What is GST?
GST stands for Goods and Service Tax. It is the equivalent of Value Added Tax (VAT) that is levied in some countries. GST is a broad-based consumption tax collected on all supplies of goods and services made in Singapore as well as goods and services imported into Singapore. The liability to register for GST arises based on the value of the taxable turnover that the business generated from the supply of goods and services.
A business must be registered for GST if its turnover from taxable supplies had exceeded S$1 million in the past 12 months or is likely to exceed S$1 million in the next 12 months. The former is known as a retrospective liability to register, and the latter is a prospective liability.
What is a Taxable Turnover?
In the case of a Sole Proprietor, taxable turnover is the combined revenue, fees and income the proprietor earns from business, self-employment, profession or vocation, rental of commercial properties, furniture and fittings. In the case of Limited Liability Partnerships, it includes the turnover of all partnership businesses with the same composition of partners and rental of commercial properties, furniture, and fittings. In the case of a company, the turnover of that particular company, and if the company owns any sole-proprietorship, then the turnover of all such sole-proprietorship must be included in taxable turnover.
It must be noted that standard-rated (7% GST) and zero-rated (0% GST) supplies are part of the taxable turnover; exempt supplies and transactions that are out-of-scope are not part of taxable turnover. Export of goods from Singapore and international Services as described in Section 21(3) of the GST Act are Zero-rated; sale and lease of bare residential property and most financial services are exempted; third-country sales of goods that do not enter Singapore (goods in transit) and dividend income are out-of-scope supplies.
When should I register for GST?
Prior to 1 January 2019, if the taxable turnover at the end of the calendar quarter, three months ending Mar, Jun, Sep or Dec, and the past three quarters exceed S$1 million, the business must register for GST. This required monitoring of the business’s taxable supplies turnover at the end of every calendar quarter and register for GST if the taxable turnover in the past 12 months is more than S$1 million.
This quarterly-basis of determining GST liability has now been amended. From on or after 1 January 2019, the liability to register for GST will be determined by computing taxable turnover on a calendar year basis instead of a quarterly basis. If the taxable turnover at the end of any calendar year on or after 1 Jan 2019 is more than $1 million, the business must register for GST. You must monitor at the end of every calendar year, 31st December, and register for GST if the annual taxable turnover exceeds $1 million.
A business will have to register for GST if it has reasons to believe that its revenue from taxable supplies in the next 12 months to be more than S$1 million. Supporting documents such as contracts, agreed quotations, confirmed purchase orders from customers, invoices to customers, and income statements must be submitted to substantiate such prospective registration for GST. However, if the revenue from taxable supplies is not likely to exceed $1 million in the next 12 months, the business need not register for GST.
Application for registration for GST must be made via myTax Portal within 30 days from the date the liability to register arises. Before 1 January 2019, within 30 days from the end of a calendar quarter; After 1 January 2019 within 30 days from the end of a calendar year.
Can I Register for GST Voluntarily?
A business that is not required to register for GST may apply for registration voluntarily if the business satisfies any of the following:
- it makes taxable supplies ;
- only out-of-scope supplies.
- it makes exempt supplies of financial services.
Even if it merely has the intention but is not actually making any of the above supplies, the business may still apply for GST registration. However, if the intentions are not firm, then it should not apply for registration.
It must be noted that the company director / sole-proprietor /partner/trustee applying for voluntary GST registration must complete two e-Learning courses and pass the quiz before submitting the registration form. The purpose of the e-learning course is to ensure that the applicants have a thorough understanding of the obligations and responsibilities of being registered for GST. However, this condition may be waived, subject to conditions. Additionally, the business must sign up for GIRO for payment and/or refund of GST and provide the security deposit imposed by the Comptroller on a case-by-case basis.
Upon voluntary registration, the business must remain registered for at least two years and make taxable supplies within two years, if not making taxable supplies at the point of application. Also, the director/partner or sole proprietor, as the case may be, must complete the e-learning course “Introduction to GST” within three months from the effective date of registration; and be on GIRO arrangement for payment and/or refund of GST. Notably, the Comptroller may also impose additional conditions and cancel its GST registration if any of the conditions are not met.
What are the Advantages of Voluntary GST Registration?
One significant advantage to voluntary GST registration is that the business can claim the input tax or the GST paid on its purchases. However, input tax is claimable only if it is attributable to the making of taxable supplies. So, if the business is making partially exempt supplies and has both business and non-business activities, then it will not be able to claim all its input tax. The costs may outweigh the benefits; so the profile of the suppliers and customers as well as the nature of supplies made must be carefully considered. If the customers are not GST registered, the business may be constrained in charging them GST as its customers cannot claim the GST paid. Charging GST on such customers could lead to customer attrition. Likewise, only when the suppliers are GST registered or if the business is importing its supplies, it will be able to claim the GST paid. If the supplies are zero-rated, though there is no impact on the selling price the business will still be able to claim the GST incurred on its purchases if the business is GST registered.
Are There Exemptions From GST Registration?
A business will be exempted from GST registration if
- all or most of its revenue is from zero-rated supplies and if being registered will lead it to claim input GST, then it may apply for an exemption by submitting the GST F2 Form.
- The business is liable to register only retrospectively, and it has reasons to believe that the turnover for the next 12 months will not exceed S$1million and the taxable revenue is estimated to be lower due to specific circumstances such as, scaling down of business, termination of sales contract, cancellation of license or distribution rights or cessation of business.
- The business has supporting documents to corroborate its stand such as, proof of cancellation of contracts, payment of early termination fees, correspondence with customers regarding termination or cancellation of orders, notice of revocation of license, board resolution for downsizing, winding up, court orders, notification of downsizing, winding up or cessation of business to third parties. However, you need to monitor the taxable turnover to determine registration liability.
When Does the GST Registration Take Effect?
The effective date of registration is as follows:
In the case of compulsory retrospective registration, the business will be registered on the first day of the third month following the end of the calendar quarter (prior to 1 Jan 2019) or calendar year (on or after 1 Jan 2019).
In the case of compulsory prospective registration, the business will be registered on the 31st day from the date of the forecast.
On approval of the application, a letter notifying the GST registration number and the effective date of GST registration will be sent to you. GST should only be charged on sales made on or after the effective date of GST registration.
How will My Businesses be Registered for GST?
In the case of Sole Proprietorship, registration will be in the name of the business owner/sole proprietor; therefore all sole proprietorship businesses that the applicant owns at the time of registration and any sole-proprietorship business that the applicant registers eventually will also be included under the applicant’s name and become GST-registered.
Unlike Sole Proprietorship, Partnerships will be separately registered for GST under its own name. Notably, if a Partnership is registered for GST, then any other Partnership that has been formed by the same set of partners or set up eventually by the same set of partners must be GST-registered.
In the case of companies, GST registration will be in the name of the company.
What Are My Responsibilities as a GST Registered Business?
A GST-registered business has the following responsibilities:
- Charging and accounting 7% GST on standard-rated supplies;
- Filing GST returns on time, within one month from the date of each accounting period. If there are no transactions during the said period a ‘Nil’ GST returns must still be submitted;
- Keeping proper records for at least five years;
- Displaying prices inclusive of GST in the prescribed format, Failure to comply is an offence that can result in a fine of up to $5,000.
- Issuing tax invoices/customer accounting tax invoices, with GST registration number, for standard-rated supplies. If the invoice amount does not exceed $1,000, a simplified tax invoice may be issued.
- Paying the tax due within one month from the end of each accounting period.
- Informing the Comptroller within 30 days after any change in the business circumstances such as changes in GST mailing address, business constitution or ownership, changes in partners or particulars of partners and partnerships business set up with the same composition of partners.
GST-registered businesses must use Corp pass to e-File their GST returns through myTax Portal and make payment to IRAS by the due date. If e-filing GST return for the first time or when there is a change in the persons filing the GST returns, the person filing the GST return has to be authorised for GST e-Service under CorpPass by the GST-registered business. If an agent files the GST return, the agent must be authorised in CorpPass to act for the GST-registered business.
GST-registered companies or partnerships will need to register a CorpPass Admin account under the Unique Entity Number (UEN). GST-registered sole-proprietors must set up a GST CorpPass Admin account for their respective GST registration number.
What Are The Consequences of Non/Late Filing or Non/Late Payment of GST?
A fine up to $5,000 and in default of payment, an imprisonment term up to six months may apply in the failure to e-file. In the case of late submission, a penalty of $200 will be charged immediately once the GST return is not filed by the due date. A penalty of $200 will continue to be imposed for every month, up to a maximum of S$10,000 per outstanding return. The IRAS will issue an estimated assessment of the tax due, and the amount is subject to late payment penalties. The estimated assessment and late payment penalties will only be revised upon receipt of the overdue GST return.
For non/late payment, a 5% penalty will be levied on the amount of tax unpaid by the due date. An additional penalty of 2% per month on tax remaining unpaid after 60 days from the due date of the prescribed accounting period (subject to a maximum of 50% of the outstanding tax) may also be imposed.
What Are The Consequences of Late Registration?
The following are the consequences of late registration
- Date of registration will be backdated to the date when business became liable for registration.
- Regardless of whether GST is collected from customers on the sales made after the business became liable for registration, GST for the past sales must be accounted for and paid from the effective date of registration, i.e., backdated period.
- A fine of up to $10,000 and a penalty equal to 10% of the GST due may be charged for late registration. Prosecution action may also apply. However, IRAS generally waives the fine and penalties for late registration in the event of voluntary disclosure.
Need assistance with GST registration and filing?
At Rikvin, our team of accounts specialists are ready to help you with your GST registration and/or filing.
Benjamin has over 20 years of tax experience, spending more than 13 years working for the Big 4 accounting firms and being an in-house tax advisor. Benjamin has also worked with SMEs, multinational corporations, and publicly-listed companies from diverse industries, offering tax advisory and planning, corporate restructuring, M&A, business model optimization, tax ruling requests, tax incentives application, tax risk mitigation, and tax reporting services on complex projects.