Singapore Goods and Services Tax (GST): Claim Refund Easily

Singapore first introduced Goods and Services Tax (GST) on 1 April 1994 at a rate of 3%. Managed by the Inland Revenue Authority of Singapore (IRAS), GST is a value-added tax (VAT) collected at each stage of the production and distribution chain, making it a multi-stage tax.

GST affects most individuals and entities in Singapore – from businesses to individuals, and even has an impact on the government. In this blog, we take a more concise look at this tax and how it impacts businesses.

What is Goods and Services Tax (GST)?

In Singapore, GST stands for Goods and Services Tax, which is a broad-based consumption tax imposed on the import of goods and most supplies of goods and services. 

It is an indirect tax expressed as a percentage to standard-rated supplies and applied to the selling price of goods and services provided by GST-registered business entities.

How Much is GST in Singapore?

The current GST rate in Singapore is 8%. It will increase to 9% from 1st Jan 2024.

What Does GST Mean for Companies in Singapore?

Companies in Singapore are required to assess their need to register for GST and must register if their annual taxable turnover exceeds a certain threshold.

Businesses that are GST-registered must collect GST from their customers for the goods and services provided, which must be paid to the tax authorities.

For example, if a company charges S$1,000 for goods to a client in Singapore, it must invoice the customer S$1,080 (S$1,000 for the goods and S$80 GST).

During the quarterly GST tax filing, this GST amount must be paid to the Singapore tax department. Being aware of the GST implications allows businesses to manage their cash flow effectively and plan for their tax obligations.

How to Know Whether a Company Must Register for GST

Companies in Singapore must regularly assess the need to be GST-registered as it is a self-assessed tax. They are either required to register for GST if they fulfil certain requirements under the retrospective or prospective view, or can choose to register voluntarily if they are not liable to do so.

Related Read: 5 Ways to File Your Corporate Income Tax in Singapore Accurately

Compulsory GST Registration

As mentioned, your company must register for GST if it meets these conditions:

Retrospective View (On or After 1st Jan 2019)

This applies to companies with taxable turnover at the end of the calendar year of over S$1 million. They must register for GST by 30th Jan, of which the effective date of registration will be 1st Mar.

Prospective View

This applies to companies with an expected taxable turnover of over S$1 million in the next 12 months. They must register for GST within 30 days of the date of the forecast, of which the registration will take effect on the 31st day from the forecast date.

Companies must also provide supporting documents to back the forecast value of S$1 million, such as:

• Customer invoices that indicate fixed monthly fees
• Signed agreements or contracts
• Quotations that are accepted, or customer purchase orders that are confirmed
• Income statements indicating that the previous 12-month period had an annual turnover of close to S$1 million of an increasing trend

Voluntary GST Registration

Companies that are not liable to register for GST compulsorily can choose to do so voluntarily if they meet any of these conditions:

• The business produces taxable supplies
• The business only produces out-of-scope supplies, which are sales of goods remaining outside of Singapore and those in transit
• The business makes exempt supplies of financial services that are also global services
• The business obtains services from service providers overseas or imports low-value products that would not qualify for full input tax credit even after GST registration

There are also other conditions to meet before and after registration, such as:

What Are the Benefits and Drawbacks of Voluntary GST Registration for Businesses?

There are certain advantages of registering for GST, such as:

• Being able to claim the GST incurred on purchases
• For companies with a turnover below but close to the S$1 million mark for compulsory registration, voluntary registration removes the need to constantly monitor turnover for compliance
• If your company makes zero-rated supplies, you may benefit from a higher gross profit since you can collect GST on purchases. For such supplies, your selling prices will not be affected even after GST registration

There are also certain downsides to GST-registration:

• There may be costs incurred from staying GST-registered for 2 years that outweigh the benefits, such as administrative costs
• If the suppliers are not GST-registered, GST cannot be claimed on the company’s purchases
• If the customers are not GST-registered, it may be harder to raise the selling price of goods and services to include the GST, resulting in your business having to absorb the GST

Hence, companies should consider these factors before voluntarily registering for GST:

• Suppliers’ profile
• Customers’ profile
• The responsibilities that come with being GST-registered
• The type of sales that the company makes

Related Read: How Does the EIS Create Tax Savings From IP and R&D Costs?

GST Exemption

If your company meets these requirements, it is exempted from GST registration:

• Your taxable turnover is obtained completely or primarily from zero-rated supplies, and you have applied for registration exemption
• You are liable for GST registration under the retrospective view but not the prospective view while meeting these conditions:
  • You are sure that your taxable turnover for the next 1 year will not be more than S$1 million
  • The taxable turnover is expected to be lower because of certain circumstances, such as significant business downsizing or high-value sales contract expiration/termination
  • You have documents to support the projection
• Note that you must still continue monitoring your taxable turnover at the end of the subsequent calendar year

Related Read: 6 Ways to Lower Your Corporate Taxes in Singapore Legally

Reverse Charge and Overseas Vendor Registration

You may be liable for GST registration if you meet either condition:

• Your company obtains services from suppliers overseas or imports low-value products and your business does not qualify for full input tax credit even if it is GST-registered (reverse charge regime)
• You are:
  • An overseas supplier or a local or overseas electronic marketplace operator, or 
  • A re-deliverer that offers services, whether digital or not, or supplies imported low-value products to people and businesses in Singapore that are not GST-registered

Late GST Registration

Companies that fail to register for GST on time will face severe repercussions. They include:

• Backdating your registration date to the date that you were liable for registration
• You must account for and pay GST on previous sales beginning from the effective registration date even if no GST was collected from customers
• You may be fined up to S$10,000 and a penalty equivalent to 10% of the outstanding GST
• You may be prosecuted

IRAS will usually waive the fine and penalties if you submit an application for GST registration and disclose the late registration voluntarily.

The GST Registration Procedure

You can register for GST digitally through an application on the myTax Portal. Companies with no access to myTax Portal, such as foreign entities not registered with ACRA or local businesses without a UEN, have to use the GST F1 form instead.

Next, you must also provide the details of all partners and partnerships using the GST F3 form.

It usually takes 10 working days for IRAS to process your GST registration application. After successful registration, a letter will be sent to your registered address, containing your GST registration number and the effective date of GST registration.

How to File GST in Singapore

GST-registered companies must e-file their returns via the myTax portal and make payment to IRAS before the due date. Here are the steps:

• Step 1 – Authorise Users for GST Filing (for first-timers and those with changes to the person filing – otherwise, go straight to Step 2)
• Step 2 – File GST F5 Return on myTax Portal
• Step 3 – Obtain a Copy of the Acknowledgement Page and Make Payment

GST-registered businesses must file GST F5/F8 to the Comptroller of GST within 1 month from the end of the accounting period (usually 3 months).

In the GST return, companies must declare these items:

• The sale of goods and services to customers
• The purchases from GST-registered businesses
• GST collected and to be claimed for relevant accounting periods

Even if there is no business transaction for the accounting period, companies must still submit a “nil” return.

Let InCorp Support Your GST Needs

At InCorp, we pride ourselves on our expertise in supporting clients’ GST needs. With our deep understanding of the complexities and requirements of the GST framework, we are well-equipped to provide comprehensive assistance to businesses of all sizes. 

Our team of knowledgeable professionals is dedicated to ensuring that your GST compliance is seamless, efficient, and aligned with the latest regulations.

Contact us today to find out how we can help!

About the Author

Eric Chin

Eric comes from banking background. He provides consultancy to local and foreign entities on the ideal market-entry strategies for setting up or expanding operations in Southeast Asia. Eric also provides advisory to fund managers and family offices on structuring as well as applicable tax incentives. He has also set up many VCC structures for licenced fund managers.

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