Commonly known in other countries as Value-Added Tax (VAT), GST is a broad-based consumption tax levied on the import of goods (collected by Singapore Customs), as well as nearly all supplies of goods and services in Singapore. GST is an indirect tax, expressed as a percentage (7% as of time written) applied to the selling price of goods and services provided by GST registered business entities in Singapore.
GST tax is charged to the end consumer therefore GST normally does not become a cost to the company. Businesses merely act as collecting agents on behalf of Singapore tax department.
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.
Conditions for mandatory GST registration:
|Backwards-looking View||Forwards-looking View|
|• Your taxable turnover at the end of the calendar quarter (i.e. 3 months ending Mar, Jun, Sep or Dec) prior to 1 Jan 2019 and the past three quarters is more than $1 million. You will have to monitor at the end of every calendar quarter and register for GST if your taxable turnover for the past 12 months exceeds $1 million. To check your registration liability, you can utilise the GST Registration Calculator by IRAS.
• (NEW) Your taxable turnover at the end of any calendar year on or after 1 Jan 2019 is more than $1 million. For periods on or after 1 Jan 2019, taxable turnover will be computed on a calendar year basis for the purpose of determining registration liability. You have to monitor at the end of every calendar year (i.e. 31 Dec) and register for GST if your annual taxable turnover exceeds $1 million.
|• If at any time, you can reasonably expect your taxable turnover to exceed S$1 million. You will have to register for GST if there is certainty that your taxable turnover will be more than S$1 million in the next 12 months. The forecast must be supported by documents, such as:
– 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
Conversely, you are not required to register for GST if there is not certainty that your taxable turnover will exceed S$1 million in the next 12 months. For example, if you made a forecast based on market assessment, business plans or sales targets.
Conditions for GST exemption:
- Taxable turnover is solely or mostly from zero-rated supplies
- You are liable under the backwards-looking view but not under the forwards-looking view, and the following conditions are met:
- It is certain that taxable turnover the for following 12 months will not exceed S$1 million
- The taxable turnover is projected to be lower due to specific circumstances, such as large-scale downsizing of business
- You have supporting documentation to substantiate projection
If you are not liable for GST registration, you may still choose to do so voluntarily evaluating the advantages and drawbacks.
Should you be liable for GST registration, you are required to apply 30 days from the date liability arose.
If you fail to register within the stipulated deadline, some penalties might be incurred:
- Your date of registration will be backdated to the date that you were liable to be registered.
- 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.
- You may face a fine of up to $10,000 and a penalty equal to 10% of the GST due. Prosecution action may apply.
However, if you submit an application for GST registration and voluntarily disclose that you are late in registration, IRAS will generally waive the late notification fine and penalties. If you have difficulties paying the GST due on the backdated period, you may be allowed to pay the GST due in instalments.
If you need help with GST registration, feel free to contact us for more information.