GST registration in Singapore: Do I require it?

Varun Hariharan

15 Nov, 2020

GST is an abbreviation for Goods and Services Tax. This is a form of Value Added Tax (VAT) which is levied on the goods and services supplied by a particular business. GST was implemented in the year 1994, by following the models of the United Kingdom VAT law and the GST law present in New Zealand.

GST is considered as value-added tax in other jurisdictions.  GST is a form of indirect tax or a consumption tax which is directly levied on the supply of services and goods provided in Singapore. Apart from this, GST registration in Singapore would be mandatory for any business that imports any form of products into Singapore.

GST is levied on the products and services which are produced in Singapore. Businesses that import products in Singapore would also have to pay some form of GST. Hence it is crucial to understand the significance of GST registration in Singapore.

What are the main objectives of GST registration in Singapore?

Some of the main objectives of GST registration in Singapore are:

• GST was introduced in the year 1994 as a form of indirect tax. This tax is imposed to reduce the overall tax burden present on individuals and business entities.
• GST tax would be charged on services and products produced in Singapore. Hence, if a particular product is manufactured and sold in Singapore, then GST would be levied on the product.
• GST would also apply to goods which are imported in Singapore. Hence, if any good is imported into Singapore, then GST would be levied on them.
• GST registration in Singapore is mandatory for companies; hence they will be directly contributing towards the revenue and gross domestic product of the country.
• By levying GST on businesses, other forms of indirect tax would not be chargeable on goods and services produced in Singapore. Any form of indirect tax or service tax would not be levied as a result of GST tax.
• As per the relevant regulatory authorities, GST registration is a compulsory step which is required for every business and entity present in Singapore. Companies have to mandatorily register themselves with this form of tax.

Regulatory Authority for GST Registration in Singapore

The primary regulatory authority for GST registration in Singapore is the Inland Revenue Authority of Singapore^[1] (IRAS). This organisation controls and administers all the GST collection processes and procedures in Singapore. Hence a business must register themselves with the IRAS.

Apart from this, the IRAS would also look into any form of disputes or appeals arising out of GST matters. The IRAS also help in settling different form of disputes related to GST registration in Singapore.

Introducing such tax is one of the most remarkable steps by the IRAS as it removes any form of additional burdens on personal and corporate income. Through this, the Government of Singapore can aim a steady revenue growth and also limit the amount of income tax paid by individuals and other forms of business entities.

What is the Current Rate of GST?

Currently, the rate of GST in Singapore is 7%. It is an indirect tax which is levied on the goods and services manufactured in Singapore. GST would apply to the sale price of goods and services in Singapore. Hence to calculate GST, the business would have to apply it on the respective selling price.

GST follows a particular structure for being taxed to the end consumer. The revenue authorities of Singapore first introduce GST. After this, it is levied on the sale price of the products and services offered to the end customer.  At the end of the GST structure, the end customer would be the individual or entity paying GST.

Hence, from the above, it can be understood that entities and businesses that go for GST registration in Singapore are not burdened by payment of GST. These entities merely act as facilitators and agents for the proper collection of GST.

Example of GST registration in Singapore for a business entity

If a business is registered in Singapore to pay GST, then the same has to be collected from the customers. The end customers pay the amount of GST, which is levied on the products and services provided by the business.  The GST registered business or entity then pays this tax to revenue authorities in Singapore.

For example, if you charge SGD 200 to your customer for products and services, then you must invoice SGD 214 for the products and services rendered to the end customer.

• SGD 200 is the sale price or selling price of the goods and services to the end customer.
• 7% is the current rate of GST in Singapore.
• Then the total amount which would be invoiced on the customer for the services would be SGD 214.

The amount which is directly invoiced to the customer must be payable to the revenue authorities of Singapore (IRAS). This must be compulsorily paid every quarter, i.e. every three months in a year. This invoice amount can be paid through the GST filing system, which is an online system for making payments related to GST.

Any company which is established has to apply to the IRAS for GST registration in Singapore. Just by incorporating under the relevant Company laws of Singapore, a company does not receive any automatic status for GST registration. Hence a company would have to register with the IRAS before they can charge any amount of GST.

Does my entity require GST registration in Singapore?

GST registration in Singapore is mandatory for all businesses in Singapore. However, there are specific criteria for a business to be registered under the relevant GST legislation. First and foremost, the payment of GST by a particular business would be determined on the amount of revenue generated by the business entity.

Hence it is clear that the payment of GST in Singapore would be based on the revenues earned by the business. Businesses would have to determine whether or not they are required to pay GST. From the above, it is clear that the payment of GST by a particular business would have to be continually assessed by the business.

Under the process of GST registration in Singapore, there are two forms of registration.

The following are the types of GST registration in Singapore:

1. Voluntary Registration
2. Compulsory Registration

Voluntary Registration- Under the process of voluntary registration, a business would have to carry out a self-assessment tax for the business entity. Based on the revenues earned by the business, the GST would be charged on the business entity. Any business that does not have the liability to compulsory register under this system can opt for the voluntary registration process. When the business goes in for the voluntary registration process, then there must be prospective plans for the business to carry out sales in Singapore.

The following conditions have to be satisfied with the business for classifying under the voluntary registration of GST in Singapore:

• Any business that goes for the procedure of voluntary registration of GST in Singapore has to be registered for a minimum period of two years.
• Apart from this, the business has to comply with relevant regulations related to GST.
• Hence the business would have to make the GST invoices payable to the IRAS.
• This payment must be carried out quarterly.
• The entity must preserve all records. The documents and records have to be maintained by the authority for a minimum of 5 years from the date of registration. This would be the case even if the business has ceased to be paying GST under the system of voluntary registration.
• Any other conditions which are imposed by the IRAS have to be complied by the business entity.

 Compulsory Registration- Under this process, every business entity in Singapore would mandatorily require registering. 

The following criteria are required for compulsory GST registration in Singapore:

• If the turnover, which includes the revenues and sale of the business exceeds more than SGD 1 Million in the past 12 months. This is known as a retrospective basis as there is some form of predetermination in the process of payment of GST.
• If the company is unsure of the turnover, but has an excessive amount of sale and there is a reasonable prospect that the turnover of the business will exceed SGD 1 Million for the next 12 months. Such pre-determination of future sales of the company is known as a prospective basis. Any form of sales contracts or agreements which are signed in advance would determine the payment of GST.

When the revenue of the company exceeds SGD 1 million, then the company would have to register with the relevant authority for paying GST. This must be carried out within 30 days of the revenue exceeding a particular amount.

By carrying out the above procedure, a business can comply with the relevant laws related to GST and avoid any form of penalties imposed by the IRAS.

Is any company or entity exempted from GST registration in Singapore?

Usually, all business entities are required to register for charging GST in Singapore. However, if the business entity has a system of making only zero-rated supplies, then such business would be exempted from GST registration.

This would be applicable for the business in case the taxable turnover exceeds the required amount of business registration for the GST perspective.

If any business is exempted from GST registration, then the following criteria have to be sufficed:

•   The business claiming some form of exemption from the GST registration has to show the IRAS that the amount of zero-rated supplies exceeds more than 90%.
•   This will be the case if the amount of revenues of the business exceeds the value of SGD 1 million.
•    Apart from this, the business entity must comply with other requirements of the business process.

If the business follows all this, then it can claim the benefits of exemption of GST registration in Singapore.

Process of GST Registration in Singapore

Every company has to follow the below process for GST registration in Singapore:

•   The applicant has to submit the Goods and Services Registration Form (GST F1) along with the respective documents to the respective tax authority in Singapore. This authority is IRAS.
•   If the business has additional partners and directors, then another form (GST F3) must be filled by the business and sent to the respective authority.
•   Filing the GST F3 form will be in the case if the business is a partnership or a limited liability partnership.
•   Suppose the applicant is an overseas company or an entity which is registered outside the jurisdiction of Singapore, then there is a separate procedure for making an application for an overseas entity.
•   It would be more convenient for an overseas company to appoint a registered agent or a duly appointed agent to file GST registration in Singapore. If the company appoints an agent, then an independent letter or a power of attorney must be submitted along with the form stating the same requirement.
•   Once this procedure is completed, the authority will get back within three weeks (21 working days). If the authority considers the application without any errors, then the applicant will be registered without any issues.
•   On successful registration, the applicant will receive intimation or a notification from the GST authority. This intimation will be in the form of a letter.
• This letter will contain the following information:
  • GST registration number of the business
  • GST return filing date of the business
  • Quarterly Filing Information for the business
  • Last date of filing GST return of the business
  • Any other important information related to the filing of GST return for the business.
•   The applicant must take all steps to file GST on time, and filing must be carried out electronically by the applicant.
•   Once this process is carried out, the applicant would be registered under the GST registration in Singapore system. The applicant has to set up a GIRO system of payments under a Singapore Bank Account.

Conclusion- GST Registration in Singapore

Read our article:Simplified and New GST Returns from April 2020