Goods and services is an indirect tax levied on the supply of goods and services in Singapore and import of goods in Singapore. Almost all types of goods and services are taxable supplies. However certain supplies are exempt from GST such as financial services, importation and local supply of investment precious metals and selling or leasing out of residential property. GST rate is fixed at 7%.
There are two types of GST registration, a compulsory registration and a voluntary registration, GST registration is compulsory when your annual turnover exceeds $1million in the past 12 months or is expected to exceed $1million in the next 12 months it is compulsory to get the GST registration. Voluntary registration is done when you are not liable to register for GST or the annual turnover does not exceed $1million or your business is involved in selling or offering “Zero rated Supplies”, i.e supplying goods and services in the International markets.
Procedure of GST registration
GST registration can be done online or by submitting paper forms. The compulsory GST registration process takes 2-3 days whereas the voluntary registration process can take upto ten days. Upon registration, an approval letter will be issued from the IRAS stating the GST registration number, effective date of registration, GST filing due dates and other relevant information.
GST Registration Liability for Sole Proprietor
A sole-proprietorship is a business owned by one person or one company. As a sole-proprietor, you have to add up the taxable turnover of all your soleproprietorship businesses to determine whether they exceed S$1 million. You also have to include income from any trade, profession or vocation you are engaged in. If your total taxable turnover in the current and the past three quarters is more than S$1 million or is expected to be more than S$1 million in the next 12 months you are required to register for GST. GST registration for sole-proprietorship businesses will be in the name of the sole-proprietor. In other words, one GST registration number will be issued for all the businesses owned by a sole-proprietor. If you subsequently set up a new sole-proprietorship business, you should inform the Comptroller of the new sole-proprietorship business in writing. Similarly, you should also use the same GST registration number to charge GST on the supplies made by your trade, profession or vocation.
GST Registration Liability for Partnership
The taxable turnover of all the partnerships will be added to determine the tax liability. For example if the same partners set up two partnership businesses, the total taxable turnover of both the businesses have to be added to determine the tax liability. GST registration will be in the name of the respective partnerships. if you set up a new partnership with the same composition of partners and the existing partnership is already GST-registered, you are required to submit another Form GST F1, GST F3 and a copy of the latest ACRA Business Profile of the new partnership with the same composition of partners before the commencement of the business. The new partnership will then be assigned a new GST registration number for the charging of GST to its customers when it commences business.
Group GST Registration
Group registration allows two or more companies within a group to file GST returns as a group instead of individually. One of the companies in the group will be the “representative member” while the others are members. On successful application, the Comptroller will register the group in the name of the representative member. The purpose of group registration is to reduce administration cost of groups of companies in GST reporting.
Divisional GST Registration
Where a registered person carries on his business through separate divisions or where he carries on different businesses, he may apply to the Comptroller of GST to register any of the divisions or businesses separately. Upon approval, each division or business will be given a separate GST registration number and will then submit its own GST return. A GST-registered person13 that carries on business through independent divisions or separate businesses 14 may find it difficult to consolidate the accounts of all its divisions or businesses to file a single GST return periodically (monthly or quarterly filing frequency). Divisional registration eases the GST administration of such a business structure by allowing the submission of GST returns by divisions or businesses
Transfer of Business as a Going Concern
If a business is transferred to you, you have to include the taxable turnover of your transferor (previous owner) to determine your liability to register for GST. In the quarter when the business is transferred to you, you are liable to register if the taxable turnover of that quarter and the past 3 quarters (including your transferor’s taxable turnover) is more than S$1 million. If you are liable for registration, your date of GST registration will be from the date of transfer of the business. The transferee must be a GST registered person at the time of the transfer. If the annual value of the taxable supplies of the transferee exceeds or is reasonably expected to exceed S$1million immediately after the transfer, the transferee has the liability to register for GST. In such instances, the transferee is required to notify the Comptroller of his liability to register 30 days before the date of the transfer; and both the transferor and transferee must maintain sufficient records on the transferred assets. The records should provide information on the description and value of each asset or class of assets transferred.
GST Liability for GST Registration
It is determined using two views retrospective and Prospective.
The liability for GST arises when at the end of any quarter, the value of taxable supplies in that quarter and the previous three quarters is more than $1million. If it is expected that in the next four quarters the taxable supplies will not exceed $1million, you are not required to be registered. In the prospective view, you assume that in the next 12 months your total taxable value will exceed $1million. Otherwise you can apply for voluntary registration.
In the retrospective view you are required to apply for GST registration within 30days of the end of the relevant quarter. In the prospective view GST registration is to be done within 30 days from the date you made the forecast that your turnover will be more than $1million.
Date of registration and Tax filing will be the end of the month following the month in which the 30th day falls for the retrospective effect and in the prospective view the date would be end of 30 days from the date of your forecast.
GST registration is to be cancelled within thirty days if
- Business has ceased
- If you have stopped making taxable supplies and do not intend to make taxable supplies in the future.
- The business is transferred to another person
- The business constitution has changed, for example from a sole proprietor to a partnership etc)
You may choose to cancel the registration if;
- You are sure that your taxable turnover for the next twelve months will be less than $1 million.
- You have been under voluntary registration for two years
The application for de-registration needs to be done online. Once it is approved, you will be notified of the effective date of cancellation of GST registration, i.e the date from when you can stop collecting GST.
The GST obligations need to be fulfilled even one day before the effective date of cancellation of your GST registration.
A final GST return G8 needs to be filed to account for all the GST till the last day of the GST registration. The form needs to be submitted within thirty days from the end of the prescribed accounting period stated on the return.
IN the return G8, the goods that are taxable at that time are required to be accounted unless the business is transferred to another GST registered person or the value of the business is not more than $10000 or the taxable person has died or is incapable.
It is compulsory that the GST return needs to be filed within the prescribed due dates alongwith the payments. GST return and payment should be made within one month after the end of the accounting period. If you have no business activity during the accounting period, you must file ‘Nil’ GST return.
Benefits of GST
- The goods and services tax Singapore is by far one of the lowest in the world at 7%.
- The Singapore regime has introduced various schemes which will help companies voluntarily going for GST registration Singapore.
- Schemes such as Goods and Services Tax Assistance Scheme, Third Party Logistics Scheme, Hand Carried Exports Scheme & Zero-GST Warehouse Scheme allow the small & medium sized enterprises (SMEs) to avoid paying GST tax Singapore.
- In addition, GST registration Singapore enable SMEs to be recognized as established entities which positively impacts its business, investors, shareholders and public at large.
- Lastly, the overall costs of doing business are reduced, since the businesses can actually claim their GST which they paid to the suppliers.
If your taxable supplies exceed the threshold, GST registration is compulsory. Otherwise, you may choose to register for GST voluntarily so that you can claim GST paid on imports.
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