singapore-gst

Goods & Service Tax - Singapore

GST is a broad-based consumption tax levied on the import of goods, as well as nearly all supplies of goods and services in Singapore. 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 some countries, GST is known as the Value Added Tax (VAT).

GST is a self-assessed tax. Businesses must come forward to register for GST when their turnover exceeds $1mil per year. After registration, businesses must charge and account for GST at the prevailing rate. This is known as output tax. GST registered businesses can also claim the GST incurred on their goods and services purchased assuming certain conditions are met. This is known as input tax.

GST is also levied on the import of goods from overseas. Singapore Customs is responsible for collecting the import GST. The GST incurred on imports can also be claimed as input tax, if the goods are used for business. GST is designed such that the end consumer (be it an individual or a business) pays this tax.

In Singapore, due to the high GST compulsory registration threshold (annual turnover of $1million), many businesses are not registered for GST.

Businesses that are not registered for GST cannot charge GST to their customers. Neither can these businesses claim the GST incurred on their purchases for the purposes of selling goods and services.

Responsibilities and obligations of a GST-registered person
A GST-registered person needs to comply with the requirements under the GST Act.

The responsibilities and obligations include:
- Collecting and accounting for GST on the supplies of goods and services made in Singapore;
- Displaying, advertising, publishing and quoting GST-inclusive price for any supply of goods or services to the public;
- Keeping business and accounting records for at least 5 years^#;
e-Filing GST returns and paying the tax due (if any) not later than one month after the end of the accounting period, failing which the Comptroller may impose penalty and make an estimated assessment of the tax due. If there is no transaction done, a "NIL" GST F5 is to be submitted.

The penalty for non and late submission of the return is $200 per month for each month that the return remains outstanding (subject to a maximum of $10,000 for each return outstanding). In addition, 5% penalty will be levied on the amount of tax unpaid by the due date and an additional penalty of 2% per month on tax remaining unpaid after 60 days from the due date of the prescribed accounting period (subject to a maximum of 50% of the outstanding tax) may also be imposed.

All submission of GST returns must be done via e-Filing and failure to do so is an offence punishable with a fine up to $5,000 and in default of payment, an imprisonment term up to 6 months;

Reflecting the GST registration number on all tax invoices, simplified tax invoices and receipts;

Informing the Comptroller in writing of the intention to transfer the business 30 days before the date of transfer;

Informing the Comptroller in writing and applying for cancellation of GST registration if the business ceases to make taxable supplies;

If the person’s GST registration is cancelled, GST has to be accounted based on the open market value of all taxable business assets held where the total value is more than $10,000 on the last day of his GST registration and input tax has been allowed on these assets previously. These assets include goods that are imported into Singapore under the Major Exporter Scheme/Approved Third Party Logistics Company Scheme, stocks, fixed assets and non-residential properties owned by him; and

For a GST-registered person under voluntary registration (i.e. annual taxable turnover is not / not expected to be more than $1 million OR have not started making taxable supplies at the point of application), the person has to remain registered for at least 2 years.

In addition, the following conditions must be met:
(a) Make taxable supplies within 2 years; and
(b) Attend the GST class within 3 months from the effective date of GST registration.

The Comptroller may also impose other conditions on the voluntary GST registrant and may cancel his GST registration if any of the conditions is not met.

How to register?
In general, registration for GST is made by completing GST F1: Application for GST Registration and submitting it together with necessary supporting documents to IRAS.
For Partnerships, in addition to the above requirements, the completion of GST F3: Notification of Liability of GST Registration:Details of All Partnerships and Partners is necessary.
However, separate application procedures/forms are available for overseas companies, group registration and divisional registration.

For overseas companies
An overseas company who makes annual taxable supplies in Singapore exceeding $1 million must register for GST. It must appoint a local 'Section 33(1)' agent who will act on its behalf for all its GST matters. This agent is responsible for the accounting and payment of GST.

The procedure to register for GST is similar to any local company. An additional requirement is the completion of Appendix 1 of GST F1: Application for GST Registration.

Alternatively, the overseas company does not have to register for GST if it can appoint a 'Section 33(2)' agent who will import goods on its behalf. This agent is responsible for all the goods imported, as if he is the principal. The agent will have to account for GST when they are imported. When this agent supplies these goods locally or exports them, he is also required to account for GST.

For group registration
Group registration allows several companies to centralise their administration for GST reporting. Supplies made between companies under the group are not subject to GST.

Group registration helps to maintain the integrity of existing groups of companies and provide a GST system that does not discriminate against particular corporate structures or encourage restructuring of groups of companies just to avoid GST.
A group of companies are eligible for GST group registration if they:
- Are individually already GST-registered;
- Each member in the proposed group must possess at least one of the following attributes:
(i) Is resident in Singapore or has an established place of business in Singapore;
(ii) Has an annual turnover of at least S$1million;
(iii) Is listed on a securities exchange established in or outside Singapore;
(iv) Is a subsidiary of a body corporate that fulfils (i) or (ii); or
(v) Is financed by an entity (as part of its venture capital investment business) who fulfils (i) or (ii).

The nominated representative member must be a Singapore resident or has an established place of business in Singapore;
For application which comprises overseas person who does not fulfil (i), both the foreign member and local representatve member must have at least fulfilled (ii), (iii), (iv) or (v); and

Each member in the proposed group must satisfy the control requirements. Under group registration, the proposed group will nominate one of the companies in it to be the local representative member. Registration will be in the name of the local representative member.

All members of the proposed group must make a joint application to the Comptroller using the GST G1 form. In the application, they should specify the name of the local representative member. The application must be made within 90 days before the requested date of the group registration.

Thereafter, a new GST registration number will be issued to the group. This number identifies the group as a whole and must be quoted on the tax invoices issued by each member of the group.

For divisional registration
Divisional registration makes it easier for a big company with many independent divisions to submit its GST return promptly as it eliminates the need to consolidate the returns of each division.

A business is eligible for divisional GST registration if:
- It is already GST-registered;
- It is likely to face difficulty in submitting a single return in respect of all its divisions;
- Each division maintains an independent system of accounting;
- Each division is separately identifiable by its nature of the activities or by its location; and
- Each division or business has the same prescribed accounting period.

A business can apply for divisional registration by completing and submitting the GST F11: Application for Divisional Registration form. It includes listing the required details of each division applying for separate registration.

Last Updated: 08 November 2008