$1 million, you must register for GST before 30 January the following year. From 1 March onwards your company will be registered as a GST registered business.
- Prospective view - You are currently making sales that can reasonably expect more than SG$1 million turnover for the next 12 months. This also includes all contracts and agreements signed for the year, making it reasonable for you to expect your revenue to exceed SG$1 million.
Do note that if your revenue exceeds SG$1 million, failure to submit the GST application to IRAS within 30 days will result in penalties.
Voluntary Registration for Goods and Services Tax
On the other hand, businesses can opt to register for GST voluntarily. GST-registered businesses that go through GST registration voluntarily will need to adhere to additional conditions.
Once registered voluntarily, the business will require to remain registered for at least two years and comply with the GST regulations, filing GST returns quarterly, and maintain all records for at least five years. This means that even if the business has ceased and deregistered, there is a need to maintain the records for five years. Depending on IRAS, there might be more conditions imposed on your business.
Businesses that choose to voluntarily register for GST might be due to specific strategic changes in the business.
For example, if a business plans to ramp up its sales department or start doing large-scale promotions. They might choose to voluntarily register for GST.
Exemption from Registration - Zero-Rated Supplies
Businesses are exempted to register for GST when they make only zero-rated supplies. This means that even if their taxable turnover exceeds the registration limits for GST registration, they do not need to register for GST. Businesses that deal with zero-rated supplies can apply for an exemption from registration that will allow them to avoid all administrative requirements of GST registration and subsequent GST filing. As long as more than 90% of the business's taxable supply is zero-rated, or its input tax is greater than its output tax, IRAS will approve the exemption.
What are Zero Rated Supplies?
There are two goods and services that consider to be zero-rated supplies.
- Providing international services - when the services you provide are considered to be international services, they are considered zero-rated, as long as they fall within the provisions under Section 21(3) of the GST Act.
Depending on the nature of the services, there might be a need to determine the client's belonging status before the service you provide can be considered zero-rated.
- Exporting of goods - 0% GST may be charged for your supply of goods when you are certain that at the point of supply, the goods supplied will be exported or have been exported.
Documents are required to prove that goods supplied will be exported or have been exported in order to support a zero rating.
De-registration of GST
You are able to de-register for GST when your business ceases operation, when your business is sold as a whole to another person, or when the revenue does not exceed SG$1 million. This can be submitted on IRAS along with supporting documents within 30 days from the date of cessation.
What Kind of Goods and Services are Subjected to GST?
GST is charged on taxable supplies. A taxable supply is a supply of goods or services made in Singapore and provided to the Singapore market. Exempt supplies will not be subjected to GST. A taxable supply can either be standard-rated at 8% currently in 2023, or a zero-rated supply.
Here is a table with some of the types of goods and services that are subjected to, out of scope, and exempted from GST:
|Types of Goods and Services||GST Tax Rate||Remarks|
|Food & Drinks||8%||Food and drinks consumed in Singapore|
|Clothes||8%||Clothes bought in Singapore|
|Corporate Services in Singapore||8%||Corporate services provided by a Singapore GST registered company to a Singapore client.|
|International Corporate Services||0%||Refers to a Singapore GST registered company providing services outside of Singapore|
|Export Goods||0%||Exported goods|
|Private Transactions||Out of scope||Transactions between individual|
|Third Country Sales||Out of scope||Sales of goods from a place outside of Singapore to another place outside of Singapore|
|Sales and Lease of Residential Land||Exempted||Residential land transaction in Singapore|
|Financial Services||Exempted||Loans, Interests, and Fees from financial institutes providing financial services|
What Are Some Ways Businesses Implement GST?
- Businesses mainly charge GST on top of their selling price
- Businesses absorb the GST by treating the selling price as GST-inclusive
How to File GST Returns?
In order for you to file GST returns, you can do so electronically on the IRAS website.
If your business is a GST-registered business, you are required to submit a return using the GST F5 form to IRAS, usually quarterly unless stated by IRAS. In your return, you will need to list the total value of your local revenue, exports, and purchases from GST-registered entities, GST collected, and GST claimed during that accounting period.
Do note that penalties will be imposed if the returns are filed late. GST must be paid within 1 month after the end of your prescribed accounting period. Again, penalties will be imposed if you are late in making the GST payment.
Are There Any GST Schemes to Help Businesses?
There are various GST schemes to help ease the cash flow for businesses. Here are some schemes available:
|Name of Scheme||Description|
|Cash Accounting Scheme||This is designed to alleviate the cash flow of small businesses. Under this scheme, businesses only have to account for output tax when payment is received.|
|Discounted Sale Price Scheme||Under this scheme, businesses can charge GST on 50% of the selling price when selling a second-hand or used vehicle. Businesses do not need to seek prior approval from IRAS for this scheme|
|Gross Margin Scheme||Secondhand dealers who purchased goods free of GST will be able to use this scheme to charge and account for GST.|
|Hand-Carried Exports Scheme (HCES)||This scheme is applicable only for businesses who wish to zero-rate supplies to overseas customers for goods hand-carried out of Singapore via Changi International Airport.|
|Import GST Deferment Scheme (IGDS)||Under this scheme, approved GST-registered businesses pay GST on imports payment when their monthly GST returns are due instead of at the point of importation.|
|Major Exporter Scheme (MES)||This scheme allows GST on non-dutiable goods to be suspended at the point of import and when the goods are removed from zero GST warehouses.|
|Tourist Refund Scheme (TRS)||GST-registered businesses may provide GST refunds to tourists under this scheme.|
|Zero GST (ZG) Warehouse Scheme||This scheme is administered by the Singapore Customs and not IRAS. Under this scheme, import GST on non-dutiable overseas goods is suspended when the goods are moved into a ZG warehouse. GST is only payable when imported goods leave the warehouse and enter the local market.|
The Goods and Services Tax (GST) in Singapore is an important aspect of the country's taxation system. It is a form of indirect tax that is levied on the supply of goods and services and the importation of goods.
For businesses, it is important to understand the GST system in Singapore in order to run your business free of trouble. However, remember that not all types of goods and services fall under the GST system.
We hope that this guide serves you a great purpose and provides you with a better understanding of the GST regulations in Singapore. After all, understanding the GST regulations in Singapore is crucial for businesses operating in Singapore.
Is a Singapore company required to collect GST tax?
If a Singapore company is not GST-registered, can it collect GST tax?
What are zero-rated supplies?
Is GST applicable to zero-rated supplies?