Once your company has generated over S$1 million in revenue within a year, you need to register for GST. We look into the process and the requirements.
What is GST?
Goods and Service Tax, also known as Value Added Tax (VAT) in other countries, stands at 7% in Singapore. The rate applies to most of goods and services exchanged in Singapore. For the ones that are exported from the country GST stands at 0%.
Should my company pay the GST?
Inland Revenue Authority of Singapore (IRAS) requires the companies to register for GST once their taxable turnover exceeds S$1 million per year. A year in this case is the past 12 months or at the end of the calendar year.
If your turnover is less than that, you don't have to register for GST, but you can volunteer if you want. In this case, you have to remain registered for at least 2 years.
How to register for GST?
The company fills in a form called GST F1 and submits it to IRAS. It requires preparing paperwork, such as a GST calculator, profit and loss report, invoices and contracts. It takes IRAS about 10 working days to process the application and provide you with your GST registration number.
It is important to submit files no later than 30 days after your company has generated S$1 million within a year. It is best to register ahead of time, once you know you’re on a track for S$1 million.
I’ve registered for GST. Does it mean I will be paying more taxes now?
Once you’ve registered for GST, you need to collect the tax on the taxable goods and services that your business provides. Normally the added cost is passed on to the consumer. For example, if your service costs S$500, you would charge S$535. The S$35 is a 7% GST tax that you’re collecting for IRAS.
Can my business claim GST refund?
If your company incurred GST on products or services purchased, this GST paid can be set off against the GST charged. Any difference will be refunded by or payable to IRAS. Here’s a simple example:
|Sales received: S$500||GST to be paid: S$35|
|Products bought: S$100||GST to claim: S$7|
|GST return to IRAS:||S$28|
How to file GST returns?
The GST return, also called GST F5, is filed quarterly or monthly, within 30 days after the business quarter ended. The payment is processed online. The report specifies the total sales amount, GST received and GST paid. Even if there is nothing to report, a 'nil' return must be filed.
Can I de-register from GST?
Yes, if your business no longer generates S$1 million a year and you can support it with projections and documents, you can apply to IRAS to cease the GST registration. If the drop in revenue is only temporary for a year, you can't change your GST status.