GST is
a tax on goods and services purchased or consumed locally. Here is a
quick overview of GST and how it affects your business
Goods and Services Tax (GST) is a tax charged on
the supply of goods and services made in Singapore and on the
importation of goods into Singapore
The current
rate is 5% (from 1 January 2004). The rate will be increased to 7% from
1 July 2007.
Goods
and services are subject to GST as the following:
All goods and services are taxable and known as
taxable supplies.
However, some
items are specifically exempt from GST by law. Exempted items include
financial services and the sale or lease of residential properties.
Necessity
of Registration
Your business must be registered to collect GST if
your annual turnover exceeds or is likely to exceed S$1 million from
the sale of taxable goods and services.
This
requirement may be waived if most of your goods or services are
exported or supplied internationally ("zero-rated supplies")
Choose to Registration
You may also apply to the Comptroller of GST to
collect GST voluntarily. Approval for voluntary registration is at the
discretion of the Comptroller.
Once approval is given, you must remain registered
for at least two years.
Purpose of Registration
Most businesses register for GST to claim back the
GST incurred on their business purchases
When GST paid exceeds GST collected, the difference
can be claimed from IRAS as a GST refund.
When GST collected exceeds GST paid, you have to
pay the difference to IRAS.
When GST rate increase, it may make business sense
to voluntarily register to collect GST in order to claim back GST
incurred on business purchases.
Eligible
Persons for Registration
Sole proprietorships
Partnerships
Limited liability partnerships
Companies
Clubs, associations, management corporations or
organizations
Non-profit organizations
Statutory boards
Government bodies
GST Schemes To Help Businesses
To
create a pro-enterprise environment, the Government has several
assistance schemes relating to GST. These schemes generally help to
ease the cash flow for businesses.
Goods
and Services Tax (GST) Assistance Scheme
Get a
grant to lower the costs involved in becoming a GST-registered trader.
GST traders can collect GST and claim back for GST paid to suppliers.
Major
Exporter Scheme (MES)
Major
exporters can improve their cash flow by deferring GST payments on
goods imported mainly for re-export out of Singapore.
Licensed
Warehouse Scheme
Transform
your warehouse into a licensed warehouse for storing dutiable goods. In
licensed warehouses, duty and Goods and Services Tax (GST) are
suspended until the goods are released for sale into
Singapore.
Zero
GST Warehouse Scheme (ZGS)
Businesses
can transform their warehouses into zero-GST warehouses to minimise red
tape and bypass the Goods and Services Tax (GST) process.
