Goods and Services Tax (GST)
Goods and Services Tax (GST) is a type of value-added tax in Singapore. As per the Companies Act (Chapter 117A), it is levied on almost all the supplies of goods and services as well as the import of goods in Singapore. GST can be charged only by a GST-registered company, which is included in the selling price of their goods and services. It is an indirect tax that is charged to the end consumer and not the business. The GST collected by the businesses is paid to IRAS.
Most financial services, the supply of digital payment tokens, the sale and lease of residential properties, and the importation and local supply of investment precious metals are expected from GST. International services and export of goods are known as zero-rated supplies. No GST is charged on zero-rated supplies.
Which businesses are required to register for GST?
A company is required to register for GST only if:
- The annual turnover exceeds S$1 million. This is called a retrospective view, or
- The annual turnover is expected to exceed S$1 million. This is called a prospective view and is determined based on the forecast. The company needs to submit supporting documents like contracts and agreements, confirmed purchase orders, or invoices while registering.
Voluntary registration of GST is permissible as well but is subject to approval by the Comptroller of GST.
Exemptions for registering for GST
Businesses that meet the below-mentioned conditions are exempted from registering for GST:
- The taxable turnover comprises income generated wholly or mainly from zero-rated supplies.
- If under the retrospective view, you are liable for GST registration but not under the prospective view, and the following conditions are met:
- You are sure the annual turnover will not exceed S$1 million for the next 12 months.
- The taxable turnover is projected to fall due to specific circumstances.
- Supporting documents are in place to verify your projection.
Once a company has registered for GST, it must charge GST on its supplies at the prevailing rate. No GST is charged on supplies that are subject to customer accounting, like mobile phones, memory cards, and off-the-shelf software, whose GST-exclusive sale value exceeds $10,000 and is not an excepted supply. GST charged and collected is known as output tax and should be paid to IRAS within a month from the end of the accounting period.
The GST that the company incurs on business purchases and expenses (including import of goods) is known as input tax. Only companies registered for GST and that satisfy the laid down conditions can claim input tax on their business purchases and expenses.
A GST registered company should report their output tax and input tax to IRAS within a month from the end of each prescribed accounting period. This is usually done every quarter. The net GST, which is payable to IRAS or refundable by IRAS, is the difference between output and input tax.