Understanding GST registration in Singapore can have a significant impact on your company’s expenses and financial statements. However, each business in effect charges GST only if the value is added to the good or service. Here, we’ll discuss various aspects to be taken into consideration while registering for GST in Singapore.
What GST Stands For In Singapore?
Goods and Services Tax is a value-added tax charged on most goods and services traded for local consumption within the boundaries of Singapore. As GST is charged to the end consumers, thus it is not a part of the cost to the company. Further, businesses act as accumulating agents on the behalf of the Singapore tax department.
Applicability of GST in Singapore
According to the Inland Revenue Authority of Singapore (IRAS), not all transactions of goods and services deduct GST. It’s applicable underneath the subsequent two cases:
Supply of Goods and Services
Supply can be made by a GST registered business only as it comes under the scope of GST. During the supply, the purpose should be mentioned for the persistence of a business of the taxable person. Additionally, tax is not applicable in the case of personal transactions done by the supplier. GST charged for supplying goods and services should be paid to the government with appropriate GST returns filing.
Import of Goods and Services
Each and every good imported into Singapore is subjected to GST (currently 7%). Moreover, the value of import includes any custom payable and the cost, insurance, and freight. Overall charge on the import is proposed by Singapore Customs.
GST Registration Falls in Two Categories
Any company whose annual taxable revenue exceeds S$ 1 million or reasonably expected turnover will exceed S$ 1 million, then the company is supposed to submit a GST application to IRAS regarding the registration within 30 days. If the annual revenue doesn’t exceed the threshold value then do contact anti-avoidance provisions to avoid penalties.
Registering from day one is advisable for many and it can be done. In this case, you don’t have to bother about your annual revenue. One can voluntarily apply for GST Registration Singapore. Being a registered company you will be able to get a credit for the input tax. Note that once you’re registered, you must follow and comply with GST regulations for at least 2 years.
The company director, sole proprietor, partner, and the trustee must compete for two e-Learning courses that are “GST Before I Register” & “Introduction to GST” for registering voluntarily.
Exemption from Registration
Whether your annual taxable revenue exceeds the threshold limit, you can escape from GST registration and quarterly GST filing if you are approved as an exemption from registration. For getting approval from IRAS as an exemption from registration, your business should wholly or mainly deal with zero-rated supplies. Also, IRAS examines whether 90% of your total taxable supplies are zero-rated or not? If not then you may face penalties. In short, your input tax should be greater than the output tax. Following are the examples of exemption from GST:
- Financial services
- Exported goods
- Sale of unfurnished residential properties
- International services
- Import and local supply of precious metals
Why Understanding GST Registration Is Significant?
Most of us are familiar with the pro-business climate of Singapore, thus complying with the GST system is necessary if you are overcharging the customers or escaping tax responsibilities. Then you would be considered as an errant company. IRAS offers cash rewards to the informants whosoever has reported an errant company. If the claim falls in the favor of the informant then the claimed company can be fined up to $ 10,000 and a penalty of 10% of the tax from the due date business is required to be registered. IRAS also conducts several audit programs that utilize data analytics tools to confirm data and detect irregularity, if any. The authority may ask you to provide:
- Information and activities of the business
- Financial listing to check accurate figures mentioned in GST returns
- Documents used for transactions
- Transaction records and the company’s accounting system
What Is The Procedure For GST Registration In Singapore?
To apply for the registration process, you need a Singapore Goods and Services registration form, attach the required documents, and send it to the tax authority. An additional form including details of all the partners must be completed if any. The application can either be done online via the tax portal from IRAS known as myTax Portal. A SingPass is required to access myTax Portal. GST registration requirements are as follow:
- Company’s registered name
- Company’s registration number
- Business activities of the company
- Financial Year End (FYE)
- Issued & Paid-Up capital
- Size of company
- Financial statements
After the application is applied to the tax authority with appropriate attachments it takes approximately 3 weeks for approval. Once it is approved, you’ll receive a GST registration letter, this includes the GST number, the actual date of registration, filing frequency, filing due dates, and much more specific instructions. The filing process should be carried out electronically.
How to File GST Returns Effectively?
A GST registered company should submit a file to the IRAS including tax returns whether monthly or quarterly. Ensure the filling is done timely within the mentioned accounting period. Even in case, your company had no GST transactions in a particular month, the company must file a “NIL” return. While calculating the due amount determining net GST is a must. For that, we need to know input and output tax.
Input tax means the tax charged on the supply of goods and services.
Output tax means the tax charges on the sales of goods and services.
If input tax is greater than output tax then IRAS will refund you.
If output tax is greater than input tax then you have to pay IRAS.
Refunds are usually made within 30 days from the date of the accounting period. Also, to receive the refund filing must be done timely, accurately, and excluding outstanding taxes. To do so, you need to outsource your filing to an experienced firm. Bestar provides GST Registration Services at its finest which assists in avoiding penalties and acquiring refunds.
Before the commencement of your business does understand the aspects of Goods and Services Tax. For ensuring that you comply with GST filing, procedure, applicability, and schemes, it is advisable to engage with a reputable corporate service firm.
To hire the best Goods and Services Tax Registration Services in Singapore. Contact us now!