Should I Register My Company for GST in Singapore?

In Singapore, businesses face a critical decision when it comes to Goods and Services Tax (GST) registration. Understanding whether to register your company for GST can have significant implications for your business operations, compliance, and profitability. This blog will guide you through the key considerations and benefits of GST registration in Singapore.

What is GST?

GST is a consumption tax levied on the supply of goods and services in Singapore, including imports. It is similar to Value-Added Tax (VAT) found in many other countries. As of now, the GST rate in Singapore is 9%. Businesses charge GST on their sales (output tax) and can claim credits for the GST they pay on their purchases (input tax).

Non-Taxable Goods and Services

Not all goods and services are subject to GST in Singapore. There are three main categories of non-taxable items:

1. Zero-rate supplies: Goods and services that are exported or deemed to be exported, such as international services and the sale of investment precious metals, are taxed at a 0% GST rate.
2. Exempt supplies: Certain financial services, the sale and lease of residential properties, and the supply of digital payment tokens are exempt from GST.
3. Deemed supplies: Goods or services provided as gifts or samples to customers are considered deemed supplies, which are not subject to GST.

How Does GST in Singapore Work?

GST in Singapore operates on a self-assessment basis, where businesses are responsible for continuously evaluating their need to register for GST and fulfilling their tax obligations. The process involves:

1. Charging GST on sales: GST-registered businesses must charge GST on the sale of taxable goods and services to their customers.
2. Claiming input tax credits: Businesses can claim input tax credits for the GST they have paid on their business-related purchases, effectively reducing their overall tax liability.
3. Remitting net GST to IRAS: The net GST, which is the difference between the output tax (GST charged on sales) and the input tax (GST paid on purchases), must be remitted to the IRAS on a regular basis.

What is the Process of Applying for GST Registration in Singapore?

To apply for GST registration in Singapore, a business must submit an online application via the IRAS website or engage the services of a professional firm. The process involves providing business details, estimated turnover, and other relevant information to determine eligibility for GST registration.

How to Register for GST in Singapore?

You can register for GST either online or offline.

Online Registration

To register online, submit your application via the myTax Portal using your CorpPass. You will also need to provide the required supporting documents. For voluntary registration, you must also submit a GIRO application form and proof of completing the e-learning course. The processing time for online registration is approximately 10 working days. Once your application is approved, you will receive an approval letter within 2 weeks from the date of submission. The date of registration will not be backdated for the purpose of claiming input tax.

Offline Registration

For offline registration, submit a Singapore Goods and Services Tax registration form (GST F1) along with all necessary supporting documents to the tax authority. Partnerships must also submit a GST F3 form. There are additional forms for overseas companies, group registrations, and divisional registrations. During the offline application process for GST registration, businesses must provide the necessary supporting documents and complete any required forms. The offline registration process can take up to three weeks.

After Registration

Once your GST registration in Singapore is confirmed, you will receive a GST Registration letter. This letter will contain your GST number, the effective date of registration, filing frequencies, due dates, and any other special instructions. GST returns must be filed electronically.

How Grof Can Help with GST Registration in Singapore?

Navigating GST registration in Singapore can be complex, but Grof simplifies the process with their comprehensive services. Grof assists businesses in determining whether GST registration is mandatory or beneficial for them, handling all the paperwork and compliance requirements. Their expert team ensures timely submission of GST returns and helps businesses maximize input tax claims, reducing administrative burden and enhancing overall efficiency. For more information on how Grof can support your GST registration needs, visit Grof’s GST Services.

Mandatory GST Registration

In Singapore, GST registration is compulsory for businesses with an annual taxable turnover exceeding S$1 million. This threshold is assessed on a retrospective basis (looking at the past 12 months) or a prospective basis (expecting to exceed the threshold in the next 12 months).

Businesses that meet the mandatory registration criteria must register with the IRAS within 30 days to avoid penalties. The IRAS has also implemented anti-avoidance provisions to prevent companies from intentionally keeping their turnover below the GST registration threshold.

Voluntary GST Registration

Even if your business’s turnover does not exceed S$1 million, you may still opt for voluntary GST registration. This can be beneficial for several reasons:

Claim Input Tax Credits

By registering for GST voluntarily, businesses can claim input tax credits for the GST they have paid on their business-related purchases, effectively reducing their overall operating costs.

Boost Brand Image

Voluntary GST registration in Singapore can enhance a company’s credibility and perceived success, as it signals that the business has a significant annual taxable turnover.

Influence Business Policies

GST registration data is used by the government to analyze industries and formulate policies. Voluntary registration can contribute to this data pool and potentially influence the development of more favourable business policies.

Maintain Lower Personal and Corporate Tax Rates

The revenue generated from GST collection allows the government to maintain lower personal and corporate income tax rates. By voluntarily registering for GST, businesses can contribute to this revenue stream and potentially benefit from the lower tax environment.

Considerations for Voluntary GST Registration

Before deciding to register for GST voluntarily, businesses should carefully evaluate the following factors:

Eligibility Criteria

To qualify for voluntary GST registration, a company must be manufacturing taxable supplies, out-of-scope supplies (goods that do not enter Singapore or are in transit), or international services. Businesses engaged in exempt supplies or importing raw materials may also be eligible.

Compliance Requirements

Voluntary GST registration comes with specific compliance obligations, such as completing the “Overview of GST” e-learning course, applying for GIRO for payment and/or refund of GST, and potentially providing a security deposit as required by the Comptroller.

Administrative Costs

Registering for GST, whether voluntarily or compulsorily, involves administrative costs, including the potential need to appoint an Accredited Tax Advisor or Practitioner to manage GST-related filings and compliance.

Impact on Pricing and Customer Relationships

Businesses must carefully consider the impact of GST on their pricing strategies and customer relationships, especially if their customer base primarily consists of end consumers who are not GST-registered.

Check If You Are Required to Register for GST Using the GST Calculator

According to the GST Act in Singapore, businesses must register for GST with the IRAS if their annual turnover exceeds S$1 million. However, there are certain exemptions to this requirement, so it’s important to confirm whether you need to register.

To determine if you are required to register for GST, you can use the GST calculator available on the IRAS website. This tool will help you assess your obligation to register for GST based on your turnover after calendar year 2019. For periods before calendar year 2019, a different GST calculator is available to assist with your evaluation.

Exemption from GST Registration

Certain businesses may be eligible for exemption from GST registration, even if their annual turnover exceeds S$1 million. This includes companies that:

1. Manufacture Only Zero-Rated Supplies: If more than 90% of a company’s total taxable supplies are zero-rated, it may be granted an exemption from GST registration.
2. Provide Only International Services: Businesses that exclusively offer international services may also be eligible for GST registration exemption.
3. Have Consistently Higher Input Tax: In cases where a company’s input tax consistently exceeds its output tax, the IRAS may grant an exemption from GST registration.

In such cases, the business can apply for an exemption from the IRAS, which can help them avoid the compliance requirements and administrative costs associated with GST registration.

Deregistration from GST

Businesses that are GST-registered may also choose to deregister if their annual turnover falls below the S$1 million threshold or if they are no longer engaged in taxable activities. To deregister, the company must submit an application to the IRAS at least 30 days prior to the desired deregistration date.

Penalties and Non-Compliance

Failure to comply with GST regulations can result in significant penalties and legal consequences. These include fines for late registration, late filing of GST returns, and late payment of GST. Intentional evasion of GST can lead to even more severe penalties, making it crucial for businesses to understand and fulfill their GST obligations. It is important to note that if you are late in registering for GST, you may also be subject to a fine of up to $10,000 and a penalty of up to 10% of the GST due. However, if you disclose your lateness when applying for GST, these fines and penalties may be waived.

Compliance and Obligations

Once registered for GST, your business must adhere to several ongoing compliance and reporting obligations to ensure it remains in good standing with the Inland Revenue Authority of Singapore (IRAS). These obligations include:

1. Issue Tax Invoices: You are required to provide GST-compliant tax invoices to your customers for all taxable supplies. These invoices must include specific details such as your GST registration number, the date of the invoice, a description of the goods or services supplied, the amount payable excluding GST, the GST amount, and the total amount payable including GST.
2. File GST Returns: Your business must submit accurate and timely GST returns to IRAS on a quarterly basis. These returns report the total value of taxable supplies, exempt supplies, and input tax claims. The due date for filing and payment is one month after the end of each accounting period.
3. Pay GST: You must pay the net GST amount to IRAS if the output tax (GST collected from sales) exceeds the input tax (GST paid on purchases). Conversely, if the input tax exceeds the output tax, you can claim a refund from IRAS. It is crucial to ensure that all payments are made by the due date to avoid penalties and interest charges.
4. Maintain Records: Your business must maintain detailed records of all transactions for at least five years. These records include invoices, receipts, credit notes, debit notes, and other relevant documents. Proper record-keeping is essential for verifying the accuracy of your GST returns and ensuring compliance during any IRAS audits or reviews.

Curious about the full obligation? Our in-depth article breaks it all down. Do check it out!

How Grof Can Help with Compliance and Obligations?

Grof specialises in providing comprehensive support to businesses navigating GST compliance and obligations. Our experienced team offers tailored solutions to ensure your business meets all regulatory requirements efficiently and accurately. Here’s how we can assist:

1. GST Registration and Invoicing: We guide you through the GST registration process, ensuring all necessary details are correctly submitted. Additionally, we help you set up systems to issue GST-compliant tax invoices, integrating best practices to minimize errors and streamline the invoicing process.
2. Filing GST Returns: Our experts assist in preparing and submitting quarterly GST returns, ensuring they are accurate and filed on time. We help you understand the nuances of your taxable supplies, exempt supplies, and input tax claims, making the filing process straightforward and stress-free.
3. GST Payment and Refunds: Grof provides clear guidance on calculating the net GST amount and managing payments to IRAS. If your input tax exceeds the output tax, we facilitate the refund claim process, ensuring you receive your due amounts promptly and without complications.
4. Record Maintenance: We implement robust record-keeping systems tailored to your business needs. Our solutions ensure that all transactional records are meticulously maintained and easily accessible, complying with the five-year retention requirement and simplifying any future audits or reviews by IRAS.

Conclusion

Navigating the GST landscape in Singapore requires careful consideration of your business’s unique circumstances and long-term goals. While compulsory registration may be unavoidable for businesses exceeding the annual turnover threshold, voluntary registration can offer significant benefits, such as input tax credit claims, enhanced brand credibility, and potential influence on business policies.