What is GST?
GST (Goods and Services Tax) also called as Value Added Tax (VAT) or output tax in other countries. The GST levied on the customers for the supply of the goods and services is referred to as Output tax.
GST exemptions apply to the provision of most financial services, the supply of digital payment tokens, the sale and lease of residential properties, and the importation and local supply of investment precious metals. Goods that are exported and international services are zero-rated.
Why must Singapore implement GST?
GST was introduced in 1 Apr 1994 to enable Singapore to shift its reliance from direct taxes to indirect taxes. GST has also enabled Singapore to sustain a lower income tax rate. Being a tax on consumption, and not income, GST inherently encourages savings and investments.
Taxable and Non-Taxable Goods and Services
The table below lists the categories and types of taxable and non-taxable supplies.
Standard-Rated Supplies (7% GST)
Most local sales fall under this category. E.g. sale of TV set in a Singapore retail shop
Most local provision of services fall under this category.
E.g. provision of spa services to a customer in Singapore
Zero-Rated Supplies (0% GST)
Export of goods
E.g. sale of laptop to overseas customer where the laptop is shipped to an overseas address
Services that are classified as international services
E.g. air ticket from Singapore to Thailand (international transportation service)
2. Non-Taxable Supplies
Exempt Supplies (GST is not applicable)
Sale and rental of unfurnished residential property
Importation and local supply of investment precious metals
E.g. issue of a debt security
Digital payment tokens (from 1 Jan 2020)
E.g. exchange of Bitcoin for fiat currency
Out-of-Scope Supplies (GST is not applicable)
Sale where goods are delivered from overseas to another place overseas
Private transactions. See Out-of-scope supplies for more information.
Businesses Required to Register for GST
As a business, you must register for GST when your taxable turnover exceeds $1million.
If your business does not exceed $1 million in taxable turnover, you may still choose to voluntarily register for GST after careful consideration.
Charging and Collecting GST
Once you have registered for GST, you must charge GST on your supplies at the prevailing rate with the exception of relevant supplies that are subject to customer accounting. This GST that is charged and collected is known as output tax. Output tax must be paid to IRAS.
The GST that you incur on business purchases and expenses (including import of goods) is known as input tax. If your business satisfies the conditions for claiming input tax, you can claim the input tax on your business purchases and expenses.
This input tax credit mechanism ensures that only the value added is taxed at each stage of a supply chain.
Paying Output Tax and Claiming Input Tax Credits
As a GST-registered business:
1. You must submit your GST return to IRAS one month after the end of each prescribed accounting period. This is usually done on a quarterly basis.
2. You should report both your output tax and input tax in your GST return.
3. The difference between output tax and input tax is the net GST payable to IRAS or refunded by IRAS.
I am not GST-registered. Can I claim GST incurred on my business purchases?
No, if you are not a GST-registered business, you cannot claim the GST incurred on your purchases.