GST-Registered Company in Singapore: What is it?
Goods and Services Tax or GST is known to other countries as Value-Added Tax or VAT. This form of tax policy was put into effect in 1994, and therefore, it is relatively new in Singapore. This GST Act is inspired on UK legislation on VAT and GST law on GST.
How does it work?
Being GST registered company, you need to collect GST from your customers for the goods and services you provide and remit the tax collected to tax authority. As an example, the customer buys goods worth S$150, you have to invoice that customer S$160.50, which means S$150 for goods or services and additional 7% or S$10.5 is for GST. The 7% tax collected from the customers must be paid to the Singapore tax authorities every quarter through GST tax filing.
Since GST is a self-assessed tax, therefore, all businesses have to keep on evaluating their need to register. GST registration can be either compulsory registration or voluntary registration.
There is a need to register for GST if :
- Your company’s taxable supplies exceeds S$1 million for 12 months, which is known as “retrospective basis OR.”
- You are presently earning and expecting taxable supplies to reach more than S$1 million for the next twelve months, which is known as “prospective basis.”
If you fail to register your business for GST, you will be sanctioned to certain penalties. Anti-avoidance schemes have been established by the government to make sure that this is strictly adhered to.
You may apply to register for GST on a voluntary basis if
- Your yearly income does not exceed S$1 million, or
- You are exporting goods outside of Singapore (zero-rate supplies), or
- You are providing services outside Singapore which met the definition of an international services.
If you are registered on voluntary basis, you have to remain registered for about two years and keep all your records for five years, even when you have ended your registration to GST. You are also required to adhere to other conditions that may be imposed by IRAS.
Exemption from GST Registration
If you are making exempt supplies, you may apply for exemption from GST registration, even if your revenue reach the threshold of S$1 million. This will allow you to avoid any administrative accountabilities from GST registration. Generally IRAS approves requests for exemption if your total exempt supplies exceed 90% of total and input tax is higher than output tax.
You may terminate or cancel your GST registration if your company stops operating or your business is bought as a whole to another individual or entity, or if your sales revenue does not reach more than S$1 million. You have to submit the appropriate form including pertinent documents to IRAS within thirty days from the official date of cessation.