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24 April, 2017
"Do I need to register for GST in Singapore?" This question often swirls in the mind of every business owner when it comes to GST registration Singapore. Many businesses often end up facing severe penalties for not complying with the law. More often than not, it happens due to their lack of knowledge about GST Singapore. Since it is a self-assessing tax, one should be well aware of the process to determine the liability for the registration of Goods & Services Tax (GST). Essentially, there are two methods upon which one can determine their compliance towards GST registration- Retrospective view and Prospective view.
Before diving a little deeper into the methods, let us discuss in brief details about GST Singapore.
What is GST Singapore?
GST, an acronym to Goods and Services Tax, is a consumption tax that is levied on the supply of goods and services. It is an indirect tax applied to the selling of goods and services provided by a GST-registered business. GST is also known as VAT (Value Added Tax) in many other jurisdictions. The current rate of Singapore GST is 7%, which is considered to be one of the lowest rates in the world.
Technically, an end consumer is the one who pays the GST tax amount indirectly to the tax authority, and the GST-registered business merely acts as a collecting agent for the government.
There are two types of GST registration in Singapore: 1) Compulsory Registration and 2) Voluntary Registration.
If the annual turnover of a business exceeds SGD 1 million or expected annual revenue is more than SGD 1 Million, then the business must register for GST on a compulsory basis.
Even if the annual revenue is below SGD 1 million, a business could go for voluntary registration to avail some benefits.
What are the Responsibilities of a GST-Registered Company in Singapore?
Being a GST-registered business, you are responsible for collecting GST tax from the end consumers of the goods and services offered by you and then pay the collected tax to the tax authority, i.e., IRAS (Inland Revenue Authority Singapore). As per the law, you must invoice 7% GST amount to your customer along with the cost of services/products. For e.g. If the cost of your services or product is $100, you must add $7 (7% GST) to the final bill. The total cost would be $107. You are then liable to submit the $7 (GST amount) to the authority by GST filing.
GST return must be filed on a quarterly basis. You must pay the net GST within 30 days after the end of your accounting period of the business. Late GST payment may attract penalty fines. To avoid penalties of government, you may hire the assistance of an accounting firm in Singapore. The tax consultant of the firm will assist you all along the way right from GST registration to timely GST filing.
How to Determine the Liability for GST Registration Singapore?
The liability of business for GST registration depends on the value of its annual turnover. Reiterating, you can use two views Retrospective and prospective to the determine the GST registration liability.
Liability for Compulsory GST registration Arises when-
At the end of a quarter, annual Turnover of a Singapore business is more than SGD 1 Million.
The expected annual revenue is more than SGD 1 million for the next four quarters (12 months). The assumptions should be made considering some reasonable ground.
When to register for GST
Within 30 days of the end of that relevant quarter
Within 30 days from the date when you made the assumption that your annual taxable revenue for coming 12 months would be more than SGD 1 Million.
Date of GST registration and filing would be from
30 days from the end of the quarter.
30 days from the date of your forecast.
There are some serious consequences for late GST registration. So, you are advised to assess the requirement for GST on a timely basis.
Your date of registration would be backdated to the actual date you were liable to register for the GST.
You would be liable to pay for the GST due amount starting from the effective date of registration. It does not matter whether you had collected the amount from the consumer or not.
A fine of up to $10,000 and a penalty equal to 10% of the GST due may apply to you. Also, prosecution action may apply.
The undesired factors such as tax penalties or prosecutions often hamper the smooth operation of business. Also, it may bring serious setbacks. So, make sure to comply with the rules and regulations of the authority to keep the business running.
SBS Consulting Pte Ltd is a Singapore-based firm specializes in accounting, taxation (GST, Corporate tax), company registration, corporate secretarial, payroll, etc. It houses a team of professionals from diverse fields. The experts have industry-wide experiences in their areas of expertise. A huge clientele base is enjoying the unparalleled services of the firm.
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