Businesses in Singapore must register for GST if your taxable turnover is more than $1 million at the end of any calendar year (from 2019 onwards). If at any time, you reasonably expect your taxable turnover in the next 12 months to be more than $1 million, you will also have to register for GST.
What Is Goods and Service Tax (GST)?
GST, or Goods and Services Tax, is a consumption tax levied on most goods and services in Singapore, as well as imported goods coming into Singapore. Other countries commonly refer to this tax as Value-Added Tax (VAT).
Currently, the GST rate in Singapore is 7%, but the government has already committed to hiking the GST rate to 9% by 2025.
GST from imported goods is collected by the Singapore Customs, while GST for goods and services in Singapore is collected by businesses when they sell goods and services. In his Budget 2021 speech, DPM Heng Swee Keat also announced that all smaller-ticketed goods purchased online from overseas will also be subject to GST.
The reason for all this: GST is an important source of revenue for the Singapore government. In 2020, the Singapore government collected $9.9 billion in GST – this was more than 15% of the total operating revenue that the Singapore government collected in 2020. With a bigger collection pot, the government can spend more.
When Do Businesses Have To Register For GST?
There are two instances when businesses have to register for GST – retrospective view and prospective view – when their taxable turnover crosses the $1 million-mark.
#1 Retrospective view: From 1 January 2019, businesses in Singapore have to register for GST if your taxable turnover exceeds $1 million in the calendar year. You can use IRAS’ Tax Registration Calculator (from 2019) to help you in this assessment.
#2 Prospective view: Businesses that forecast a taxable turnover to go beyond $1 million in the next 12 months will also have to register for GST. To become GST-registered, you must also show supporting documents such as
- Signed contracts or agreements
- Accepted quotations and signed purchase orders
- Invoices to customers with fixed month fees
- Income statement on past 12 months showing turnover already close to $1 million, and on an increasing trend
Businesses must apply for your GST registration within 30 days from the date your liability to register arose. If you fail to apply by this deadline, you may still be liable for GST on your turnover even if you did not collect it from your customers. You may also face a fine of up to $10,000 and a penalty equal to 10% of the GST due.
There are two main exceptions allowing you to avoid registering for GST.
i. If your taxable turnover is wholly or mainly from zero-rated sales
Zero-rated goods are typically exported goods. This is usually for products sold to overseas customers or goods that are to be sold to overseas customers.
Zero-rated services are typically for international services, such as a website collecting ad revenue but is primarily for readers outside of Singapore. The full list of international services is available on the IRAS website.
ii. If you are liable for GST registration under retrospective view, but not under prospective view
This means that if your taxable turnover crosses the $1 million mark in a calendar year (retrospective view), but you are winding down or have supporting documents to substantiate the fact that your taxable turnover will not hit the level again (prospective view), you may be exempt.
How To Calculate Your Taxable Turnover?
Computing your business taxable turnover may vary depending on the business entity you are running.
Sole Proprietors: combined turnover of all your sole-proprietorship businesses AND income derived from your trade, profession or vocation. All sole-proprietorship businesses under your name will be GST-registered, even those you set up in the future.
Partnership: combined turnover of all partnership businesses with the same composition of partners.
Companies: turnover of the company. If your company owns sole-proprietorship businesses, you need to combine the turnover of the company AND all its sole-proprietorship businesses.
Beyond your business entity, there are also zero-rated supplies (GST is charged at 0%) and non-taxable supplies which fall under the categories of Exempt Supplies (GST is not applicable) and Out-of-Scope Supplies (GST is not applicable).
You Can Also Qualify For Voluntary Registration For GST
Even if your business is not required to register for GST, you can still qualify for Voluntary Registration if your business satisfies any of the following:
- your business makes taxable supplies
- your business makes only out-of-scope supplies, mainly referring to sales of goods that did not enter Singapore and goods in transit
- your business makes exempt supplies of financial services that are also international services
- your business procures services from overseas service providers and you would not be entitled to full input tax credits even if you were GST-registered
Before embarking on a Voluntary Registration, business owners should understand the obligations and responsibilities of a GST-registered business. To do so, you must complete two e-learning courses: Registering for GST and Overview of GST. These are not required if business owners are already managing other GST-registered businesses, or if they sign up for GIRO for payment and/or refund of GST, or provide a security deposit.
Pros And Cons Of Voluntary Registration For GST
In general, there are three considerations when you are applying for Voluntary Registration for GST.
a. Profile of your suppliers
If most of your suppliers are GST-registered, they will be charging you 7% GST for goods and services sold to you. However, if you are not GST-registered, you cannot claim the GST paid. In this case, it can make sense for you to do a Voluntary Registration, allowing you to claim the GST paid.
However, you need to note that as a GST-registered business, you also have to charge your customers GST now.
b. Profile of your customers
If your customers are not GST-registered, you will effectively be increasing your prices as they cannot claim the GST paid. If you keep your sales price the same (and absorb the GST) for them, your gross profit from each sale will take a hit.
c. Type of sales made
If you are selling zero-rated supplies, i.e. exporting goods or providing services to international clients, you do not have to charge any GST. In this scenario, you may benefit from being GST-registered as you can claim GST incurred on your purchases, but you don’t have to raise prices for your customers.
Responsibilities Of A GST-Registered Business
Once you are a GST-registered business, whether voluntarily or not, you have fulfil your responsibilities of a GST-Registered business. This includes:
- Charging and accounting for GST – you need to charge 7% GST.
- e-File GST Returns and Pay Tax Due – all GST returns must be submitted via e-filing on the myTax Portal within one month from the end of each accounting period. Late filing or not filing is an offence.
- Paying GST Due on time – GST due must be paid within one month from the end of each accounting period. A 5% penalty will be levied on the GST unpaid. An additional 2% penalty will be levied on GST unpaid after 60 days from the due date.
- Keep proper business and accounting records for at least five years (even if your business has ceased or de-registered for GST).
- Display price with GST
- Issue tax invoice with GST registration number
- Notify IRAS within 30 days, after any change to your business
- Change in GST mailing address
- Change in business constitution or ownership
- Change in partners or particulars of partners
- For partnerships, any set up of new partnerships with the same composition of partners
- Obligations for businesses that apply for Voluntary Registration
- Comply with IRAS on any conditions that may be imposed for protection of revenue
How Can Businesses Register For GST In Singapore?
All applications for GST registration are to be submitted online via the myTax Portal, using your CorpPass with relevant supporting documents. This means authorised employees or third-parties can make the application for the business. Sole proprietors should also use the myTax Portal.
Businesses that are applying for Voluntary Registration may have additional steps to take, including submitting your GIRO application and completing the two e-learning courses described earlier.
IRAS will take about 10 working days to process your application. During this time, additional information and supporting documents may be requested. Thereafter, you will be notified of the approval.
Your GIRO application form will then be sent to your bank for approval. This may take two to four weeks for approval. Your bank will notify you of accepted applications (not IRAS).
Upon your successful application to be GST registered, a letter will be sent to your registered address. The letter will provide details such as your GST Registration number and your effective date of GST registration. A copy of this letter will also be available on the myTax Portal.
Once you know your effective date of GST registration, you have to start charging GST from the effective date.
If you are actually trying to make your GST registration, you can watch a step-by-step video guide by IRAS for registering for GST on the myTax Portal.
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