Introduced in 1994 to diversify Singapore’s tax base, GST is a tax charged on the import of goods, as well as all supplies of goods and services in Singapore. The prevailing rate for GST is 7%. Most of your business’ sales in Singapore involving goods and services, such as computer software or marketing services, are taxable. These are known as taxable supplies.
As a company, your total “taxable turnover” is the combined revenue, fees and income it earns from:
- All its business activities
- Sole proprietorship businesses
- Rental of commercial properties
- Rental of furniture & fittings
When is my company liable to register for GST?
If your company’s annual taxable turnover exceeds or is likely to exceed S$1 million from the sale of taxable goods and services, you will need to register your business for GST.
Here’s how you can determine if your business is liable to register for GST. From 2019, you may monitor the value of your business’ taxable supplies on a calendar year basis instead of a quarterly basis. Your business is required to commence charging GST from its effective date of GST registration.
|Date your company’s GST registration liability arises||At the end of any calendar year, if your company’s taxable turnover that calendar year exceeds S$1m.|
|Deadline for GST registration||By 30 Jan|
|Your company’s date of registration||1 Mar|
What happens when your company is GST-registered?
If your business is GST-registered, it must charge GST at 7% on the goods or services it provides in Singapore, and pass this on to the Inland Revenue Authority of Singapore (IRAS). Before passing it on, your company is allowed to deduct any GST that it has paid on its business purchases.
If the GST your business paid on its purchases (input tax) exceeds GST it collected on its sales (output tax), your company may claim the difference from IRAS as a GST refund.
If your company’s output tax exceeds input tax, the difference is due to IRAS.
Are there any exceptions to the rule?
Some items are specifically exempt from GST by law. Exempted items include financial services and the sale or rental of residential properties. If the goods your company supplies will be exported, it can charge GST at 0%. GST can also be charged at 0% if your company provides qualifying international services such as international transport.
As such, if your business’ turnover mainly comprises the export of goods or international services, it needs not register for GST, even if its annual taxable turnover has exceeded $1 million.
If my company’s taxable turnover does not exceed S$1 million, can I still register my business for GST?
If your company’s taxable turnover does not exceed S$1 million whether you take a retrospective or prospective view, you may also apply to IRAS for your business to collect GST voluntarily.
If your company is GST-registered, it can recover any GST that has been charged to it. Being registered for GST may also present your business as a large, professional and well-established organisation. However, do consider this option carefully and whether the benefits in your situation are likely to outweigh the administrative costs.
To avoid hefty fines and penalties, monitor your business’ taxable turnover closely on an annual basis, and promptly register for GST once your company’s turnover crosses the $1 million mark!
At Corporate Services Singapore, our professional tax specialists will guide you in determining whether GST registration is ideal for your business set-up. For professional advice on making the best out of Singapore’s GST tax regime, talk to us today!