The Goods and Services Tax is a consumption tax levied on imported goods and on most of the goods and services supplied in Singapore. It is the equivalent of the value-added tax.
Foreign businessmen who have opened a company in Singapore should know that they are liable for Goods and Services Tax (GST) registration, a process that may differ in accordance with the constitution of the business. GST was introduced in Singapore in 1994 and the current standard GST rate is established at 8%, starting with 2023 with a number of zero-rated supplied and other non-taxable supplies. Some of the exempt supplied include the import and local supply of investment precious metals and some supplies for which the GST does not apply include private transactions. Entrepreneurs who need assistance for GST registration in Singapore can receive adequate advice from our team of accountants. Our team can also assist businessmen in other accounting matters, such as payroll in Singapore or performing audits.
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Foreign companies registering for GST in Singapore
Foreign companies are considered Singapore non-resident entities with places of management in the city-state. When making supplies of taxable goods and services, these entities are required to register for GST in Singapore just like any other local business. An additional requirement for these companies is that they are required to appoint a local agent to handle the registration process and later the payment and filings with the IRAS.
It is useful to know that a new type of GST registration has been approved by the IRAS. This is the Reverse Charge and Overseas Vendor Registration which has entered into effect starting with the 1st of January 2020. The new mechanism applies to businesses selling imported goods online or on marketplaces.
Our accountants in Singapore can offer more information on the Reverse Charge and Overseas Vendor Registration scheme. If you are looking to register for GST in Singapore as a foreign businessperson, you can rely on our specialists.
GST registration steps for local businesses in Singapore
The list below includes the five main steps for GST registration in Singapore:
- Step 1: business owners need to determine if they are required to register for GST, according to the annual taxable turnover.
- Step 2: the e-Learning course – those investors who register voluntarily need to complete two e-Learning courses for the purpose of registration and as a general overview.
- Step 3: submit the application – the application for GST registration and the supporting documents are to be submitted to the Inland Revenue Authority.
- Step 4: application processing – additional information may be requested apart from the supporting documents already provided during the previous step
- Step 5: receive the notification of registration – once the company is registered, the applicant will receive a notification at the company’s registered address.
Starting with October 2018, businesses in Singapore will be required to complete the GST registration steps online via the myTax Portal. The online application is a fast-track process and investors should note that paper applications will only be allowed in certain special cases, for example when the business cannot access the portal. One of our accountants in Singapore can guide you through the use of the e-services provided by IRAS. The same procedure remains in place when it comes to VAT registration in Singapore in 2023.
| Quick Facts | |
|---|---|
| We offer GST registration services (YES/NO) | Yes
|
|
Standard rate |
8% |
| Lower rates
|
0% on international services and exports |
| GST registration requirements |
1 million SGD registration threshold |
| Registration time frame (approx.) | Between 2-4 weeks |
| GST for real estate transactions |
GST exepmtions on real estate sale and lease |
| Exemptions available |
YES, financial services, lease and sale of real estate, import and supply of precious metals, e-payments |
| Filing period | Monthly or quarterly filings are permitted |
| GST returns support | Yes |
| GST refund availability | YES, for tourists purchasing goods worth more than 100 SGD |
| Local tax agent required | Not mandatory, but advisable |
| Registration requirements for foreign companies (YES/NO) | Foreign companies must comply with the same GST registration requirements as local companies |
|
Authority in charge of GST collection in Singapore |
The Singapore Inland Revenue Authority |
|
Documents for GST registration |
– Application form, – information about the company; – details of the officer appointed. |
| GST format | SG + 15-digit code |
| Possibility to apply for EU EORI numbers (YES/NO) |
YES, the Singapore GST number can be used for EORI registration for EU trading activities |
| Penalties for not registering for GST in Singapore (if any) |
Yes, late GST registration and late filing requirements are subject to penalties in Singapore |
| Voluntary registration requirements (if any) |
Yes, an officer (director) of companies filing for GST registration in Singapore must complete two courses related to this tax |
| Mandatory issuance of GST invoice (YES/NO) |
Yes, all invoices must contain the GST amount |
| Requirements to maintain GST information |
GST information must be maintained for 5 years |
| GST schemes availability (YES/NO) |
Yes, here are some of them: – Tourist Refund; – Cash Accounting; – Major Exporter; – Import GST Deferred Scheme. |
| De-registration requirements |
The company is undergoing liquidation, the registration threshold has not been reached. |
| Other services available (YES/NO) |
We also offer payroll, accounting services, and audits in Singapore. |
The Goods and Services Tax and its applicability in Singapore in 2023
The GST is an indirect levy or a consumption tax, and it applies to all goods and services imported, produced and sold in Singapore. The GST is collected by the Customs Authority and in order to pay it, Singapore companies must register with this authority. Specific GST registration requirements apply to companies operating in various sectors in Singapore.
It is important to note that the GST applies at a standard rate, but reduced rates are also available. There are also various goods and services exempt from the GST, and among these, we mention financial services, the issuance of digital payment tokens, real estate leases, and sales, as well as the supply of precious metals. The export of goods and international services are levied a 0% GST.
Even in the case of goods and exempt from GST in Singapore, it is important to note that these companies could be required to complete the GST registration procedure. Furthermore, trading companies need to comply with specific procedures with the Singapore Customs in order to be able to engage in the import-export of taxable goods and services.
Once registered for GST, a Singapore company is required to first collect the due amount of money from the customers/clients and then pay the tax to the Inland Revenue Authority.
With the help of our accounting firm in Singapore, you can complete the necessary procedures related to the registration, collection and payment of the Goods and Services Tax.
Companies liable for GST registration
Companies operating in Singapore are liable to GST registration if several conditions are met:
- the taxable income of the business in the last three-quarters of the year and at the end of the calendar quarters was set up above $1 million; businessmen who consider that the taxable revenue for the next financial year will be below this value (proven with documentation in this sense) may be exempt from GST registration;
- the investor is expecting that the taxable income will be established at the total value of a minimum of $1 million for the following 12 months.
According to the local legislation, companies in Singapore are required to register for GST in a period of a maximum of 30 days after the end of the quarter. For the second situation, in which the businessman expects a turnover above $1 million, the company will have to register for GST before the 31st of July.
Late registration is sanctioned through a fine of up to 10,000 $ or a penalty of 10% of the due value of the GST. A waiver will generally apply for those applicants who register later than the deadline but disclose this fact upon registration. The residual GST may be paid in installments in certain cases. Our accountants in Singapore can provide you with more details on registration, late registration, and specific requirements.
Those business owners who have a taxable turnover from zero-rated supplies can apply for an exemption from GST registration in Singapore. For this purpose, the applicant must show that zero-rated supply makes up for more than 90% of the company’s total taxable supplies. A special form is submitted with the Singapore Inland Revenue Authority, and, upon approval, the applicant will no longer need to file GST returns. Beneficiaries must notify the Comptroller if any change occurs from their first application for the GST exemption. Should they cease to qualify for this exemption they will need to register for GST.
What does GST registration mean for Singapore companies?
As mentioned at the beginning of this article, the GST is an indirect tax and Singapore companies with GST numbers are required to collect this tax from their clients and customers and then forward it to the Inland Revenue Authority. It is important to note that a company registered in Singapore is not automatically issued a GST number, as it must apply for it. Also, GST registration in Singapore is not compulsory right after the business is incorporated.
There are specific conditions that lead to GST registration, however, there are also companies exempt from this procedure.
Our accounting firm in Singapore can offer detailed information on the requirements related to GST registration and the formalities that need to be completed. Our company can also help you if you need various types of audit services in Singapore. Operational audits in Singapore, also known as program or performance audits, look at how resources are used by the unit to determine whether those resources are being used in the most effective and efficient ways possible to achieve the unit’s goals. A compliance and a financial audit are all included in an operational audit.
We invite you to read about the GST registration procedure in Singapore in the scheme below:
Exceptions from GST registration in Singapore
Not all companies are required to register for GST in Singapore, and among these are the following:
- companies with a taxable turnover obtained from a zero-rated supply of goods and services;
- companies subject to retrospective view GST registration provided that their annual turnover is not expected to exceed 1 million SGD;
- companies expecting their turnover to be lower due to specific reasons.
Even if in these cases GST registration is not required, companies have the obligation of monitoring their annual turnover. Also, they are required to submit documents that attest to their request for exemption from GST registration.
With continuous support from our Singapore accountants, you can monitor the financial situation in your company and decide whether to register for GST or not.
Voluntary GST registration in Singapore in 2023
A mandatory requirement for companies seeking to register for GST in Singapore voluntarily is for one of the directors to complete two e-learning courses – one related to GST registration and one related to the payment of the goods and services tax. This requirement also applies to sole traders, trustees in management companies and members in partnerships. It is good to know where the person appointed to handle GST registration, payment, and filing matters is an accountant or an accredited tax advisor, the company representative is no longer required to participate in such courses. This is why you can work with our certified accountants in Singapore.
Even if you are not required to register for GST in Singapore, you can still do so on a voluntary basis.
You must meet one of the following requirements in order to be eligible for voluntary registration:
- your company manufactures chargeable supplies;
- only supplies outside your company’s scope are produced. Out-of-scope supply mostly refer to sales of commodities that were in transit and goods that were not brought into Singapore;
- your company performs foreign financial services that are exempt supply.
Even if your business is GST-registered, you would not be eligible for the full input tax credit if you import low-value goods or hire foreign service providers to provide services for you.
You may even apply if you have not yet begun any of the aforementioned transactions but plan to do so in the future.
Before registering for GST, make sure you are eligible for voluntary GST registration and that you meet all the requirements.
Compared to other countries, before completing the registration in Singapore, the director, sole proprietor, partner, trustee, or person responsible for preparing GST returns must have successfully completed and passed the “Overview of GST” e-Learning course. This is done to make sure that before you register for GST, you fully comprehend the duties and responsibilities of a GST-registered firm.
This is one of the main reasons many entities choose to outsource their accounting. This way, they can ensure respecting the laws.
Following registration, the company must maintain the Singapore GST number for at least 2 years.
One advantage of registering for GST is that, provided you meet the requirements for claiming input tax, you can claim the GST you paid on your purchases.
Implementation of the GST in Singapore
Once a company registers for GST in Singapore it will become accountable for charging the tax and forwarding it to the IRAS. For this purpose, it is required to set up a GIRO account that can be linked to the company’s bank account. This is why it is useful to have an account with a Singapore bank.
The GST can be charged separately from the selling price or it can be absorbed in the selling price, however, it is important to note that:
- the price of the goods and services must be displayed with the GST included;
- the GST must then be published separately on invoices.
An exception from the GST-included price is available for the food and beverages industry, where the prices can be listed without adding the GST.
For assistance with the accounting of your company in Singapore, you can rely on our accredited specialists.
GST invoices in Singapore
As mentioned above, there are a few requirements to be met when registering for GST in Singapore. One of them is related to the billing and invoicing of customers. We remind business owners that invoices must be issued no matter if they sell goods and services subject to GST or not.
When issuing an invoice, it must contain the product or service, its total price and the price with the GST separately. This way, the buyer will be able to claim the input tax. These invoices must be kept by the Singapore company for at least 5 years. Moreover, the company must keep a GST account where the total of the input and output taxes are recorded for each accounting period. These will help the company with the filing of the GST returns.
We remind business owners that they can register for GST even if they set up sole proprietorships in Singapore. Their registration can be made on a voluntary basis.
If you need help with the preparation of tax and GST returns, do not hesitate to request the services of our accounting firm in Singapore.
GST schemes in Singapore
Registering for GST in Singapore has its advantages, and one of them refers to the schemes enabled by the government to help companies. The following programs are currently available for GST-registered companies:
- the Tourist Refund Scheme which enables tourists buying goods in Singapore from GST-registered companies to ask for refunds for the goods purchased;
- the Cash Accounting Scheme which is available for small entities with annual sales below 1 million SGD;
- the Major Exporter Scheme created for large companies importing goods sold on the Singapore market;
- the Zero GST Warehousing Scheme which is available for companies transforming their warehouses into zero-GST warehouses;
- the Import GST Deferment Scheme which enables companies to pay the GST with the monthly GST returns.
Singapore also has various industry-specific GST schemes. Our accountants can offer more information on them.
GST registration and approval timeline in Singapore
The following information is useful when it comes to GST registration in Singapore:
- it takes no more than 30 minutes to file a GST registration application;
- mandatory registration is approved within 2 business days;
- voluntary applications are processed in approximately 10 business days;
- companies that become liable for GST registration must register within 30 days once all the criteria are met.
We invite you to watch the following video on GST registration in Singapore:
GST rates in Singapore
Businesses set up in Singapore are usually taxed for their goods and services transactions at the standard rate of 8% starting with 2023. However, it is important to know that the export of goods is exempt from GST; the same rule applies in the situation of international services, the provision of financial services, the lease and sale of residential property in Singapore and local supply of investment precious metals.
Registered corporations are required to file the GST returns quarterly. Some can choose to file them on a semi-annual basis or on a monthly basis. Tax refunds are usually received within a three-month period after the submission deadline.
Filing GST returns in Singapore
Singapore companies registered for GST are required to submit returns related to this tax. GST returns must be filed in accordance with the company’s accounting period which can be:
- monthly;
- quarterly.
The form must be completed with information about the company’s sales, exports, and purchases from companies registered for GST themselves, as well as the GST collected by the end of the accounting period. The company will also mention the amount claimed for the respective period.
GST returns may be filed one day after the accounting period has ended at the latest. GST returns can now be filed electronically with the IRAS.
Special situations related to GST registration in Singapore in 2023
There are two important regulations applicable to Singapore companies related to GST registration. The first one is related to the exemption to register for GST if a company supplies 0%-rated goods and services, even if it has surpassed the taxable turnover registration threshold. One should pay attention to the fact that approval for GST registration exemption is possible only if more than 90% of the entire taxable supplies are subject to the 0% GST rate and if the input tax is higher than the output tax.
It is also possible for a Singapore company to de-register for GST in the following situations:
- the operation of the business cease;
- if the 1 million SGD turnover is not reached.
An application form alongside other documents must be filed with the IRAS with 30 days from stopping the activity.
De-registration will help prevent unwanted situations, such as penalties from missing filing deadlines. We advise you to discuss with our accountant in Singapore about GST de-registration.
If you need bookkeeping services in Singapore, you can rely on us.
The penalty for GST late payment
All companies in Singapore which are registered to pay the goods and services tax are expected to make the necessary payment within one month after the end of the accounting period. This period is covered by the GST return and failure to comply with the specified term results in a five percent penalty that may be followed by another additional penalty of two percent. The 5 percent penalty is added when the F5 and F8 forms were filed past their due date or when they were not filed at all. The five percent is imposed on the tax estimated in the Notice of Assessment. If the value of the declared tax is higher than the estimated tax, then five percent is imposed on the additional tax. The five percent penalty also applies to the F7 form that was filed one year late. The additional 2 percent penalty can be imposed each month if the tax remains unpaid 60 days after the 5 percent penalty was imposed. The two percent penalty applies to each month in which the penalty remains unpaid. One of our accountants in Singapore can give you more details on how the additional two percent tax applies and the total additional tax that can reach as much as 50% of the tax overdue.
The main benefits of GST registration for companies in Singapore
The Goods and Services Tax is one of the most important levies and contributors to the Singapore company, even if it is an indirect tax. For the economy, the GST provides stability as it represents a steady income to the country’s Gross Domestic Product and is one of the most efficient taxes from an administration and collection point of view. Moreover, the GST can be used to offset the corporate and personal income taxes by encouraging foreign investments. Thus, the Goods and Services Tax is quite beneficial for the economy.
When it comes to companies, large corporations choose to obtain GST numbers in Singapore even when they are foreign businesses running local operations in the city-state. Apart from the fact that they can collect some of the tax they pay back through their tax returns, these companies also enjoy increased confidence from business partners and clients.
Small and medium-sized (SMEs) also enjoy various benefits when they decide to register for GST in Singapore. No matter if the process is completed voluntarily or mandatory, for such businesses the registration for this tax they will be able to access lower costs related to the administration of the operations thanks to the many incentives granted by the Government. As mentioned above, Singapore even has a GST scheme which quite unique in Southeast Asia. Thanks to programs like this Singapore attracts a great number of foreign investors from European countries every year.
When it comes to self-employed individuals and sole traders, GST registration has several advantages. Considering this tax applies on consumption only, sole traders and self-employed individuals will be applied with this levy only when they spend money, thus their incomes are protected from this tax.
For individuals, there is no GST on savings and investments, therefore GST registration is not required.
Our accounting firm in Singapore can guide sole traders and self-employed individuals who want to register for GST in the city-state.
Singapore companies doing business in Europe
It is not unusual for Singapore companies to have various connections with European ones, considering the city-state is one of the important trading partners of the European Union (EU) which has a unique identification system of traders which assigns EORI numbers to companies and individuals trading within the Eurozone. While EU-based companies need to have VAT numbers, Singapore companies can register for the EORI system based on their GST numbers which are the equivalent of the VAT in Europe. This means that in order to be allowed to trade in the EU, a Singapore company must first obtain the EORI number through a rather simple procedure.
The advantages of obtaining EORI numbers for Singapore companies are the fact that these numbers can be obtained once and can be used no all over the Eurozone. Moreover, if a Singapore business loses or de-registers from the EORI system it can return any time and obtain the same number again.
Our accountants in Singapore can offer more information on GST registration with the purpose of trading in the EU.
Why is it recommended to register for VAT?
Even if VAT registration is not mandatory in Singapore, in 2023 it is advisable to resort to this action in order to avoid missing deadlines once the company reaches the registration threshold.
With the help of our accountants in Singapore, VAT registration at the level of 2023 is quite simple.
GST rates increase announced in Singapore
The GST rate rise will be phased in over two steps, according to the Budget 2022 announcement from the Minister of Finance:
- from 7% to 8% starting on January 1, 2023;
- from 8% to 9% starting on January 1, 2024.
- the establishment of a 0% VAT rate for services related to booking travel beginning January 1, 2023.
GST transition rules for all imported products and non-digital services will also change. Beginning on January 1, 2023, the regulations for reverse billing and abroad vendor registration will be improved for tax security. Starting on January 1, 2023, a non-compliant fee of (EUR 500,000) will be levied. However, this penalty can be doubled by imprisonment.
Businesses that have registered for GST are required to show GST-inclusive prices to customers on price displays. In other words, the price you see must be the price you ultimately pay.
Hotels and food and beverage (F&B) businesses that charge a service fee for their products and services are given an exception. To make their business operations easier, they are not obligated to show GST-inclusive prices for goods and services that are subject to service charges. However, they must still include a clear sign stating that the prices shown are inclusive of GST and service tax.
Hotels and F&B establishments that don’t charge a service fee are not covered by the exception. Additionally, it does not apply to F&B companies that charge a little service fee only to hide pricing inclusive of GST from customers. These companies must still display pricing that includes GST. Those that do not adhere to the criteria for price display risk penalties under the form of fines.
Even if not drastic, these changes will affect Singapore companies to some extent. If you want to be prepared for them, you can rely on our accounting firm which is at your service with details about the latest legislative amendments.
De-registration from GST in Singapore
There are various cases in which a Singapore company can de–register from the GST. The most common ones are related to the cessation of the business and when a company is sold to another person. Also, if a company does not meet the 1 million SGD threshold it has the right to de-register from the GST system.
The application form and other supportive documents which attest to the financial situation of the company must be filed with IRAS no later than 30 days after the changes in its status.
If you need assistance in GST de-registration in 2023, you can rely on our Singapore accountants.
We can also provide tailored audit services in Singapore, so do not hesitate in asking for more information on our services.
Tailored accounting services in Singapore
No matter if you have a business or want to start a new one, our accountants are at your service with tailored support in registering for GST when this procedure becomes mandatory or if you decide to register it voluntarily. Our accountants in Singapore will handle the entire process in order for your business to obtain its GST number as soon as possible.
If you need help in preparing GST returns for filing them, you can once more rely on our accountants who can also explain how to benefit from the GST scheme your Singapore business qualifies for. We can also handle the GST filing process in the timeframe required by the IRAS in order to avoid any penalties.
If you need further information on the GST registration in Singapore, please contact our accounting firm for assistance.