Understanding Goods & Services Tax (GST) in Singapore: A Comprehensive Guide

Introduced in 1994, the Goods and Services Tax (GST) is a consumption tax levied on most goods and services in Singapore. It plays a critical role in the country’s economic health as a revenue driver. Businesses in Singapore must be familiar with GST, as they are responsible for collecting and reporting it.

This article provides a clear overview of Singapore’s GST, explaining its purpose, application, and upcoming changes. It will explore registration requirements and the impact of GST on both consumers and businesses.

Singapore’s GST rate

In a two-step increase announced in 2022, the GST rate in Singapore rose to 9% on January 1st, 2024. This represents a 1% increase from the previous rate of 8%, which has been in effect since January 1st, 2023. The government implemented this hike to address rising healthcare expenditures and support an ageing population.

What does Singapore GST apply to?

GST generally applies to most goods and services GST-registered businesses provide to consumers and other Singapore businesses (whether GST-registered or not). There are four categories of supplies:

1. Standard-rated supplies: Most goods and services come under this category.
2. Zero-rated supplies: These include supplies that are not taxable, such as exports of goods or services provided internationally, such as an international airline ticket (as the service is supplied outside of Singapore).
3. Exempt supplies: Supplies specifically exempted from GST, such as property transactions, purchases of precious metals and the provision of financial services.
4. Out-of-scope supplies refer to when a Singapore business provides goods or services outside of Singapore to a customer outside of Singapore.

Certain concessions are available, such as:

• Liquor and tobacco imported and stored in GST and customs-free warehouses are exempt from GST until they leave the warehouse.
• Imports via parcel post valued under SGD 400 are not subject to GST.
• Certain free trade zones in Singapore, where goods are imported and stored within those zones, are not subject to GST until they are transferred into Singapore customs territory.

Who needs to register for GST in Singapore, and when?

A company is required to register for GST in two situations:

• Retrospective view: The value of taxable supplies in the previous calendar year exceeded SGD 1 million. Registration for GST is required by 30 January and will be effective from 1 March.
• Prospective view: If there is a reasonable expectation that turnover in the next 12 months will exceed SGD 1 million, registration for GST must occur within 30 days from the forecast date, and registration will be completed on the 31st day from the forecast date. However, registration is not mandatory without reasonable certainty of exceeding the SGD one million threshold.

Voluntary registration

A company can voluntarily register for GST even if it does not meet the taxable supplies threshold. This can be advantageous in scenarios where the company pays GST on its inputs but is not required to charge GST to its customers.

By voluntarily registering, a company can file quarterly GST returns and receive refunds for the GST it has paid on its inputs. However, any business registering voluntarily must maintain the registration for at least two years.

Exemption

If a company’s turnover exceeds SGD 1 million, it may apply for exemption from GST registration based on one of two grounds:

1. If most of its turnover comes from zero-rated supplies.
2. If, based on retrospective testing, registration is required, but prospective testing indicates that the company’s sales will not exceed SGD 1 million due to an expected decrease in sales. Documentary evidence supporting this must be provided to the Inland Revenue Authority of Singapore (IRAS) for consideration.

If an exemption from registration is granted, it remains necessary to keep track of the taxable turnover and notify the IRAS if the company’s circumstances change.

Charging and collecting GST in Singapore

Once a company registers for GST in Singapore, it must levy GST on all its customer invoices. This GST (output tax) must be remitted to the IRAS. The IRAS provides guidelines regarding the information required on a tax invoice, including the company’s GST registration number, the GST amount and the total invoice amount. Simplified invoices are permissible for amounts under SGD 1,000. The GST that a business pays on its supplies is known as input tax.

GST must be applied to the total value of the goods or services. For example, if a service charge is imposed in a restaurant setting, it should be added to the bill for the items consumed, and then GST should be charged on the combined service value. For imported goods, GST should be calculated based on the landed cost of the goods, including freight, insurance and any customs duty payable.

GST returns and payments

A company registered for GST must submit a quarterly GST return by the last day of the month following the end of the previous quarter. The company must report and deduct the total output tax from the total input tax paid. The resulting number is the GST payable to the IRAS. If this figure is negative (e.g., because all goods manufactured in Singapore are exported), the IRAS will refund the company.

A company must be careful with the input tax claimed—each claim needs to be supported by a valid GST invoice. Input tax should be claimed in the quarter in which it is incurred, even if the goods on which the GST was paid remain unsold by the company. Furthermore, any input tax claimed must be for goods and services used in business operations. Certain exclusions exist for claiming input tax, such as GST on club fees and benefits provided to friends and family of staff members.

Certain GST expenses that the company incur within the six months before its GST registration are eligible for claims. In Singapore, GST can be claimed on:

1. Goods held by the business at the time of GST registration.
2. Property rental, utilities and services that are not directly attributable to any supply made by the business before GST registration.

To pay quarterly GST to the IRAS, a company needs to set up a GIRO account with the IRAS. This is a type of direct debit account where the company authorises the IRAS to deduct the GST owed directly from the company’s bank account.

Conclusion

GST in Singapore is currently charged at a rate of 9% and is exempted when the goods are zero-rated supplies or when the goods and services are supplied internationally. Registering for GST also has certain benefits, such as reducing business costs. The guide above provided in-depth information about GST in Singapore that business owners and investors should know when conducting business in Singapore.

How can Astria help?

If you need assistance with registering or fulfilling GST obligations in Singapore, Astria is here to support you. Our accredited tax professionals can seamlessly manage all aspects of your GST compliance requirements in Singapore. Whether navigating registration or ensuring punctual and accurate GST payments, Astria is dedicated to providing reliable and efficient assistance throughout the process.

To learn more about how we can help you leverage the opportunities in Singapore, contact us today and speak with one of our experts.