Goods and Service Tax

Detailed Analysis on GST Registration in Singapore

calendar30 Nov, 2020
timeReading Time: 7 Minutes
- GST registration in Singapore

GST (Goods and Services Tax) is the form of indirect tax or consumption tax which is directly levied on the supply of services and goods provided. GST tax is charged to the consumer therefore GST normally does not become a cost to the company. The Singapore government introduced this system of GST in 1994. Therefore, GST registration in Singapore becomes mandatory for any business that imports any form of products from Singapore. Businesses that import products in Singapore would have to pay some form of GST. Hence it is important to understand the significance of GST registration in Singapore.

What are Objectives of GST Registration in Singapore?

Some of the objectives of GST registration in Singapore are:-

  • GST was introduced in year 1994 as the form of indirect tax. This tax is imposed to reduce overall tax burden present on individuals and business entities.
  • GST tax is charged on services and products produced in Singapore. Hence, if the particular product is manufactured and sold in Singapore, then GST would be levied on that product.
  • GST is applied to goods which are imported in Singapore. Hence, if any good is imported in Singapore, then GST would be levied on those products.
  • GST registration in Singapore is also mandatory for companies; therefore, they will be directly contributing to revenue and gross domestic product of a country.
  • By levying GST on the businesses, other forms of indirect tax would not be chargeable on goods & services produced in Singapore.
  • According to regulatory authorities, GST registration is a compulsory step which is required for the business and entity present in Singapore. Companies must mandatorily register themselves with this form of tax.

Regulatory Authority for the GST Registration in Singapore

The primary regulatory authority for the GST registration in Singapore is the Inland Revenue Authority of Singapore (IRAS). This organisation controls and administers all GST collection processes and procedures in Singapore. Hence the business must register themselves under the IRAS.

Apart from this, the IRAS also look into any form of disputes or appeals arising out of GST matters. The IRAS helps in settling different form of disputes related to GST registration in Singapore.

Introducing this tax is one of the most remarkable steps by IRAS as it removes any form of additional burdens on personal & corporate income. The Singapore government aims steady revenue growth and limits an amount of income tax paid by the individuals and other forms of business entities.

What is Current Rate of GST in Singapore?

Currently, rate of GST in Singapore is 7 per cent, which is an indirect tax levied on the goods manufactured in Singapore. GST applied to the sale price of goods and services in the Singapore. Hence in order to calculate GST, the business would have to apply it on the respective selling price. The revenue authority of Singapore has first introduced GST which is levied on the sale price of products and services offered to the customers.

Hence, from the above, it is understood that the payment of GST does not burden entities and businesses that go for the GST registration in Singapore. These entities merely act as facilitators & agents for the proper collection of GST.

Example of the GST registration in Singapore for a Business Entity

If the business is registered in Singapore to pay GST, then the same has to be collected from the customers. The customers pay an amount of GST, which is levied on products and services provided by the business.  The GST registered business or entity then pay the tax to revenue authorities in Singapore.

For example, if charge is of SGD 200 to the customer for products and services, then invoice must be of SGD 214 for the products and services rendered to the end customer. SGD 200 is a sale price or selling price of the goods and services to the customer. 7% is a current rate of GST in Singapore. Then the total amount would be invoiced on the customer for the services would be of SGD 214.

The amount that is directly invoiced to the customer must be directly payable to the revenue authorities of Singapore (IRAS). It has to be compulsorily paid every quarter in a year. The invoice amount can be paid through the GST filing system, that is an online system for making the payments related to GST.

Any company that is established has to apply under IRAS for GST registration in Singapore. Just by incorporating under a relevant Company law of Singapore does not provide any automatic status for GST registration. Hence the company would have to register with the IRAS before they can charge any amount of the GST.

Does my Entity Require the GST registration in Singapore?

GST registration in Singapore is required mandatory for all the businesses in Singapore. However, there are specific criteria for the business to be registered under a relevant GST legislation. The payment of GST by the particular business is determined on an amount of revenue generated by a business entity.

Hence it is clear that a payment of GST in Singapore would be based on the revenues earned by business. Businesses have to determine whether or not they are required to pay GST. From the above, it can understand that a payment of GST by a particular business would have to be continually assessed by a business.

Mandate of GST registration in Singapore under Two Forms

The following are the two types of GST registration in Singapore:

Mandate of GST registration

Voluntary Registration

Under this process of voluntary registration, the business has to carry out a self-assessment tax for a business entity. Based upon the revenues earned by the business, the GST would be charged on a business entity. Any business that does not have a liability to compulsory register under this system can opt for the voluntary registration process.

When the business goes in for a voluntary registration process, then there must be prospective plans for a business to carry out sales in Singapore. The following conditions must be satisfied with the business for classifying under a voluntary registration of GST in Singapore:-

  • Any business which goes for the procedure of voluntary registration of GST in Singapore must be registered for a minimum period of 2 years.
  • Apart from this, the business must comply with relevant regulations related to GST.
  • The business would have to make GST invoices payable to the IRAS.
  • This particular payment must be carried out quarterly.
  • The entity must preserve all the records. The documents and records must be maintained by the authority for a minimum of 5 years from the date of registration.
  • Any other conditions that are imposed by the IRAS[1] have to be complied by the business entity.

Compulsory Registration

Under this, every business entity in Singapore must mandatorily require registering. The following criteria that are required for compulsory GST registration in Singapore:

  • If a turnover, including the revenues and sale of the business, exceeds more than SGD 1 Million in past 12 months. It is known as a retrospective basis as there is some form of pre-determination in a process of payment of GST.
  • If a company is not sure about the turnover but has an excessive amount of sale and there is a reasonable prospect that a turnover of the business will exceed the SGD 1 Million for the next 12 months. Such pre-determination of future sales of a company is known as a prospective basis. Any form of sales contracts or agreements are signed in advance would determine the payment of GST.
  • When revenue of the company exceeds SGD 1 million, then the company must have to register with the relevant authority for paying GST. It is carried out within 30 days of the revenue exceeding that particular amount.

By carrying out the above procedure, the business has to comply with the relevant laws related to GST and avoid any form of penalties imposed by the IRAS.

Is any Company or Entity Exempted from the GST registration in Singapore?

Usually, all business entities required to register for charging GST in Singapore. However, if any business entity has a system of making only zero-rated supplies, then such business gets exemption from GST registration. It would be applicable for the business in case the taxable turnover exceeds a required amount of business registration for the GST perspective.

If any business is exempted from the GST registration, then the following criteria have to be fulfilled:-

  • The business claims for an exemption from GST registration must show the IRAS that an amount of zero-rated supplies exceeds more than 90%.
  • It will be the case if an amount of revenues of the business exceeds the value of the SGD 1 million.
  • The business entity must comply with all other requirements of the business process.

Process of GST Registration in Singapore

Every company must follow the below process for GST registration in Singapore:

  • The applicant must submit the Goods & Services Registration Form (GST F1) along with all respective documents to the tax authority in Singapore, which is IRAS.
  • If a business has additional partners and directors, then another form (GST F3) has to be filled by the business and sent to the authority.
  • Filing of GST F3 form will be in the case if the business is the partnership or limited liability partnership.
  • However, there is separate procedure for making an application if an applicant is an overseas company or an entity which is registered outside the jurisdiction of Singapore
  • It would be convenient for an overseas company to appoint a registered agent or a duly appointed agent to file the GST registration in Singapore. If a company appoints an agent, then an independent letter or a power of attorney has to be submitted along with the form stating the same requirement.
  • Once the procedure is completed, the authority will get back within three weeks (21 working days). If an authority considers that the application has no errors, then an applicant will be registered without any issues.
  • On successful registration, an applicant will receive intimation or a notification from the GST authority. The intimation will be in the form of a letter, which will contain the following information:
  1. GST registration number for a business
  2. GST return filing date of a business
  3. Quarterly Filing Information for a business
  4. Last date of filing GST return of a business
  5. Any other important information related to filing of GST return for a business.
  • The applicant has to take all steps to file GST on time, and filing must be carried out electronically by an applicant.
  • Once the process is carried out, an applicant would be registered under the GST registration in Singapore system. An applicant has to set up a GIRO system of payments under the Singapore Bank Account.

Conclusion

It is concluded that it is important that every business entity must have GST registration in Singapore. By this particular system, a company does not have an additional burden to pay the other forms of indirect taxes. 

When a business manufacturers any product or provides a service, then GST is levied on the products and services. A business requires to register for GST if the revenue exceeds more than SGD 1 Million. However, there are exemptions from registering under the GST system. At Corpbiz we assist our clients’ matters pertaining to GST registration.

Read our article: List of Goods and Services where GST is Applicable: Latest Rates

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