SO MANY TAX OBLIGATIONS, SO LITTLE TIME. WE FEEL YOU.
Fortunately for you, we know this stuff inside out and can assist you to ensure you meet all the obligations that IRAS is required of you. There are advantages and disadvantages to each and it’s important to check all the details thoroughly, as the business structure will affect; the tax you are liable to pay, your business income, and ongoing costs.
What is GST?
Goods and Service Tax Singapore (GST) is a consumption tax that is levied on the supply of goods and services in Singapore and the import of goods into Singapore. GST is an indirect tax, expressed as a percentage (currently 7%) applied to the selling price of goods and services provided by GST registered business entities in Singapore.
What does GST mean for a Singapore company?
If you are a GST registered company, you are required to collect GST from your customers for the goods and services rendered by you and then pay the tax collected to tax authorities. For example, if you charged S$100 for your services to a customer in Singapore, you must invoice your customer S$107 (S$100 for your service plus 7% GST). This invoiced GST amount collected on behalf of the tax authorities from the customer must subsequently be paid to the Singapore tax department on a quarterly basis via GST tax filing. Companies incorporated in Singapore are not automatically registered to charge GST. Companies that have met certain conditions have to apply to IRAS to become a GST registered company before it is allowed to charge and collect GST.
Is my company required to register for GST?
GST is a self-assessed tax and businesses are required to continually assess the need to be registered for GST. GST registration falls into two categories: compulsory registration and voluntary registration.
Registering for GST is compulsory when the turnover of your business is more than S$1 million in the past 12 months – known as the retrospective basis OR you are currently making sales and you can reasonably expect the turnover of your business to exceed S$1 million for the next 12 months – known as the prospective basis. This includes any agreements/contracts that you have signed and expected revenue for you in the next 12 months exceed S$1 million.
When your revenue exceeds S$1 million, you will need to submit the GST application to IRAS within 30 days. Failure to register your business with IRAS within the stipulated time frame will result in penalties. There are anti-avoidance provisions to ensure that entities are not established merely to keep turnovers less than the threshold and thereby avoid registration.
You may also voluntarily register for GST if you are not liable to compulsorily register, depending on your business operations. The business must have plans to do sales or have started doing sales in Singapore (taxable supplies). Please note that there are additional conditions if you choose to register for GST on a voluntary basis.
Once you are registered voluntarily, you must remain registered for at least two years and comply with the GST regulations, filing the GST return on time on a quarterly basis and maintain all your records for at least five years, even after your business has ceased and you have deregistered from GST. You may also have to comply with any additional conditions that are imposed by the tax authority.
Exemption from Registration
If you make only zero-rated supplies you can apply for an exemption from registration, even if your taxable turnover exceeds the registration limits. This allows you to escape from the administrative requirement of GST registration and subsequent quarterly GST filing. IRAS will approve the exemption, if more than 90% of your total taxable supplies are zero-rated and if your input tax is greater than your output tax.
You can cancel your registration when your business stops or when your business is sold as a whole to another person or when your sales figures do not exceed 1 million SGD. You must submit an application form, along with other relevant documents to the tax authority within 30 days from the date of cessation.