Singapore Goods & Services Tax(GST) Guide

The registration for GST is segmented in two categories:

• Compulsory Registration
• Voluntary Registration

Compulsory Registration

Registering for GST becomes compulsory when

• the turnover of your business in the past 12 months is more than S$1 million– this is known as the retrospective basis OR
• you are making the sale, and you expect your business to S$1 million for the next 12 months – this is known as the prospective basis. This also includes any contracts or agreements that you might sign and expect the revenue to exceed S$1 million in the next 12 months.

Whenever your business revenue exceeds S$1 million, you are required to register for GST within 30 days. Not doing so within the given time will result in penalties from Singapore tax authorities. There is also an anti-avoidance mechanism in place to ensure that businesses are not manipulating their revenue to keep it under S$1 million, thereby avoid registration.

Voluntary registration

Even if you are not liable to compulsorily register, you may also voluntarily register for GST, keeping in view the business operations of your company. Your company should have plans to make sales or should have already started making sales in Singapore (on taxable supplies). You should remember that there are additional conditions if you choose to register voluntarily for GST.

On voluntary registration, you are bound to remain registered for at least two years and comply with the GST regulations like maintain all your records for at least five years and filing the GST return on a quarterly basis even after you have deregistered from GST or ceased your business.

When do Companies Registere Voluntarily

If in your business scenario, you pay a lot of GST on input (Purchase) side and if you are not registered for GST then this input side GST will become your cost. If you are in the trading business then this cost can be significant. In this case, you can register for GST voluntarily to get the refund of input GST back.

The tax that you company charges from the customers is called GST. Whereas, the tax you give your supplier is called input tax. So you can offset your GST, by paying to or claiming form the Singapore tax department the difference between the input tax and the GST of your sales.

For example, if in a period you have made taxable supplies worth 100,000 SGD and collected tax on it of 7000 SGD. At the same time, you have also incurred expenses and spend on purchases worth 60,000 SGD and has paid GST on the input side of worth 4200 SGD. Then, in this case, you will pay net 2800 SGD as GST to IRAS.

GST on International Services

If your services fall within the scope of Section 21(3) of the GST Act, your services are considered as international services. As per the GST act, international services are zero-rated, which means 0% GST is charged on these services. However, keeping in view the types of services, you may be required to know your customer’s belonging status (local or overseas) before your supply of services can be zero-rated.

It is important to note that all services provided to overseas customers are not zero-rated. International services that are covered under international services are, Advertising Services, Co-location Services (for computer server equipment), International Transport (for Goods and Passengers), Lease or Hire of Transport, Services Performed Completely Overseas, Services Related to Goods for Export and Goods Moving Outside Singapore, Services Related to Land/Buildings/Goods Located Overseas, Services Supplied to Overseas Person, Supplies Related to Ships or Aircraft, Services Related to Electronic System, Services Performed on Goods Stored in a Warehouse under the Specialised Warehouse Scheme, Supplies Related to Air and Sea Containers, Telecommunication Services and Trust Services.

If you perform any services to the overseas company, but the performance of the contract is in Singapore then such services are still GST taxable. For example, an overseas company may engage you to perform market research in Singapore.

Exempt supplies cannot be charged with GST. The input tax that is incurred on making exempt supplies is not claimable. Following is the list of services that are exempted of GST:

• Tokens for Digital payment (with effect from 1 Jan 2020)
• Financial services;
• IPM (Investment Precios Metal)
• Residential Properties

Out-of-scope Supplies

Out of scope, supplies are those supplies which do not come under the scope of the GST act. Following are examples of out of scope supplies:

• Private transactions
• Transfer of business as a going concern
• Sales made within Zero GST Warehouse
• Sales of goods and services from a place outside Singapore to another location outside of Singapore. This is also called Third Country Sales.

The following are the benefits and drawbacks to register voluntarily for GST that would help you decide whether to voluntarily register for GST or not.

Benefits

• Since most of the large businesses are GST registered, so getting your business registered for GST gives a signal to your customers that your business is well established and is of substantial size.

• Businesses do not suffer from the cost of tax as the actual taxpayer is the end-user.
• GST is not applied to saving, and investments; only consumption is levied. This encourages people to invest and save in productive activities.
• If you spend substantially on input tax, then voluntarily registering for GST helps you to get a refund of such tax paid.

Drawbacks

• It adds to the administrative burden that comes with the GST registration.
• One may either need to study the complexities of GST or hire an accountant to undertake this work, which can be very cost-effective.
• Being registered, your selling price increases by 7%. Your customers who are not registered will not be able to reclaim the GST they paid, making them not very pleased about it.
• GST can be burdensome for smaller businesses / lower-income groups, especially during the time of increased inflation when 7% tax is to be paid on high prices of daily essentials.

• GST F1, which is the form for Singapore goods and services registration along with other supporting documents, is needed to be sent to the tax authorities.
• An additional form known as GST F3 that gives the details of all the partners must also be completed if there are partnerships in the business.
• However, if you have access to your corppass account then this application now can be filled in online also.
• For overseas companies, there are separate application procedures / forms available. A local agent must be appointed by the foreign registrants. This agent will act on his/her behalf and is required to include a letter stating the same along with the application form.

• The process of registration takes up to three weeks. You will receive a notification whenever your registration is successfully completed. The notification letter will contain your GST number, the date with effect from which your business becomes registered, filing frequency, filing due dates, and other special instructions. GST returns must be submitted electronically.
• In case you are voluntarily registering for GST, then you will be required to complete an online GST learning course.

• You are required to submit your return GST F5 to the authorities quarterly, depending upon your accounting cycle.
• You must mention in your return the total value of your sales, purchases, and exports from GST registered entities, the GST collected, and the GST claimed for a specific accounting period.
• GST Returns are filed online.
• Once you have e filed your GST F5, your next GST return will be made available online at the end of your accounting period.
• GST F5 can be file electronically up to one day after your accounting period ends.

• IRAS must receive your return within a period of one month after the end of your accounting period.
• If there is no tax due, even then, you are required to submit a Nil return.
• Regardless of the fact whether the net GST declared is a payable or refundable amount, IRAS will impose the late submission penalty if your GST return is not filed within the prescribed time.
• You will receive the GST refunds within thirty days from the date when you submitted your tax return.