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Good and Service Tax in Singapore
Good and Service tax (GST) is a tax on supply of goods and services made in Singapore by taxable person or any business that the taxable person carried or importation of goods into Singapore. In certain countries, GST is also known as Value Added Tax (VAT).
What is subject to GST?
GST is impose on taxable supplies i.e. all goods and services made in Singapore except :
1) Exempt supplies
- Sale and rental of residential properties
- Provision of Financial services
- International services under Section 21(3) of GST act
2) Out of scope supply
- Goods that do not enter to Singapore
- Goods-in-transit in Singapore
- If the goods are not made or product in Singapore.
- Goods that supplies within Zero GST warehouses, licensed warehouse or Free trade zone.
3) Sales of capital assets
- sales of machinery
What is the current GST rate?
GST is further divided into 2 types i.e.:
1) Standard-rate supplies 7%
2) Zero-rate suppliers 0%
- Export of goods to oversee parties
- Provision of International services
Although zero-rate supplies, the entity is still liable to report
Who shall register for GST?
There are 2 types of registrations i.e. compulsory and voluntary registration:
1) Compulsory registration
a) Annual turnoveron taxable supplies in Singapore is more than S$1million
b) Expected annual turnover on taxable suppliers in Singapore is more than S$1million
The above 2 criterias are applicable to all types of company includes sole-proprietor, partnership, private company and public listed company.
If either 1 of the criteria above is meet, then the entity shall liable to register GST within 30 days from the date.
2) Voluntary registration
To be qualify for the registration, the Company must:
1) Make and intend to make taxable supplies
2) Carry on business and intend to make such supplies in the course of furtherance of the business
3) Have a business establishment in Singapore
4) Sole-proprietor/Partnership/Director must complete the e-learning course "GST-Before I register" before apply for registration.
What if the entity fail to register?
The entity shall be liable for fine up to S$10,000 and a penalty of 10% of tax due from the year the entity is liable to apply for registration. The penalty is retrospective and the entity shall pay for GST for the prior years even though the entity has not collected GST from its customers.
What should the entity do after register?
Submission of GST return
All registered GST companies are required to submit their GST filling online on a monthly or quarterly basis. The entity shall required to report its output tax and input tax for that accounting period in the GST return. The difference between output tax and input tax is the net GST payable to or refundable from IRAS
The entity shall submit and GST filling online and remit the outstanding amount due to IRAS not later than 1 month after end of quarter or end of the month. If there is no transaction done, you are still required to submit a "NIL" GST return.
Penalty for late submission
For entity that does not submit the GST filling online, a late submission of $200 will be imposed for every completed month that a GST F5 Return remains outstanding. The maximum penalty is $10,000.
For entity that does not remit the outstanding amount due to IRAS on time, a 5% penalty will be levied on the amount of tax unpaid by the due date. In addition, an additional penalty of 2% per month on tax remaining unpaid after 60 days from the due date and subject to a maximum of 50% of the outstanding tax will also be imposed.
What is the definition between input tax and output tax?
Input tax arises on purchases of goods or services received from GST registered suppliers. As a GST-registered entity, the entity is able to claim back tax that paid to suppliers. However, certain conditions are imposed when claiming the input tax.
Condition for claiming input tax
1) The clamming entity must be GST-registered
2) The goods and services are supplies to or imported by the claiming entity
3) The goods and services are used or to be used for the business purposes.
*No input GST to be claim If the goods and services are not used or not to be used for the business purposes i.e. personal, private purposes, free activities without commercial reasons or activities with non business objects such as religious, political, patriotic or public domain.
There are certain expenses that are not allowable under GST act by nature.
Disallow input tax claims
1) Club subscriptions fee, entrance fee and transfer fee
2) Medical expenses, medical and accident premium incurred by the staff
3) Benefit provided to the staff's family members or relatives.
4) Expenses (eg: Hire purchase interest on purchasing a car, petrol and parking fees) incurred by a motor car i.e. car, lorry and motorcycle Except for Q-plated cars with COE issued before 1 April 1998.
5) Any transaction involving betting, lotteries and others gambling activities
Output tax arises on sales of goods or services provided to local or oversea customers. As a GST-registered entity, the entity is liable to charge and collect GST from their customers. Please refer to information above for What is subject to GST?
For details explanation on GST, please refer to http://www.iras.gov.sg.
At One-Stop, we help our clients to file GST return and application for GST registration.
Please contact us for the fee charged.