SINGAPORE GOODS AND SERVICES TAX (GST)
To increase the resilience of taxes as a source of government revenue, Goods and Services Tax (GST) was introduced in 1994. GST is similar to Value Added Tax (VAT) in other countries. It is seen as a means to lower personal and corporate income tax rates while maintaining a steady revenue base for the government. GST is an indirect tax as it taxes expenditure. The current rate for GST is 7%.
The Inland Revenue Authority of Singapore (IRAS) acts as the agent of the Singapore government and administers, assesses, collects and enforces payment of GST. It is a broad-based consumption tax levied on the import of goods (collected by Singapore Customs) as well as nearly all supplies of goods and services in Singapore. However, some items are specifically exempt from GST include financial services and the sale or lease of residential properties.
ESSENTIAL FACTS ABOUT GST
GST tax is charged to the end customer therefore GST normally does not become a cost to the company. Businesses merely act as collecting agents on behalf of IRAS.
A company incorporated in Singapore is not automatically registered to charge GST. Registration for GST is compulsory when the annual turnover of the company exceeds or is likely to exceed S$1 million for the next 12 months from the sale of taxable goods and services. This requirement may be waived if most of the goods or services are exported or supplied internationally (“zero-rated supplies”). Once the revenue exceeds S$1 million, the company needs to submit the GST applications to IRAS within 30 days, failing which, will attract penalties.
A company may also apply to the Comptroller of GST to collect GST voluntarily. Approval for voluntary registration is at the discretion of the Comptroller. Once approval is given, the company must remain registered for at least two years and it has to comply with the GST regulations, filing the GST return on time on quarterly basis and maintain all records for at least five years, even after the cessation of business or deregistration from GST.
A company can cancel its registration when its business stops or when the business is sold as a whole to another entity or when the sales figures does not exceed S$1 million. It can be done vide a submission of an application form, along with the other relevant documents to IRAS within 30 days from the date of cessation.
For more information, please visit the tax authority at https://www.iras.gov.sg