Goods and Services Tax (GST) in Singapore
GST is similar to Valued Added Tax (VAT) in various countries. It is a consumption tax that is levied on the supply of goods and services in Singapore as well as the import of goods into Singapore. GST is based on a percentage which is applied to the selling price of goods and services supplied by GST registered business entities in Singapore.
GST tax is generally passed on to the end consumer and therefore GST does not become an additional cost to GST registered business entities. These business entities merely act as collecting agents on behalf of Singapore tax authority, Inland Revenue Authority of Singapore (IRAS). However, for non-GST registered business entities, they may have to bear this additional cost as they are unable to pass on the costs to the end consumer. They can choose to either increase their selling price to recover the GST which they pay to GST registered suppliers or absorb the GST cost.
GST collected on behalf of Singapore tax authority will have to be paid to them during filing of GST returns. GST returns has to be filed every quarter covering the period of January to March, April to June, July to September and October to December. If you need to file your returns on a different period, you can submit a request to IRAS for their review and approval.
GST Registration Requirements
There are 2 kinds of GST registration:
sales turnover is more than S$1 million for the past 12 months (unless you are certain that it will not exceed $1 million in the next 12 months); or
are currently making sales and you can reasonably expect your sales turnover in Singapore to be more than $1 million in the next 12 months.
Do note that there are penalties for failing to register. There are anti-avoidance provisions to ensure that businesses do not form new entities just to keep their turnovers less than the minimum prescribed amount to avoid registration.
If you do not meet the requirement to register for GST but wish to do so, you may apply under voluntary GST registration if you satisfy any of the following:
You make taxable supplies, meaning you make sales that are GST chargeable.
You make only out-of-scope supplies. Out-of-scope supplies mainly refer to sales for goods which did not enter Singapore and goods in transit.
You make exempt supplies of financial services that are also international services.
If you have not started making the supplies, IRAS may also allow you to register voluntarily. You must be carrying on a business and have the intention to make any of the above types of supplies at the point of registration. However, should your intention fail to materialise and the Comptroller is not satisfied that you have firm intention to make taxable supplies from the start, the input tax you have claimed following your GST registration may be withdrawn.
Requirements for Voluntary Registration
Be on GIRO Plan for payment and/ or refund of GST.
Provide the security deposit as may be imposed by the Comptroller on a case-by-case basis.
The director of the company/ sole-proprietor/ partner/ trustee has to complete the e-Learning course “GST-Before I Register” and its quiz before submitting the registration form. This 20-minute course includes the following information:
Responsibilities and obligations of a GST-registered business;
Factors to consider before registering voluntarily; and
Conditions for voluntary registration.
Complete the course “Introduction to GST” within three months from the effective date of registration. You can choose to complete the course via e-Learning or seminar by IRAS.
Remain GST-registered for at least two years
Make taxable supplies within two years if you have not started making taxable supplies at the point of applying for GST registration.
Comply fully with the responsibilities of a GST-registered business
Any other conditions as may be imposed by IRAS.
The advantage of voluntary registration is that you can enjoy the benefits of claiming input tax incurred in the course of your business. This is especially so when you make purely zero-rated supplies (exports or international services).
Exemption from Registration
If you only make zero-rated supplies, even if your turnover exceeds the S$1 million, you can apply to be exempted from registering as you would only be reclaiming and not paying tax to the IRAS. In general, if more than 90% of your total supplies are zero-rated and if your input tax is greater than your output tax, IRAS will grant the exemption.
GST Registration Procedure
A Singapore Goods and Services registration form (GST F1) together with all necessary supporting documents must be submitted to IRAS. In the case of partnerships, an additional form (GST F3), stating details of all the partners must be completed. For overseas companies, group registration and divisional registration, there are separate application procedures and forms are available. Overseas registrants are expected to appoint a local agent who will act on its behalf and must include a letter, along with the application form, stating the same.
The registration process takes about 3 weeks. Upon successful GST registration, you will receive a Notification of GST Registration letter. This letter will contain your GST number, your filing frequency and filing due dates as well as any other special instructions. You must file your GST returns electronically.
As a GST registered entity, you are responsible for charging GST on supply of goods and services and remitting the GST charged to IRAS.
You can either charge GST on top of your selling price or absorb the GST by treating the price as GST-inclusive.
As a GST registered trader you must show and quote GST-inclusive prices on all prices displayed, advertised, published and quoted verbally or in writing. Failure to display GST-inclusive prices to the public is an offence and carries a penalty. However, for goods and services subject to service charge (F & B industry), prices displayed may be GST-exclusive.
When billing customers, a tax invoice must be issued when the customer is a GST registered entity so that the latter can use it as a supporting document to claim input tax on the standard-rated purchases. It contains information on what is being sold and the respective GST charged and can be used to replace a normal invoice. Tax invoices must be retained for at least five years as part of your business records. Note that tax invoices are not required to be submitted along with your GST returns. In general, it is to be issued within 30 days of the time of supply. A tax invoice need not be issued for zero-rated, exempt and deemed supplies or to non-GST registered customer.
When payment has been made to you, you must issue a serially printed receipt to the payer if a tax invoice or simplified tax invoice has not been issued by you.
You must keep records of all your business transactions that affect your GST declarations. Additionally, keeping of a GST account (summary of the totals of your input tax and output tax for each accounting period) will facilitate your completion of GST returns.
You should make your input tax claims in the accounting period according to the date of the tax invoice or import permits.
Filing GST Returns
As a GST registered entity, you are required to submit a return (GST F5) to IRAS based on the GST accounting period or your special GST accounting period, normally on a quarterly basis. In your return, you will indicate the total value of your local sales, exports and purchases from GST registered entities, the GST collected and GST claimed for that accounting period. GST Returns are now filed electronically. Once you have started to e-file your GST F5, your next GST return will be made available online by the end of each accounting period. You can e-file your GST F5 one day after the end of the accounting period. You must ensure that IRAS receives your return not later than one month after the end of your prescribed accounting period. If there is no tax due for the said period, you must still submit a ‘nil’ return. Penalties will be imposed if you file the GST return late. This is regardless of whether the net GST declared is a payable or refundable amount.
You must pay the net GST within 1 month after the end of your accounting period. Penalties will be imposed if you are late in making the GST payment. GST refunds will usually be made within 30 days from the date of receipt of the return.
GST Assistance Schemes
The Singapore Government has introduced several assistance schemes relating to GST. These schemes generally help to ease the cash flow for businesses and help create a pro-business environment.
Tourist refund scheme, allows tourists who buy goods in Singapore from participating GST registered retailers to claim a refund of the GST paid if the goods are brought out of Singapore
Cash Accounting Scheme, is specifically for small businesses whose annual sales do not exceed SGD 1 million.
Under the Gross Margin Scheme, GST is chargeable only on the gross margin of your goods.
The Major Exporter Scheme (MES) is designed to help the cash flow of major exporters who have significant imports.
Under the Approved Contract Manufacturer and Trader (ACMT) Scheme, you are not required to charge GST when you are instructed by your overseas customer to deliver your finished goods to his customers in Singapore. As per the Approved Marine Fuel trader (MFT) Scheme, you are not required to pay GST when you purchase marine fuel oil from a local GST registered supplier.
The Hand Carried Exports Scheme is if you wish to zero-rate your supply of goods made to an overseas customer and your goods are hand-carried out of Singapore via Changi International Airport.
Under the Zero GST Warehouse Scheme, businesses can transform their warehouses into zero-GST warehouses to minimise red tape and bypass the GST process.
Approved Third Party Logistics Scheme, allows you to import goods belonging to yourself or your overseas principal without paying GST upon importation.
Are there any industry specific GST guidelines?
Singapore tax department has prepared GST guides for each industry which provide you with specific information on how GST affects your sector.
Advantages and Disadvantages of being GST registered
Being GST registered gives an impression that your company is of a certain size.
Cost of doing business is reduced since you are able to claim back the GST you paid to your GST registered supplier.
The administrative burden that comes with discharging the duties and responsibilities being GST registered.
One must either study the intricacies of GST or pay an accountant to undertake this work which in some cases can be quite costly.
Being GST registered effectively increases your selling price by 7%. Your customers who are not GST registered would not be able to recover the GST you charge and hence you will be less competitive.
You can cancel your GST registration if:
You have stopped making taxable supplies; or
You expect your taxable turnover for the next 12 months to be $1 million or less; or
Your business has ceased; or
Your business is transferred as a whole to another person.
However, if you have voluntarily registered for GST, you have to remain GST registered for two years (unless your business has ceased or your business is transferred as a whole to another person).
To apply for cancellation of GST registration, you can either submit the GST F9 via myTax Portal or by post using the hardcopy of GST F9 – Application for Cancellation of GST Registration.
You have to continue to fulfil your obligations as a GST-registered person (e.g. charge GST, submit GST returns) until the approved effective date of cancellation of your GST registration.
After Effective Date of Cancellation
You have to stop collecting GST from the effective date of cancellation. If there are any outstanding GST returns, you should file them. The final GST return to be filed after the effective date of cancellation is GST F8. In this GST return, you need to account for GST up till the last day of your GST registration.
Accounting for GST for assets held at point of de-registration
In your final GST return (GST F8), you need to account for output tax on taxable assets (including capital assets and inventories) that you held on hand as at the last day of GST registration.
GST has to be accounted for (at the prevailing rate) based on the open market value on the last day of registration. This is the price that you will pay if you purchase the asset on that day.
If the total value of business assets (which you have claimed the input tax previously) held on hand as at the last day of registration is not more than $10,000, you need not account for GST on all the business assets.
If you have transferred the whole business as a going concern to another GST-registered business, you also need not account for GST on all the business assets held on hand.
If you did not claim input GST on these assets previously, you need not account for GST on them.
Anyone who had been duly authorised to access “myTax Portal” to e-File GST returns can apply for cancellation of GST registration online. Please refer to our user guide on “Apply for Cancellation of GST Registration online” for details.
Definition of GST Terms
GST charged by a company to its customers is known as output tax
GST paid by the company to its suppliers is called input tax
What you pay to (or claim back from) the tax authorities is difference between your output and input tax.
Zero Rated Supplies
Export goods and services are called zero rated supplies and no GST is applicable.
GST is charged on taxable supplies. A taxable supply is a supply of goods or services made in Singapore, other than an exempt supply. A taxable supply can either be a standard rated or zero-rated supply.
Standard Rated Supplies
Most local sales of goods and provision of local services are standard-rated supplies. The standard rated supply is currently 7%.
Zero Rated Supplies
Zero-rated supplies of goods and services are subject to 0% GST. A GST registered entity that makes zero-rated supplies is able to claim a credit for input tax paid on purchases of inputs. In Singapore, exports of goods and provision of international services are zero-rated supplies.
GST is not chargeable on exempt supplies, of which there are two categories – sale and lease of residential land; and financial services.
The difference between zero-rated and exempt supplies is that an entity who makes exempt supplies cannot claim input GST.
Out of Scope Supplies
Out of scope supplies refers to supplies which are outside the scope of the GST Act. In general, they are:
Transfer of business as a going concern
Third country sales – refers to sale of goods from a place outside Singapore to another place outside Singapore
Sales made within Zero GST Warehouse