HOW TO REGISTER FOR GST IN SINGAPORE

REGISTER GST

 

HOW TO REGISTER FOR GST IN SINGAPORE

The Goods and Services Tax (GST) is a value-added tax levied on most goods and services sold for domestic consumption. The GST is paid by consumers, but it is remitted to the government by the businesses selling the goods and services.

The GST registration process differs slightly depending on the type of registration and constitution of your business.

 

QUALIFYING FOR GST

A business that is not required to register for GST may apply for registration on a voluntary basis if the business satisfies any of the following:

  1. Your business makes taxable supplies;
  2. Your business makes only out-of-scope supplies. Out-of-scope supplies mainly refer to sales of goods which did not enter Singapore and goods in transit; or
  3. Your business makes exempt supplies of financial services

Conditions for Voluntary Registration

 REGISTERATION LIABILITY

Your liability for GST registration depends on the value of your taxable turnover. This refers to the value of goods and services supplied by you which are regarded as taxable supplies for GST purposes

You are liable for GST registration if:

  1. Your taxable turnover at the end of the calendar quarter (i.e. 3 months ending Mar, Jun, Sep or Dec) and the past three quarters is more than $1 million. (“Retrospective View”)

In other words, you have to monitor your past 12 months of taxable turnover at the end of every calendar quarter and register for GST when your taxable turnover exceeded $1 million.

You will have to register for GST when there is certainty that your taxable turnover will exceed $1 million in the next 12 months. You must have supporting documents to support your forecast value of $1million. For example:

  • Signed contracts or agreements
  • Quotations accepted by customers
  • Confirmed purchase orders received from customers
  • Invoices to customers with fixed monthly fee charged
  • Income statements showing that past 12-month period was already close to $1 million and that annual turnover is on an increasing trend

On the other hand, you are not required to register for GST if there is no certainty that your taxable turnover will exceed $1 million in the next 12 months. For example, you made a forecast based on market assessment, business plans or sales targets.

You have to submit your application for GST registration by the due date to avoid being penalised for late notification of your liability for GST registration.

You must apply for GST registration within 30 days of:

  1. the end of the quarter where you are liable for GST registration under the retrospective view; or
Taxable turnover exceeds $1million for the four quarters: Due date to apply for GST registration
1 Apr to 31 Mar 30 Apr
1 Jul to 30 Jun 30 Jul
1 Oct to 30 Sep 30 Oct
1 Jan to 31 Dec 30 Jan
  1. the day you are liable for GST registration under the prospective view
Date of forecast: Due date to apply for GST registration
Contract or agreement with more than $1 million value signed on 1 Jul 2016 31 Jul 2016
 Quotation with more than $1 million value accepted by customer on 2 Sep 2016 2 Oct 2016
Past 12-month turnover as at 31 Dec 2015 was $900,000. As turnover has increased by 15% on year-to-year basis, turnover for next 12 months projected to be more than $1 million on 15 Jan 2016.  14 Feb 2016

Late Notification of Liability for GST Registration

There are serious consequences for late registration:

  1. Your date of registration will be backdated to the date that you were liable to be registered.
  2. You will have to account for and pay GST on your past sales starting from the effective date of registration, even if you did not collect any GST from your customers.
  3. You may face a fine of up to $10,000 and a penalty equal to 10% of the GST due. Prosecution action may apply.

If you submit an application for GST registration and voluntarily disclose that you are late in registration, we will generally waive the late notification fine and penalties. If you have difficulties paying the GST due on the backdated period, we may allow you to pay the GST due in instalments.

Computing Your Business Turnover

Sole Proprietorship

In the past 12 months:

  • Business A turnover is $500,000.
  • Business B turnover is $490,000.
  • Income derived from your taxi driving is $30,000.

To compute your business turnover:

  1. Combine the turnover for Business A, Business B and the income derived from taxi driving.
  2. Total Turnover/Income: $500,000 + $490,000 + $30,000 = $1,020,000
  3. The combined turnover (including the income from the taxi driving) exceeds $1 million.
  4. You must register for GST immediately if you can reasonably expect your total turnover to be more than $1 million for the next 12 months.

Partnership

You and B own two partnership businesses (Businesses C and D). You also own a partnership business (Business E) with C

In the past 12 months:

  • Turnover of Business C is $200,000
  • Turnover of Business D is $300,000
  • Turnover of Business E is $600,000

To compute your business turnover:

  1. Combine turnover of all partnership businesses with the same composition of partners.
  2. You own Businesses C and D with Mary. Your Business Turnover is $200,000 + $300,000 = $500,000.
  3. The combined turnover is $500,000. You need not register for GST if you expect your business turnover to be less than $1 million for the next 12 months

You should calculate the business turnover for Business E separately because you have a different business partner – C.

Company

You are the director of private limited company F which is operating a trading business selling goods in Singapore. You incorporated another private limited company G a few years ago for the purpose of diversifying into a different line of business of rental of commercial properties.

In the past 12 months:

  • Turnover of Company F is $1,100,000
  • Turnover of Company G is $500,000

To compute your business turnover:

  1. The turnover of Company F exceeds $1 million.
  2. Company F must register for GST immediately if it reasonably expects its total turnover to be more than $1 million for the next 12 months.
  3. The turnover of Company G is $500,000. Company G need not register for GST if it expects its total turnover to be less than $1 million for the next 12 months

GST Registration Procedure

Step 1: Submit an application for GST registration with IRAS. The company or a designated filing agent (usually the company’s corporate service provider) can submit an online or paper application.

Online applications can be submitted through myTax Portal. Paper applications must be sent to the following address.

 

55 Newton Road, Revenue House, Singapore 307987

Note that companies are not allowed to charge GST until they have received approval from IRAS.

Step 2: Receive the notification of effective date of registration from IRAS. Once approved, the company will receive a confirmation letter from IRAS confirming that the company is registered for GST. The letter will include the following information:

  • The company’s GST Registration Number
  • The company’s effective date of GST registration

On the effective date of GST registration, the company must start charging and collecting GST.

Filing GST Tax Returns

GST registered businesses must file a GST F5 tax return to IRAS. The key facts to filing GST returns are as follows:

  • GST tax returns must be filed electronically through myTax Portal either on a monthly or quarterly basis.
  • If there are no GST transactions during an accounting period, the business must still file a nil return.
  • Companies must pay GST to IRAS within 1 month after filing an F5 return.
  • Companies must report both their input tax and output tax.

When filing an F5 return, a company must first calculate its net GST by taking the company’s output GST minus its input GST.

  • Output tax is the GST that the company collected from its customers.
  • Input tax is the GST that the company paid on purchases from suppliers or on imported goods.

If the output tax is greater than the input tax (i.e. negative net GST) then the company must pay the net GST to IRAS. Conversely, if the input tax is greater than the output tax (i.e. positive net GST) then IRAS owes the company a refund.

WHY TO REGISTER FOR GST

Establish a Presence

In a competitive market such as Singapore, establishing your company’s presence can be a big challenge. Big businesses are required to register for GST as their turnover usually puts them in a category where voluntary registration for GST is not an option. Voluntarily registering for GST makes your company look as established as the big players and lets clients know that you mean business. When customers and vendors find out that your business is registered for GST, they automatically make the connection that your company is of a certain size and generates sizable revenue. Regardless of whether your company does brilliantly, the psychological effect on potential clients is not lost.

Shape the Polices Which Affect You

Every time a business registers for GST, the pool from which financial data can be analysed increases. The bigger the pool of data, the better the information can be analysed. This in turn helps the government predict the income tax revenue growth for the foreseeable future and make the relevant policy changes that will ultimately affect your business.

Lower Individual Income Tax Rates

One of the main reasons why entrepreneurs find Singapore so appealing is its attractive orporate and personal income tax framework. Lower personal income tax rates can be implemented partly because of GST. The tax revenue growth data collected ensure that the government is aware of the amount of income from corporate tax payments and allows them to keep personal income tax rates as low as possible.

Boosts Savings and Investments

One of the best things about GST is that people are taxed only when the spend on consumer goods and services. Not only does this mean that individual tax rates are lower, but also that savings and investments end up being exempt from any kind of taxation.

Lower Cost of Administration and Doing Business

In the end, anything that helps save money is a good thing. And that is exactly what registering for GST does. According to Forbes magazine, compared to other tax systems, Singapore’s GST proves to be a very efficient tax system. As a result, not only is it appealing for foreign investors, the cost of administration and collection is a lot lower for the government.

CONCLUSION

GST is a tax charged on the supply of goods and services made in Singapore and on the import of goods into Singapore. The current rate is 7%. All goods and services are taxable and known as taxable supplies. However, some items, including financial services and the sale or lease of residential properties

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