A Quick Guide To Singapore Goods And Services Tax

By Author: Ashley V.
Total Articles: 63
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WHAT IS GST? A Goods and Services Tax (GST) in Singapore is a tax that is levied on the supply of goods and services and the import of goods into Singapore. It is in the nature of an indirect tax as it is imposed on expenditure. The current GST rate is 7% and is applied to the selling price of goods and services of GST registered company in Singapore. It is more commonly known as Value Added Tax (VAT) in other countries. A registered company acts as a collecting agent for the government as it is required to submit the tax collected from its consumers to the authorities.

GST in Singapore is a relatively new law as it was only implemented on April 1, 1994. It is modelled on the laws of UK and Zealand and is seen to be an effective means of reducing personal and corporate income tax rates and at the same time maintain a steady revenue base for the government.

GST REGISTRATION. GST can only be collected by companies that are registered. Registration of a company for GST is divided into two categories: compulsory registration and voluntary registration.
A compulsory registration occurs when:

* A company ...
... earns a profit of more than S$1 million for the past 12 months (retrospective basis); or
* A company is currently making sales and there is a reasonable expectation of profits exceeding S$1 million for the past 12 months (prospective basis)
Failure of a company which possesses the following criteria to register for GST shall be liable for penalties from the government.
* A company that does not belong to the compulsory registration category may apply to voluntarily register for GST provided that it satisfies any of the following requirements:

The annual profit does not exceed S$1 million

The goods are supplied outside of Singapore (out-of-scope);

Exempted supplies for financial services which are also considered as international services;
In voluntary GST registration, the registration must remain for at least two years and the financial records of the business must be kept and maintained for at least five years, regardless of whether the business has stopped its operations or has de-registered from GST.

EXEMPTION FROM REGISTRATION. A company may apply for exemption from GST registration if it makes only zero-rated supplies such as export of goods, regardless of whether the profits exceed the limits for registration. The IRAS or Inland Revenue Authority of Singapore which is the controlling authority with respect to GST implementation and collection will approve applications for exemptions if more than 90% of the total supplies are zero-rated and if the input tax is greater than the output tax.

DE-REGISTRATION. A GST registration may be cancelled upon the cessation of the business, or its sale, or when the sales profits do not exceed S$1 million. An application for de-registration shall be submitted to the Inland Revenue Authority of Singapore (IRAS) within 30 days from the cessation of business operations.

GOODS AND SERVICES SUBJECT TO GST. Only taxable supplies can be subject to GST. A taxable supply is a supply of goods or services made in Singapore and can either be a standard rated (currently 7%) or zero-rated supply. Standard rated supplies usually include local sales of goods and provision of local services while zero-rated supplies include exports of goods and provision of international services.
Contrary to taxable supplies, there are also exempt supplies. Exempt supplies are not GST chargeable and have two categories: 1) sale and lease of residential land; and 2) financial services.

BENEFITS. Both the government and the individual/company can acquire benefits from the GST. Through GST, the government can generate a stable and predictable tax income regardless of the health or status of the economy. A company registered to GST proves that it is a well-established company and thus creating a positive image and reputation to the society.

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