Goods and Services Tax (GST) is a tax charged on the supply of goods and services made in Singapore and on the importation of goods into Singapore. The current rate is 7%.The only exemptions are for the sales and leases of residential properties and most financial services. Export of goods and international services are zero-rated.
In Singapore, the GST was introduced as part of a larger tax restructuring exercise to enable Singapore to shift its reliance from direct taxes to indirect taxes. The GST also enables the country to sustain a lower income tax rate.
The government argues that with an ageing population, Singapore’s income tax base is expected to decline. With a broad-based GST, the taxation burden will be more evenly spread among the population. Thus, the GST was introduced as part of a larger exercise to put in place a tax structure to see the country into the future.
What Goods and Services are Subject to GST
All goods and services are taxable and known as taxable supplies. Some goods are exempted from GST by law. Exempted items are financial services and the sale or lease of residential properties.
When is the GST Paid
The GST is paid when one buys goods or services from GST registered businesses and when one import goods into Singapore. In the case of imports, GST is paid to Singapore Customs.
Registration for GST
Goods and Services Tax (GST) in Singapore is a self assessed tax. For the purpose of GST, businesses have to continually assess the need for registration. In most cases registering for GST is compulsory when:
- The business turnover is more than $1 million for the past 12 months or
- You are currently making sales and you can reasonably expect the turnover of your business to be more than $1 million for the next 12 months.
Voluntary Registration
Conditions for Voluntary GST Registration
- Your annual turnover is not more than $1 million, or
- You only supply goods outside Singapore (out-of-scope supplies), or
- You make exempt supplies of financial services that are also deemed as international services
Important Information for Voluntary Registration
After the registration process is completed, one must remain registered for at least two years.
A GST-registered person needs to comply with the requirements under the GST Act. According to the Act a tax to be known as Goods and Services Tax shall be charged in accordance with the provisions of this Act on the supply of goods and services in Singapore (including anything treated as such a supply) and on the importation of goods into Singapore.
Compliance
- Comply with additional conditions (if any) put forward by the Comptroller of GST.
- Maintain all records for at least five years.
- Non compliance of GST would attract penalties.
Who Should Register For GST
Businesses with an annual taxable turnover exceeding $1 million must register for GST under compulsory registration. With the GST increase from 5% to 7%, non-GST registered businesses with an annual turnover of less than $1 million, may want to register for GST on a voluntary basis.
Businesses with an annual taxable turnover exceeding $1 million must register for GST under compulsory registration. With the GST increase from 5% to 7%, non-GST registered businesses with an annual turnover of less than $1 million, may want to register for GST on a voluntary basis.
