Understanding GST in Singapore: A Clear Guide to the Goods and Services Tax
- Published: 25 March 2025
- 11 min read
- Tax & GST
Heather Cameron
Author
From expert guidance and helpful accounting tips to insights on the latest trends in fintech, Heather is here to empower entrepreneurs and small business owners in Singapore with great content. With a background in digital marketing spanning eight years, she has experience writing for various industries and audiences. As Osome’s copywriter, she’s here to inform and inspire our readers with great storytelling.
Kelly Yik
Reviewer
Kelly Yik, our Accounting Team Lead based in Singapore, ensures that the team meets quality standards and follows accounting standards (SFRS) while remaining compliant with all the authorities' rules and regulations in Singapore. With six years of experience in Singapore accounting, she knows the ins and outs of financial reporting standards, GST, and corporate tax like nobody's business. Kelly supports our blog writers by carefully reviewing our content, making sure it's accurate, up-to-date, and packed with helpful tips for Singapore businesses. So, you can trust the info you get on our blog is not only interesting but also reliable!
GST, or Goods and Services Tax, is a tax on most goods and services in Singapore. It impacts everyday purchases and business operations. This article explains what GST is and how it affects you as a taxable person, covering essential aspects like Singapore's GST rates, categories, and compliance. It also covers how the Inland Revenue Services tax GST, how they exempt basic necessities for lower income households, taxable supplies, prevailing GST rate, and the responsibilities of GST registered persons.
Key Takeaways
- Goods and Services Tax (GST) in Singapore is a broad-based consumption tax applied to goods and services, initially introduced to reduce reliance on direct taxes and ensure government revenue stability through indirect taxes.
- GST registration is mandatory for businesses with taxable turnover exceeding $1 million, but voluntary registration is permitted, providing benefits such as the ability to claim input tax.
- Proper GST compliance involves accurate classification of taxable supplies, regular filing of returns, and maintaining valid documentation to allow for tax claims and adherence to regulations.
What Is Goods and Services Tax (GST) in Singapore?
GST, or Goods and Services Tax, is a broad-based consumption tax by Singapore customs applied to imported services and goods and nearly all supplies of goods and services in Singapore. Introduced to shift the reliance from direct taxes to indirect taxes, GST helps sustain a lower income tax rate while ensuring the government maintains a steady revenue stream.
GST has a broad scope. It encompasses goods and services used within the country, as well as goods imported from overseas suppliers. Whether it’s the latest smartphone you order from overseas suppliers or the meal you enjoy at a local restaurant, GST payable tax applies.
Launched in Singapore on April 1, 1994, GST began at a rate of 3%. The rate has gradually risen to meet the nation’s economic needs. By 2024, the prevailing GST rate reached 9%, reflecting shifting economic priorities such as healthcare, childcare support, and security investments.
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Categories of Supplies Under GST
Both businesses and consumers benefit from understanding the various categories of supplies under goods and services tax. Taxable supplies are divided into two main categories: standard-rated and zero-rated supplies. Standard-rated supplies incur GST at the applicable rate of 9% on all sales of goods and services in Singapore. This category encompasses a broad range of transactions, ensuring that most goods and services are GST payable.
Zero-rated supplies, on the other hand, include the export of goods and the provision of international services where GST is not charged. This exemption plays a significant role in promoting international trade and maintaining global competitiveness. Businesses engaged in exporting goods or providing international digital services must grasp zero-rated supplies for accurate tax reporting and compliance.
Exempt supplies comprise certain local and imported services and goods that do not attract GST payable tax. These include most financial services, residential property sales and leases, digital payment tokens, and local sales of investment precious metals. For example, an exempt supply of investment precious metals means that no GST payable tax is levied, and businesses cannot claim GST incurred on purchases used to make these services supplied. Also, businesses that trade in digital payment tokens do not need GST registration. This category is designed to ease the tax burden on essential local and imported services and investments.
According to the inland revenue authority, out-of-scope supplies refer to transactions that do not fall within the purview of goods and services tax.
Category | Description | GST Rate | Examples |
|---|---|---|---|
| ✅ Standard-Rated Supplies | Most business-to-consumer goods and services sold locally. Prevailing GST is charged. | 9% | Retail sales, professional services |
| 🌍 Zero-Rated Supplies | Exports and international services where GST is not charged. | 0% | Exported goods, international transport |
| 🏦 Exempt Supplies | Specific exempt items where no GST payable is charged, and input GST cannot be claimed. | 0% | Financial services, residential property sales |
| 🚫 Out-of-Scope Supplies | Transactions outside the GST system (e.g., non-business transactions, overseas sales). | 0% | Sale of goods outside Singapore, transfer of goods within the same business |
How GST Is Calculated
GST is calculated based on the value of the goods and services supplied, applying the prevailing GST rate at each stage of the supply chain — from manufacturing and distribution to retail sale.
For standard-rated supplies, the prevailing GST rate is charged at 9% on the selling price. For example, if a product is sold for S$1,000, the GST charged will be S$90, making the total price S$1,090.
For zero-rated supplies(such as exports), the prevailing GST rate is 0%, meaning no GST is collected. For exempt supplies, no GST is charged to the customer, and businesses cannot recover input GST paid on purchases used to make these exempt supplies.
To calculate the final GST payable to IRAS, businesses use this formula:
GST payable = Output GST (collected from customers) - Input GST (paid on purchases).
Accurate classification of each transaction (standard-rated, zero-rated, exempt, or out-of-scope) is essential to apply the correct GST treatment, maintain proper records, and avoid penalties for incorrect reporting.
Output Tax vs Input Tax
Output tax refers to the GST collected from business to consumer activities (including any self-accounted GST under the reverse charge mechanism). It is charged on local supplies and is collected on behalf of the government, making businesses the intermediaries in the GST system.
Input tax refers to the GST businesses pay on their purchases from other suppliers, including expenses for goods and services used in business-to-business operations. Businesses can offset input tax against output tax (and GST accounted for under reverse charge) to determine their net GST payable, preventing double taxation on the same value.
If a business’s input tax exceeds its output tax, it is entitled to GST returns from the tax authorities for the prescribed accounting period. This mechanism ensures that businesses are not unduly burdened by GST and can maintain their cash flow effectively.
Output Tax 💰 | Input Tax 🧾 | |
|---|---|---|
| What is it? | GST collected from customers on sales | GST paid to suppliers on purchases |
| When? | When selling goods or services locally | When buying goods or services for business use |
| Impact | Increases the GST you owe to IRAS | Can be used to offset the GST you owe |
| Refund? | No refund — you collect for IRAS | Refund if input tax is higher than output tax |
GST Registration Requirements
Businesses must register for GST if their taxable turnover exceeds $1 million at the end of the previous calendar year or is expected to exceed that amount in the next 12 months. This threshold ensures that only GST-registered businesses with significant economic activity are required to comply with GST regulations, easing the burden on smaller enterprises.
However, businesses can choose to voluntarily register for GST even if they do not meet the threshold. Voluntary GST registration can be beneficial, allowing businesses to claim tax on their purchases and potentially improve their cash flow.
Late GST registration can result in backdated registration, forcing businesses to pay GST on past sales along with potential fines or higher GST rates. Supporting documents such as contracts and income statements are necessary to validate forecasts of exceeding the $1 million turnover threshold, ensuring a smooth registration process.
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Charging and Claiming GST
Only GST-registered businesses are allowed to charge GST. They can also claim GST from the date their registration becomes effective. This means that businesses must ensure they are properly registered before charging GST on their sales or claiming it on their purchases.
GST-registered businesses can claim the GST incurred on business purchases and expenses as input tax, provided they fulfil certain conditions. Only purchases directly related to business operations qualify for input tax claims, which include office supplies, rental costs, and professional services needed for business activities. This allows businesses to reduce their overall GST payable.
Claims must be supported by valid documentation, such as tax invoices and a tax invoice and import permits.
Special Schemes and Concessions
The overseas vendor registration regime mandates that foreign businesses with significant sales register for GST in Singapore, ensuring they contribute to the local GST framework and promoting fair competition.
Like the overseas vendor registration regime, special schemes and concessions under GST aim to simplify compliance and promote international trade. These schemes help maintain a balanced and efficient tax system in a globalised economy, simplifying cross-border operations while ensuring compliance with local tax regulations through the permanent GST voucher scheme.
Filing GST Returns and Payments
GST-registered businesses must file periodic returns, detailing both input and output taxes. Most businesses are required to submit the GST returns on a quarterly basis, ensuring regular reporting and compliance. Maintaining accurate records is essential to meet these requirements and avoid discrepancies.
Returns are required to be electronically submitted within 30 days following the conclusion of the designated accounting period. Businesses can also opt for monthly returns, but this requires approval from the IRAS. The GST-F5 form is used to claim tax and report taxable supplies and output tax.
Output tax collected must be paid to IRAS within a month after the accounting period ends. GST input tax claim errors can be corrected within a year to avoid penalties. Businesses with a GIRO plan can receive a 15-day extension on payment deadlines, providing some flexibility.
Set calendar reminders for your GST filing deadlines and consider using accounting software that automatically tracks input and output tax. This helps avoid last-minute stress and reduces the risk of errors when filing your returns.
Sector-Specific GST Guidelines
Different industries face unique GST rules tailored to their business activities. Understanding these sector-specific guidelines helps businesses apply GST correctly and stay compliant.
Sector | Key GST Guidelines |
|---|---|
| 💰 Financial Services | Exempt from GST for qualifying financial services such as issuing and transferring debt securities, providing loans, and offering financial advisory services. Services that charge explicit fees (like administrative fees) may still be taxable. |
| 🚚 Logistics | GST treatment depends on whether the supply is domestic or cross-border. Exported goods are zero-rated, while local deliveries are standard-rated. International freight and related logistics services also qualify for zero rating. |
| 📢 Advertising, Construction, Ecommerce | Advertising services provided to local businesses are standard-rated, while services for overseas clients may be zero-rated. Construction services are standard-rated, but GST on development properties depends on use (residential vs. commercial). Ecommerce platforms must apply GST on imported digital services and low-value goods sold to Singapore customers. |
| 🤝 Charities & Non-Profits | Can apply for special GST schemes, including exemption from charging GST on non-commercial activities and input tax claims for charitable purchases. Registration for GST is voluntary unless commercial revenue exceeds S$1 million. |
| ✈️ Aerospace | Sale and maintenance of aircraft (used for international travel) are zero-rated. This ensures Singapore remains competitive as a global aviation hub. Ancillary services such as ground handling may also qualify for zero rating. |
| 🍽️ Hotels & F&B | GST applies at 9% for most local hospitality and dining transactions. Hotels must also charge GST on services like event packages. Tourist refunds are available under the Tourist Refund Scheme (TRS) for qualifying purchases. |
| 🏢 REITs & Funds | Qualifying REITs and prescribed funds can claim input tax incurred on expenses like property management fees, legal fees, and maintenance costs, ensuring the GST cost does not erode investment returns. |
Simplifying GST Compliance
Navigating GST compliance can be a daunting task for many businesses, but there are several strategies to simplify the process. Hiring professional services or tax advisors, like Osome's expert accounting team, can greatly improve the accuracy of GST registration and payment processes.
Regular training and resources on GST compliance can reduce errors and improve reporting accuracy. Osome's accounting services include ongoing updates and advice to ensure your business is always aligned with the latest GST regulations, helping you manage your tax obligations effectively and avoid penalties.
Summary
Understanding the Goods and Services Tax(GST) is essential for both businesses and consumers in Singapore. From knowing what GST payable is and how it is applied to different categories of supplies, to learning about the registration requirements and the process of charging and claiming GST, this guide has covered the key elements of GST compliance.
From expert guidance and helpful accounting tips to insights on the latest trends in fintech, Heather is here to empower entrepreneurs and small business owners in Singapore with great content. With a background in digital marketing spanning eight years, she has experience writing for various industries and audiences. As Osome’s copywriter, she’s here to inform and inspire our readers with great storytelling.
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FAQ
What are the benefits of GST for businesses in Singapore?
GST (Goods and Services Tax) offers several benefits to businesses in Singapore. It allows businesses to claim back GST paid on their business expenses, improving cash flow. Additionally, it ensures transparency in the tax system, creating a level playing field for businesses. Being a GST-registered person also signals credibility to potential clients and partners, which can enhance your business's reputation.
How much is GST in Singapore?
The prevailing GST rate in Singapore is 8%, effective from January 2023. This tax applies to most goods and services, with certain exceptions such as financial services and basic necessities like healthcare. The government plans to gradually increase the prevailing GST rate to 9% by 2025, which GST-registered businesses need to prepare for in their pricing and tax filings.
How can I avoid paying GST on overseas purchases?
To avoid paying GST on goods imported overseas to the Singapore customs, ensure the items are considered "exports" or purchased from overseas vendors who do not charge this tax. In Singapore, GST is not levied on goods imported for personal use under a certain value threshold. However, if the imported services or goods are for business use, you may be able to claim back the customs duty paid upon importation if you're a GST-registered business.
How can I claim a GST refund in Singapore?
To claim a GST refund in Singapore, you must have a GST-registered business and make the claim on your GST return. As a taxable person, you can claim GST returns on taxes paid on business-to-business purchases and expenses. If you're a foreign business, Singapore's Refund Scheme allows you to claim back GST incurred on eligible goods and services if certain conditions are met.
How do I compute GST in Singapore?
To compute tax for GST-registered businesses in Singapore, multiply the taxable value of the goods or services by the prevailing GST rate (currently 9%). For example, if a service costs $100, the GST payable would be $9 ($100 x 9%).
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