Goods and Services Tax or GST is applicable on almost all transactions in Singapore. The tax has to be paid by the consumer. This is why the tax is charged at all the transactions even if it is the sale of the same products from one entity to the other. In this way, the last person who consumes or uses the goods will be the one who bears the tax. This will remove the burden of tax from the producer or the seller. In some countries, the same tax is known by the name VAT or Value Added Tax. Companies in Singapore have to register for GST and include the GST element in their invoices. The company GST registration in Singapore is a process that is better done by experts so that everything is as per the law.
The Conditions For GST Registration In Singapore
It is better to let the experts handle the registration of your company for GST. It involves the completion of the form and submission of documents. The service providers can do this job better as they are experienced in it. The registration must be done properly so that there are no problems in the future. There are conditions regarding which companies must register for GST.
Any company that has exceeded a turnover of S$1 million in the past four quarters is liable to be registered for GST. If the firm is unsure that it will not be over a turnover of S$1 million, then also the company must register for the GST. GST registration is compulsory for a company that expects to cross a turnover of S$1 million in the next year. The companies must start charging GST on their transactions before the completion of thirty days from registration for the same. There is a provision to get an exemption from GST if the company intends to make only zero-rated or mostly zero-rated products.
There is a provision for companies to register for GST voluntarily even if they don’t expect to have a turnover of more than S$1 million. Many companies do this because applying GST on all their transactions can sometimes prove beneficial to the company. The input credit allowed under the GST rule can be beneficial to these companies. The company should use the services of tax consultants to analyze the impact of registering for GST on the company’s financial position. Companies must also consider the reporting requirements once they register for GST.
How Is GST Registration Done In Singapore?
There are certain prerequisites to get a company registered for GST. The company must be already registered and incorporated with the ACRA. This is a requirement for all businesses operating in Singapore. The company which wants to register for GST must have a bank account in its name. There must be a clear plan of the business activity for the next year accompanied by the expected revenue. All required documents must be kept ready. This will depend on whether the business has already commenced operation or not.
Those companies which are planning to do a voluntary GST registration must undergo the E-learning process before registration. The company officials like the director, proprietor or partner must undergo at least two courses of the E-learning if they want to register for GST. They must also pass the quiz based on the lessons. If you are doing compulsory GST registration you must have had a turnover of S$1million in the past 12 months.
Once the company has determined the type of registration and completed the requirements then the actual registration must be done. This can be done by using the myTax Portal. The registration can also be done by using a paper application. You must ensure that all the documents required for registration have been submitted. Failure to submit any document can leave the registration incomplete. You must check the list of documents and see that everything is being submitted along with the application.
Once the registration is done, a letter will be sent to the company informing the completion of the registration along with the registration number and the date of registration.
Service Providers’ Package For GST Registration
Fees In SGD
Voluntary Registration For GST Including Follow Up
$600 ($642 with GST)
Compulsory Registration For GST Including Follow Up
$1,000 ($1,070 with GST)
Application For GST Exemption
$500 ($535 with GST)
The Method Of Applying GST On Your Transactions
Once the registration is completed, the companies must start collecting and paying GST. The GST must be mentioned in the invoice and collected from the buyers. The tax thus collected must be paid to the IRAS. The tax that you collect is called Output Tax. The GST that your supplier charges you on your purchases is known as Input Tax. The input tax applies to your expenses and the import of goods. You can claim the input tax as a deduction when you pay the output tax. This means that you pay GST only for the value that is added by you. This applies to every stage of the journey of the goods until it reaches the last consumer.
Type Of Goods And Services And Rate Of GST
There are four types of goods or services that are classified by the IRAS for the calculation of GST. The sales of almost all the products and various services are charged as Standard Rated Supplies. These are taxed at 7% GST. Some supplies are classified as Zero-Rated Supplies. These will not attract any GST. When an unfurnished residential building is sold or rented it is classified under Exempt Supplies. The same is the case with the import of precious metals for investment and financial services. The Out-Of-Scope Supplies include sale made from an overseas location to another overseas location.
You can claim input tax for goods sold to you for use in your business provided you are registered for GST. All goods imported by you for your business are also subject to input tax. Import permits in your name must be produced. Invoices that carry your company name must support local purchases for claiming input tax.