A Beginner’s Guide to Singapore’s Goods and Services Tax (GST)

Last Updated on June 15, 2023

Implemented in 1994 under The Inland Revenue Authority of Singapore (IRAS), the Singapore Goods and Services Tax (GST) Act is seen as a way to provide steady revenue for the government while keeping personal and corporate income tax rates at a relatively low rate. IRAS acts as the agent of the Singapore government and administers, assesses, collects, and enforces payment of GST. The Singapore GST rate currently stands at 8%.

What is GST in Singapore?

In some countries, the Goods and Services Tax is known as Value Added Tax (VAT). It is a consumption tax levied on end-users for the supply of products and services in Singapore, and it also applies to items imported into the country. The tax rate is calculated based on the selling price of products and services provided by GST-registered enterprises. They serve as an agent who collects the tax on behalf of the government.

Who should register for GST?

GST registration in Singapore is optional for incorporated companies. Only companies that have fulfilled specific criteria are entitled to charge and collect the tax. Your business must register if your business’ turnover is more than $1 million in the past year (retrospective basis) or you’re currently making sales that are expected to have a turnover that exceeds S$1 million for the next 12 months (prospective basis).

Ups and downs of being a GST-registered business 

Being registered offers several benefits, including informing buyers that your company is established and of a specific size. It also lowers the cost of business since you’re entitled to GST Singapore refunds. It’s important to remember that the Goods and Services Tax is only applicable to consumption, meaning that savings and investments are not taxed. This will hopefully encourage people to invest more.

However, registering comes with an administrative burden that is not easy to handle. You must understand the intricacies on your own or hire an experienced accountant, which may not come cheap. Additionally, as you’ll increase the selling price of your goods and services, it may impact the buying power of your customers, especially lower-income groups.

How to register for Singapore's GST?

You must submit a Singapore Goods and Services registration form (GST F1) and the necessary supporting documents to the tax authority. In the case of partnerships, an additional form (GST F3) giving details of all the partners must also be submitted. Meanwhile, for overseas registrants and companies, hiring a local agent who will act on your behalf is necessary. The registration process will take approximately three weeks.

Implementing and filing GST returns

The tax is relatively simple to implement; you must either charge GST on top of your selling price or absorb the amount by labelling the price as GST-inclusive. GST-inclusive prices must be displayed and quoted on all prices displayed, advertised, published, and quoted verbally or in writing. Failure to do so will be considered an offence and will result in a penalty.

You must submit an electronic return (GST F5) to the tax authorities either monthly or quarterly. In your return, you must include the total value of your local sales, exports, and purchases from GST-registered entities, the tax collected, and the amount claimed for a given period. The government has implemented a number of schemes to assist businesses.

Becoming a GST-registered business comes with its benefits. It certainly is beneficial for the government as it provides a constant stream of revenue that will be utilised to better society. We hope that this article has helped you in weighing whether your business should be a GST-registered business or not.

In need of expert assistance?

Take the hassle out of managing your business's finances and ensure compliance with Singapore's GST regulations. We offer Singapore GST registration and GST quarterly filings. Let Lanturn be your trusted partner in handling accounting, reporting, payroll, and tax matters, so you can focus on growing your business. Reach out to us today and experience the peace of mind that comes with expert assistance.

Contact us!