What is the Goods and Services Tax (GST)?
GST is a consumption tax levied on goods or services consumed domestically, including imports. It was first introduced in 1994 at the rate of 3%. The current GST rate has been 7% since 2007.
What does GST mean for a Singapore company?
A GST-registered company is required to collect GST from customers for the goods and services rendered and pay the tax collected to tax authorities. For instance, if you charge $100 for providing a service to a customer, you must invoice the customer $107 ($100 for service + 7% GST). The GST amount collected needs to be paid to the Singapore tax department on a quarterly basis via GST tax filing. Companies incorporated in Singapore are not automatically registered to charge GST. Companies that have met certain conditions have to apply to IRAS to become a GST-registered company before it can charge and collect GST.
Is my company required to be GST-registered?
Compulsory
- Turnover for business is more than S$1 million in the past 12 months. (retrospective basis) OR
- Currently making sales and can reasonably expect the turnover of business to exceed S$1 million for next 12 months. (prospective basis)
- When revenue exceeds S$1 million, you need to submit a GST application to IRAS within 30 days. Failure to register business with IRAS within the stipulated time frame will result in penalties.
Voluntary
- May voluntarily register for GST if not liable to compulsorily register, depending on operations. Business must have plans to do sales or have started doing sales in Singapore. Once a business is registered voluntarily, it must remain registered for at least two years and comply with GST regulations, filing the GST return on time on a quarterly basis and maintain all your records for at least five years.
GST on Supplies of Low-Value Goods (LVG) and Remote Services
From 1 Jan 2023, GST will apply to
- Goods valued up to S$400 (LVG), imported via air or post.
- Imported remote services which consists of digital services, non-digital services or services which do not require the customer to be physically located where the services are performed.
This will be effected via the extended Overseas Vendor Registration Regime (OVR). Overseas Vendors who are GST-registered will charge GST on supplies on LVG and remote services to:
- Non-GST registered customers; and
- GST-registered businesses purchasing for non-business use.
How does this impact you if you are a GST-registered local supplier?
Goods located outside Singapore
- Direct sales of LVG to non-GST registered customers in Singapore.
- Direct sales of LVG to GST-registered customers in Singapore not required to charge GST if customers provide their GST registration numbers.
What do you have to do?
- Capture and account for GST on LVG.
- Collect customers’ GST registration numbers.
- For direct sales of LVG with GST charged, indicate the two pieces of relevant GST information.
- If double taxation occurs, process a refund of GST collected at the point of sales to customers.
