GST or Goods and Services Tax is an indirect tax charged in Singapore. The current GST rate is 7% but the government has announced plans to increase the GST rate to 8% on 1 January 2023 and to 9% on 1 January 2024.
There GST regime include Taxable and Non Taxable Supplies.
These are standard Rated Supplies of Goods or Services domestically. From 1 Jan 2020 companies that are not entitled to full input tax credit may be subject to GST Reverse Charge (RC) on imported services (B2B – Business to Business) even if your business is not GST registered. RC could also be applicable for non-GST registered businesses in certain cases. Overseas vendors selling Digital Services to Singapore consumers may also be liable to Overseas Vendor Registration (OVR) and required to file GST returns for sales into Singapore over certain thresholds. GST registered businesses need to provide their GST number to the GST registered Overseas supplier to exempt GST being charged on their purchases. Electronic marketplace operators supplying remote services to Singapore consumers are also required to charge and collect GST as well as file GST returns.
Zero Rated supplies refer to Export of Goods to an overseas customer or services classified as international services. Although these are charged at 0% they are still considered as Taxable Supplies that need to be reported on the GST return.
Non Taxable Supplies
Exempt Supplies include sale and rental of unfurnished residential property and importation/local supply of investment precious metals, financial services (e.g. issue of debt securities) or digital payment tokens (exchange of bitcoin for fiat currency). Out of Scope supplies refer to private transactions, trading of goods that are not brought into Singapore and other Out of Scope supplies like Free Trade Zones (FTZ) and Zero GST Warehouses.
Companies can appoint Ezee Pte. Ltd. as authorized agents to file their GST F5 returns. Filing an erroneous GST return can attract penalties of up to 200% of the tax owed. It is important to ensure that the transactions are thoroughly reviewed prior to filing the GST return. Our consultants have many years of experience with GST filing and are familiar with some of the common errors associated with GST including identifying taxable and non taxable scenarios correctly. Our further value added services include working with clients to identify and rectify the errors at source. This includes reviewing accounting systems to ensure systems are properly setup including vendor classifications and GST rates. Staff knowledge and training are critical to identify and record the transactions correctly at source to prevent errors in the first place. There is a difference when it comes to GST reporting between Exempt Supplies and Zero Rated Supplies and transactions need to be captured correctly to generate accurate GST submissions. We can help with staff training to ensure rules are properly understood depending on the nature of your business and activities.
If your business is low margin trading business and is perpetually in a GST refund situation, it is important to ensure your GST refunds are processed timely. Error could trigger audits from the IRAS and delays in processing your GST refunds which could impact your cash flow.
As Singapore shifts from personal income taxes as a revenue base to Corporate Taxes where BEPS or the new global rules related to Base Erosion and Profit Shifting are likely to shrink Corporate Tax collections in Singapore, GST will become the main tax revenue collection mechanism as it taxes consumption rather than income. Hence in our view, there will be more stringent emphasis on compliance for GST to ensure companies are properly accounting for their transactions and paying their due share of GST taxes to the state coffers.