Guide to Goods and Services Tax in Singapore

What is GST?

GST stands for goods and service tax. It is similar to VAT, sales tax, ModVAT as maybe called in your country. GST-registered companies are mandated to collect 7% GST on the products and services they provide to customers. Remittance of GST to tax authorities is done quarterly. As an example, a company selling an S$100 product can charge its customer S$107. The additional $7 is the GST levied on the product. At the end of the quarter, this seven-dollar charge is paid to the government through GST tax filing.

Who needs to register for GST?

Not every company needs to register for GST. Applicability of GST depends on the condition of a company. It is, therefore, important that a company continually assesses its liability. It is also important to note that penalties are imposed on companies that are GST-eligible, but did not register. There are two categories of GST registration that each company must be aware of:

Mandatory Registration

A company must be GST registered based on two conditions:

  1. Retrospective basis: The previous 1-year sales of a company exceed S$1 million;
  2. Prospective basis: The company expects reasonably that its sales will go beyond the S$1 million threshold in the next 12 months.

Voluntary Registration

you may choose to apply for GST registration on voluntary basis if you satisfy any of the following

  1. You make taxable supplies.
  2. You make only out-of-scope supplies. Out-of-scope supplies mainly refer to sales of goods which did not enter Singapore and goods in transit.
  3. You make exempt supplies of financial services

Companies who choose to voluntarily register must maintain this status in the next two years from the date of their registration. They are also required to maintain a 5-year record of their transactions even the business has closed or it chose to deregister within that timeframe. There are also other requirements from tax authorities that a company may need to adhere to. IRAS may ask you to provide Bank guarantee for approving voluntary GST registration.

On What Products and Services Can GST be Charged?

GST Chargeable Supplies

All products and services that originate from Singapore, also known as taxable supply, are subject to GST. A seven percent GST is imposed on standard rated taxable supply.

    Zero-rated supplies

    Zero-rated supplies are products and services that originate from Singapore but are exported internationally. GST-registered companies can claim credits on their input tax for the products and services they produced locally and sold internationally.

      exempt supplies

      Financial services and sale and/or lease of residential properties belong to the “exempt supplies” category and are not subject to GST. Transactions under this category are not allowed to claim credits for input GST.

        out-of-scope supplies

        GST is also not applicable to supplies belonging to the category “out-of-scope supplies”. These include:
        1. Sales generated from a zero-GST warehouse
        2. Sales made from a foreign country to another foreign country – High seas sales
        3. Private business deals
        4. On-going business transfer

          collecting GST from Customers

          Only GST-registered companies are legally allowed to add GST in their invoicing. Collecting GST when not registered is an offence. Aa company can claim back the GST it paid to its suppliers. In taxation parlance, the company need to pay only the difference in input GST and output GST.

          Procedure to be followed in Registering for GST

          The general rule to be followed in registering is to complete the GST F1 form and submitting all supporting documents required by IRAS. Partnerships are required to complete the GST F3 form, while overseas companies, divisions, and groups need to file separate application forms. An overseas company must empower a local agent to act on its behalf if it wants to be GST-registered in Singapore.

          The whole GST-registration process is about three weeks. Once a company is listed, the relevant tax authority will send a letter entitled “Notification of GST Registration”. This letter contains the company’s GST number, filing instructions that include due date and frequency, and other pertinent information related to GST. GST returns filing is done electronically.

          What are the Requirements in Implementing, Paying, and Charging GST?

          1. It is the responsibility of all GST-registered companies to charge the said tax on their goods and services and submitting the said collected GST to IRAS.
          2. GST can be included as an add-on price to the original price of goods or services or it can be embedded to show the price as GST-inclusive.
          3. All manner of communications mentioning the price of a product of service must always show GST-inclusive prices, except in the food and beverage industry where the price quoted can be GST-exclusive. Penalties will be meted on companies that fail to follow this requirement.
          4. Issuing a tax invoice is mandatory when the goods or services are sold to another company that is GST-registered. This is to provide the buying company with documentation to claim input tax. All invoices issues must be kept for at least five years, although these are not needed when submitting GST returns. Zero-rated, exempt supplies, deemed supplies, or customers who are not GST-registered need not be issued sales invoice.
          5. In the absence of simplified tax invoice or tax invoice, a serially-printed receipt must be issued to a buyer.
          6. All GST-related records must be kept to easily facilitate filing of GST returns. For a company, it will be easier to compute input and output taxes when making tax claims.
          7. A tax invoice’s date must coincide with the accounting period on which an input tax claim is made.

          Filing GST Return

          GST returns are filed electronically and quarterly through the GST F5 form. The form must include the following:

          • Total value of sales made during the quarterly accounting cycle
          • Exports to and purchases made from other GST-registered companies;
          • Amount of GST collection
          • Quarterly claim for GST

          All filings must be done within a month after the end of each accounting period. In the event that there is no sale within a cycle, a “nil” return must still be submitted. Failure to comply with this procedure will be meted with penalties. GST refunds are issued within 30 days after IRAS receives the GST return.