COUNTRY

Singapore

GST REGISTRATION SERVICE IN SINGAPORE

Good and services tax, also widely referred to as value-added tax or VAT, is a consumption tax levied on applicable goods and services rendered in Singapore. The Singapore government introduced GST in 1994 as part of the effort to shift the country’s reliance from direct taxes to indirect taxes.

The government has also announced an increase in the GST rate effective 1st January 2023. The effective GST rate in 2023 will be 8% and a further increase to 9% effective 1st January 2024. The effective GST rate is applicable at the time of supply. 

If you send an invoice and are paid for the supply made on or after 1st January 2023, you must charge GST at 8% unless you qualify under the transitional rate regulations to charge GST at 7%.

KEY POINTS ABOUT GST IN SINGAPORE

  • GST is a tax on domestic consumption that is also known as value-added tax (VAT) in some other countries. Singapore currently has an 8% GST rate. With effect from January 1, 2024, the GST will rise to 9%.
  • The final consumer is required to pay GST. It is the responsibility of the company selling the goods or services to 1) apply and collect GST from customers and 2) pay the tax to IRAS. The company essentially serves as IRAS’s GST collecting agent.
  • Only firms that are GST-registered may charge GST. Only companies with an annual taxable turnover of more than S$1 million are required to register. However, businesses with lower revenue levels can also voluntarily register.
  • Imported goods are subject to GST as well. Singapore Customs is responsible for collecting GST on imports.
  • The sale and lease of residential properties, financial services, and the import and local supply of precious metals aimed toward investment are a few business categories that are exempt from the GST.
  • GST is not applied to the export of goods or certain types of services offered to clients in other countries.
  • A GST-registered business must submit a GST return to IRAS every month or every three months.
  • Output tax refers to the GST that a company collects from customers. In contrast, input tax refers to GST paid on a company’s purchases or to its suppliers.
  • A company that has registered for GST may seek credit for their input tax. In addition, input tax can reduce output tax. As a result, firms that have registered for GST only pay GST on the “value-added” to their goods or services, which is determined by subtracting their input tax from their output tax.

ARE THERE BENEFITS TO REGISTERING FOR GST IN SINGAPORE?

  • Enhanced Brand Name

The competition in the Singaporean corporate world is fierce, with numerous companies competing for positions as market leaders. A business that has registered for GST gives off the impression of being established and puts you on a level with other market leaders in the particular field.

When customers learn that the business is GST registered, they make optimistic estimates about its size and likely revenue. This will eventually result in sales and referrals.

  • Lower individual income tax rates 

Due to its advantageous business and personal income tax system, Singapore is appealing to the majority of individuals. The tax revenue growth report allows the government to monitor the amount of corporate income taxes collected, allowing it to keep the personal income tax rates as low as possible.

  • Lowers the cost of doing business

Due to its effectiveness, Singapore’s advantageous tax system has been recognized as one of the best in the world. Foreign investors are not the only ones who profit from this tax system; the government also saves money on administrative and collection expenses. By shifting tax charges to the final customer, Singapore GST registration lowers the cost of doing business. This means that firms are exempt from paying any tax expenses, which has a significant positive impact on their bottom line.

  • Encourages investment and saving

Singapore only taxes citizens when they purchase goods and services for consumption. This results in lower individual tax rates, and as if that weren’t good enough, money set aside for investments and savings is exempt from taxes. It is only fair to exempt savings and investments from further taxation as Singaporeans pay GST on every purchase they make.

  • Enable Customized Business Policies

By registering the company for GST, the applicant is added to a database of financial data. The government can effectively and precisely evaluate this data in order to forecast the anticipated growth in income tax collection. This information will help the government make decisions that are likely to benefit GST-registered businesses.


REQUIREMENTS OF GST REGISTRATION IN SINGAPORE

Mandatory Registration

Companies must register and collect GST if and when:

  • The company expects its taxable turnover to surpass S$1 million in the upcoming 12 months OR
  • The company’s taxable turnover for the last 12 months exceeded S$1 million.

At the conclusion of each quarter, businesses are supposed to assess their taxable turnover to determine whether they require GST registration.
Companies that have taxable sales of more than S$1 million in the previous 12 months are obliged to register for GST within 30 days of the end of the quarter in which this has happened.

Companies must register for GST within 30 days of making the determination that their anticipated annual taxable revenue would exceed S$1 million.

Voluntary Registration

Businesses having an annual taxable turnover of less than S$1 million are not required to register for GST, but they are free to do so if they wish.

The company’s director(s) are required to finish the two e-Learning courses Registering for GST and Overview of GST as part of voluntary GST registration, with the following exceptions:

  • The business director has prior expertise running other already-operating GST-registered companies.
  • The Accredited Tax Adviser (ATA) or Accredited Tax Practitioner (ATP) prepares the business’s GST returns.
  • The above e-learning courses were successfully completed by the individual who prepared GST returns within the last two years.

Additional requirements for GST registration and compliance may be specified by IRAS. In addition, if the business doesn’t comply with any of the requirements, it can cancel its GST registration.

HOW TO APPLY FOR GST REGISTRATION FOR YOUR BUSINESS?

Assess registration type and complete the IRAS e-learning course

The company directors or authorized individuals should determine whether the GST registration is deemed voluntary or mandatory and complete the e-learning course. You can skip step 1 if you engage a qualified Singapore firm such as Relin Consultant to assist you with the GST registration.

Gather all the required documents and information for GST registration 

IRAS has listed out a list of supporting documents required during the submission. You can refer to the following link for a list of supporting documents. 

Once all the documents are ready, the company should print out a GIRO application form and complete the same manually.

Submit the registration application 

The company can proceed with the application by filling out the online application form at the IRAS tax portal. Once the application is submitted, the company must immediately courier the GIRO application form to IRAS at the given address. 

IRAS will usually review a voluntary GST registration application and revert within 2 to 3 weeks with a conclusion. Applicants under the required GST registration method will receive the conclusion in 2 business days. If the GST registration is approved, IRAS will also notify the company of its GST registration number and the effective date of the GST registration date.

Businesses are only allowed to charge GST on or after the effective date of the GST registration date provided by IRAS.

SINGAPORE GST-REGISTERED BUSINESSES

All Singapore GST-registered businesses must timely file a GST F5 tax return to IRAS. Irrespective of whether there are any transactions in a given period, the company must still electronically file GST through the IRAS tax portal. Most businesses usually opt for quarterly GST filing. The business must report both its input and output tax during the filing.

The GST payment date is within one month from the filing date. Most companies will set up automatic payments via GIRO. 

A business being charged GST by its suppliers can perform a GST registration check at the following link whether the business is GST registered. 

Other GST schemes introduced by IRAS

IRAS has introduced a few different schemes for businesses that intend to be GST registered companies in a specific industry. We have listed below some of the schemes.

If you require additional information or assessment on whether your business qualifies for the schemes below, you can reach out to our GST team at enquiry@relinconsultants.com

Major Exporter Scheme (MES)

MES was designed to assist businesses with substantial import and export of goods to ease their cash flow. Businesses under the MES, are allowed to suspend the payment of GST at the point of importation of goods. Hence, such companies can import non-dutiable goods without paying GST to Singapore Customs.

Tourist Refund Scheme (TRS) 

The Tourist Refund Scheme (TRS) allows tourists to receive a refund of GST paid on goods purchased from retailers who participate in the scheme. 

Approved Third Party Logistics (3PL) Company Scheme 

This scheme was designed to improve the competitiveness of logistics companies that provide logistics management services to overseas clients to use Singapore as a logistics hub. 

Import GST Deferment Scheme (IGDS) 

GST-registered businesses can defer their import GST payments until their monthly GST returns are due. 

Specialized Warehouse Scheme (SWS) 

Qualifying services performed on qualifying goods and storage facilities can be zero-rate if the warehouse hat are used for providing specialised storage facilities to overseas persons and most of the goods stored will eventually be exported.

Hand-Carried Exports Scheme (HCES)

This scheme is applicable if you wish to zero-rate your supply to overseas customers for goods hand-carried out of Singapore via Changi International Airport.

Approved Import GST Suspension Scheme (AISS) 

This scheme is designed to alleviate the cash flow of businesses in the aerospace industry by suspending the import GST. 

Approved Marine Customer Scheme (AMCS) 

Under the scheme, purchases or rental of goods will be zero-rated for business for businesses procuring goods for use or installation on internationally bound commercial ships.

Approved Marine Fuel Trader (MFT) Scheme 

Under this scheme, the company need not pay GST when it makes local purchases of approved marine fuel oil from other GST-registered suppliers.

Approved Contract Manufacturer & Trader Scheme (ACMT) 

The ACMT Scheme is designed to relieve businesses (e.g. local contract manufacturers) that have substantial business with non-GST registered companies. 

Approved Refiner and Consolidator Scheme (ARCS) 

The ARCS eases cash flows for qualifying refiners and consolidators of precious investment metals (IPM) in their payment of GST on the import and purchase of raw materials and relieves input tax incurred in their refining activities.

SINGAPORE GST RATE CHANGES IN 2023

GST-registered businesses must comply with the following rules by the effective date. 

Displaying the price of the GST Rate to the public

Prices for products and services that include GST must be shown to the public on all pricing displays. As a result, starting on 1st January 2023, all pricing displays must include GST at 8%. You may show two prices if you fail to adjust your pricing displays overnight:

One in effect before 1st January 2023 lists prices that include GST at 7%.

One starting on 1st January 2023, displaying prices inclusive of GST at 8%

Plan to update your pricing to reflect the 8% GST rate on or after 1st January 2023. You should give your customers more clarity by placing a notice alongside your price displays before that date indicating prices will be changed.

However, no update is needed on your pricing displays if you opt not to raise your prices for the goods and services. For sales made on or after 1st January 2023, you will still need to account for GST using the applicable tax fraction (8/108) of your pricing.

New Tax Invoice in Simplified Format

Starting on or after 1st January 2023, you may submit a simplified format of tax invoices as long as the total amount due, including the GST for the supply, does not exceed SGD 1,000. For the GST rate at 7% due to the transitional rules, you must issue proper tax invoices that display the different GST rates applied to the particular supply.

Tax Claims Input 

Only the GST amount indicated on the tax invoice may be claimed as input tax. You may utilize the tax fraction to calculate the GST amount to be claimed as your input tax if.

  • The provided tax invoice is in a simplified format 
  • the GST amount is not displayed on the tax invoice.

The issued date for the simplified tax invoice can be utilized to determine the tax portion. For example, you should use tax fraction 7/107 for simplified tax invoices dated prior to 1st January 2023 and tax fraction 8/108 for those dated on or after that date.

Filing for the GST Returns

The method to fill out your GST submission is unaffected by the change in the GST rate. If the GST rate change requires adjustments to your standard-rated goods or services (including reverse charge supplies), you must report those adjustments in your GST return. 

The report must cover the period when the adjustment is made following the transitional rules for a rate change. No separate form or refund is required for purchases of goods or supplies made after the GST rate adjustment.

GST rate change may be affected by the transitional rule

This means that certain supply transactions, including reverse charge supplies and imported services under the OVR regime, can have different GST rates than the effective 8% rate in 2023. 

The transitional rule depends on the date.

  • The issuance of the invoice
  • The receipt of payment 
  • The delivery of goods or performance of services

In addition to the invoice date and payment date, GST-registered businesses need to know when their supplies are delivered or performed to assess if and how the transitional rules would apply to a supply that spans the date of the rate change. 

For more details regarding the example of transitional rules application for supplies, you can refer to the IRAS e-tax guide, where details regarding the transitional time of supply rules are further elaborated.


GST REFUND IN SINGAPORE

Who is eligible for a tax refund?

  • The applicant is not a citizen of Singapore or a permanent resident; 
  • They are at least 16 years old at the time of purchase; 
  • They aren’t a member of the flight crew departing Singapore;
  • Either Changi Airport or Seletar Airport is where you depart from Singapore. If you depart by the Causeway or the water, you will not be entitled to a GST refund.
  • When the applicant claims for a refund, their purchases must have been made within the previous two months.
  • They are not a “Specified Person” on the day of the transaction, at any point in the three months prior to the date of the purchase, or on the day they file the claim for a GST refund on the airport purchases.

FAQs

What are the affected industries and scope for the changes in GST rate in 2023?

Every GST-registered business will be affected by the GST Rate Change in 2023.

Why Singapore increase the GST rate in 2023?

The Singapore government stated that the reasons contributing to the changes in the GST rate are mainly to support the government’s intention to generate extra funds necessary to cover increased healthcare and social spending.

What are the requirements to register for GST?

Businesses that are generating a taxable turnover exceeding $1 million in a calendar year are required to mandatory register for GST. The company can still choose to voluntarily register for GST if the taxable turnover does not exceed S$ 1 million.

Can I choose the date when I want to register?

No, a company must register for GST once it meets the mandatory requirements. Companies that opt for voluntary registration will be advised by IRAS on the date of registration once they review and approve the application.

Is there any penalty for late registration?

Yes, depending on the circumstances and seriousness of the breach of late registration. A company can be fined from 2% to 55% of the total GST due.

How is GST calculated in Singapore?

GST is arrived by multiplying the cost of goods or services by 8%. The GST rate in Singapore is 8%, effective 1st January 2023.

Is GST any different from VAT?

GST is the same as VAT.

What are exempt and zero-rated supplies? Is there any difference between them?

Zero-rated supplies are different as compared to exempt supplies, although both of them qualify for a 0% GST. 

As per IRAS, out-of-scope supplies include the sale of goods not brought into Singapore, sales of overseas goods made within the Free Trade Zone and Zero GST Warehouses, and private transactions.

As per IRAS, GST-exempt supplies include the following. 

  • The provision of financial services;
  • The supply of digital payment tokens (with effect from 1 Jan 2020);
  • The sale and lease of residential properties; and
  • The import and local supply of investment precious metals (IPM).
  • GST need not be charged on exempt supplies.

What is the accounting period for GST filing returns? Can it be changed?

Once the company is approved by IRAS GST registration, IRAS will indicate the company’s GST filing period based on the company’s financial year-end. If a company wishes to change the GST accounting period it may do so by submitting a written request to IRAS.

How can I cancel my GST registration?

Companies that voluntarily register for GST cannot cancel the registration within 2 years of registration. Otherwise, a company can apply for cancellation by writing to IRAS.

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