Overview of Goods and Services Tax (GST) in Singapore

What is GST?

GST means Goods and Services Tax in Singapore while it is considered as VAT (Value Added Tax) in many other countries. GST is broad-based consumption tax levied on the import of goods which are collected by Singapore customers. In fact, a standard rate of GST is set at 7%, regardless of the nature of goods or services provided.

In case a business is a GST-registered business, this business has to collect GST on behalf of IRAS (the Inland Revenue Authority of Singapore). It means that these services and products of the business are included GST into their prices; and then claim GST credits back on the products or services purchases as business expenses. Non-registered companies will not be able to do so.

In Singapore, GST-registered companies would declare how they have computed their GST through filing their GST returns regularly throughout the year.

Charging and Collecting GST

After registering for GST, the business must charge GST on your supplies at the prevailing rate. There are two kinds of taxes which the business need to understand including output tax and input tax. Look at a picture shown about output and input tax.

Note: this input tax credit mechanism ensures that only the value added is taxed at each stage of a supply chain.

Paying Output Tax and Claiming Input Tax Credits

As a GST-registered business:

  • You must submit your GST return to IRAS one month after the end of each prescribed accounting period. This is usually done on a quarterly basis.
  • You should report both your output tax and input tax in your GST return.
  • The difference between output tax and input tax is the net GST payable to IRAS or refunded by IRAS.

Taxable and Non-Taxable Goods and Services

Generally, some goods and services are exempt from GST in Singapore as follows:

  1. Financial services;
  2. Sale and lease of unfurnished residential properties;
  3. Importation and local supply of investment precious metals
  4. International services; and
  5. Exported goods

Benefits of registering GST

In fact, registration for GST could be beneficial to businesses so there are some businesses choose to register for GST voluntary when it is not compulsory to them.

Here are 5 benefits for being GST-registered businesses in Singapore:

  • Establish a Presence
  • Shape the Polices Which Affect You
  • Lower Individual Income Tax Rates
  • Boosts Savings and Investments
  • Lower Cost of Administration and Doing Business

Registering for GST

As mentioned, there is not a compulsory for all companies registering GST in Singapore. A company is required being a GST-registered company if its annual taxable supplies exceed $1 million. However, in case of do not reaching $1 million annual taxable supplies, the company may choose to register for GST voluntarily after careful consideration.

The registration for GST of businesses can be done both online through myTax Portal and by submitting paper forms. Note that to access myTax Portal, the business is required a SingPass.

Businesses would like to apply for GST registration, contact to ACE Global Accountant for details instruction.

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