After starting a business in Singapore, you must register for the GST when your taxable turnover reaches USD $1 million. Below is a brief on Singapore GST for newcomers.
1. What is GST?
- Simply, the GST’s aim is to shift its reliance from direct taxes to indirect taxes on nearly all supplies of goods and services in Singapore, as well as the goods imported into Singapore.
- Since 1 Jul 2007, the GST rate in Singapore is 7%.
- Only GST-registered businesses can charge GST.
- GST is paid when customers buy taxable goods or services from GST-registered businesses. Your company now acts as a GST collection agent.
2. How GST affect businesses in Singapore?
This next part will show you the basic information on how the GST affects companies and businesses in Singapore.
- GST is charged in two cases as follows:
- The Importation of goods into Singapore. It is collected by Singapore Customs at the point of importation.
- The Supply of goods and services in Singapore. It is paid whenever customers buy taxable goods or services from GST-registered businesses. Your company acts as a GST collection agent. For example, if you sell a $100 product, you have to add $7 GST (you will give it back to IRAS later). So, the customer now has to pay $107 for your product.
- Output tax/ Input tax/ Net GST
- Output tax is the GST collected from customers and to be paid to IRAS later.
- Input tax is the GST that businesses incur when they purchase, expense, and import goods into Singapore.
Net GST* = (Output Tax) – (Input tax)
(*) If the Net GST is positive (Output tax > Input tax), this will be the amount that your company needs to pay back to IRAS. If it is negative (Output tax < Input tax), this will be the amount that is to be refunded to you by IRAS.
3. What businesses need to do with GST?
Below are four things businesses in Singapore need to do with GST
- Register for GST
There are three steps to register for GST as below:
Step 1 – Choose the type of GST registration: compulsory or voluntary GST
Your company is responsible for compulsory GST when your taxable turnover exceeds $1million in the previous financial year. Companies that have taxable turnover lower than $1million can voluntarily register for the GST.
Step 2 – Submit Your Application for GST Registration
The registration process may take approximately ten working days for compulsory GST and a month for voluntary GST.
Step 3 – Receive the effective tax date
(*) Noted for Overseas Entities:
If you are registering for the GST, you must appoint a local agent in Singapore who will be in charge of all your GST matters.
- Pay output tax and claim input tax credits
As mentioned above, after your company is registered for the GST, you have to do the output tax and input tax calculation.
- Output tax: charge GST on your supplies at the prevailing rate. Submit this amount to IRAS one month after the end of each prescribed accounting period.
- Report both output tax and input tax amounts on the GST return.
Email or Call us if you want to register for GST or need help with calculating GST! Our friendly consultant will give you advice that matches your needs.