When to Register for GST, How and Responsibilities after Registration
- What is the Goods and Services Tax (GST)?
- When Do Businesses Need to Register for GST?
- Voluntary GST Registration
- How to Apply for GST Registration
- Responsibilities of a GST-Registered Business
- Cancellation of GST Registration
What is the Goods and Services Tax (GST)?
The Goods and Services Tax (GST) is a consumption tax levied on nearly all supplies of goods and services in Singapore, as well as goods imported into Singapore.
GST is charged at the prevailing rate of 7% when customers buy taxable goods or services from GST-registered businesses.
When Do Businesses Need to Register for GST?
From 1 January 2019 onwards, businesses must register for GST if the value of their annual taxable turnover at the end of each calendar year (i.e. 31 December) exceeds $1 million.
Under the prospective view, businesses will have to register for GST when there is certainty that their taxable turnover will exceed $1 million in the next 12 months. This forecast must be supported by documents which may include:
- Signed contracts
- Confirmed purchase orders
- Invoices to customers
- Past income statements that show the annual turnover for the past 12 months is close to $1 million and is on an increasing trend.
Exceptions to compulsory GST registration
You can choose to apply to the Comptroller of GST for exemption from GST registration if:
- Your zero-rated supplies (i.e the provision of international services or export of goods that are charged at 0% GST) are more than 90% of your total taxable supplies; and
- The total amount of GST that your customers would have to pay is less than the GST incurred on purchases from GST-registered suppliers.
You also do not need to register for GST if:
- You qualify for GST registration under the retrospective view, but not under the prospective view;
- It is certain that your taxable turnover for the next 12 months will not exceed $1 million due to specific circumstances (e.g. business downsizing); and
- You have the detailed computation (e.g. income statements and invoices) to support this forecast and documents to prove that the specific circumstances have occurred. For example, in the case of the downsizing of a business leading to closure of retail stores, supporting documents such as the termination of lease of property arising from the downsizing must be submitted as proof.
Nonetheless, you must continue to monitor your taxable turnover at the end of the next calendar year. If you are certain that your turnover will exceed $1 million in the next 12 months, you will need to register for GST.
Voluntary GST Registration
Qualifying for voluntary registration
Your business may apply for GST registration on a voluntary basis if your business makes:
- Taxable supplies (local sale of goods or provision of services);
- Out-of-scope supplies (e.g. delivery of goods from and to a place overseas); or
- Exempt supplies of financial services (e.g. provision of loans).
Those who opt for voluntary GST registration must complete 2 e-learning courses and pass a quiz. You will not be required to take the courses and quiz if:
- You have experience managing other GST-registered businesses;
- The person preparing your GST returns is an Accredited Tax Advisor or Practitioner; or
- The person preparing your GST returns has completed both courses within the past 2 years.
You will also be required to sign up for GIRO for refund/payment of GST and may be required to provide a security deposit.
Pros and cons of voluntary GST registration
Voluntarily-registered businesses must remain registered for 2 years. Thus, prior to registering for GST, you should weigh the pros and cons of registration over the 2-year period by taking the following factors into consideration:
The profile of your customers
If your customers are GST-registered, you may be able to increase your sale prices to include GST as these customers will be able to claim the GST.
However, if your customers are not GST-registered, registering for GST may result in a fall in gross profits. This is because you may have difficulty raising your prices to cover the GST you now have to pay to the Inland Revenue Authority of Singapore (IRAS) as your customers will not be able to claim the GST that you charge.
The profile of your suppliers
If your suppliers are GST-registered or if you import goods, GST registration is beneficial as your business may be able to recoup the GST it has paid to such suppliers, by charging your customers GST.
The type of sales made
You may benefit from GST registration if you export goods or provide services that qualify as zero-rated supplies to overseas customers (and hence you can charge GST at 0% for such goods or services).
How to Apply for GST Registration
Applicants for GST registration will have to submit their applications online via myTax Portal using their CorpPass with supporting documents such as your Accounting and Corporate Regulatory Authority (ACRA) Business Profile, or Certificate of Incorporation in English (if your business is incorporated overseas).
Those opting for voluntary registration also have to submit a GIRO application form and the acknowledgement pages from the e-learning courses.
IRAS will take about 10 working days to process your application. You may be required to submit additional supporting documents (e.g. invoices, contracts), should the Comptroller request so upon reviewing your application.
If your application is approved, IRAS will send you a letter of notification. The letter will include your GST registration number and effective date of GST registration – you will have to begin charging and collecting GST on this date.
What is the deadline for GST registration?
You are required to apply for GST registration within 30 days from the date where your liability to register arose.
Under the retrospective view, the effective date of registration will be the first day of the third month following the end of the calendar year.
Under the prospective view, you will be registered on the 31st day from the date of forecast.
Penalties for late GST registration
If you are late in registering for GST, you will be deemed to have registered for GST on the date that you were liable to be registered. You will need to pay GST on past sales starting from this date, even if you had not started collecting GST from customers then.
Late registration may also attract a fine of up to $10,000 and a penalty of up to 10% of the GST due. However, if you disclose that you are late when applying for GST, the fine and penalties will generally be waived.
Responsibilities of a GST-Registered Business
Once a business is GST-registered, it will need to fulfil its responsibilities as a GST-registered business starting from the effective date of GST registration.
Filing of GST returns
Businesses will need to charge and account for 7% GST for goods and services supplied in Singapore. GST returns must be accurately submitted online via e-Filing on myTax Portal within 1 month from the end of each accounting period.
You will need to report both your output tax (the GST collected from customers) and input tax (the GST paid to suppliers) in your GST return. If your output tax is higher than your input tax, you will have to pay the difference to IRAS. Alternatively if your input tax is higher than your output tax, IRAS will refund the difference to you.
Penalties for late and/or non-filing of GST returns
A submission penalty of $200 is imposed if your GST return is not filed by the due date, and for each additional month the GST returns remain outstanding (up to a maximum of $10,000).
On top of the late submission penalty, if you fail to file GST returns altogether, this may attract a fine of up to $5,000 and, in default of payment, an imprisonment term of up to 6 months.
Payment of GST
GST must be paid within 1 month from the end of each accounting period.
Penalties for late payment of GST
Failure to pay GST by the due date will result in a 5% penalty levied on the amount of tax unpaid by the due date.
After 60 days from the due date, an additional 2% will be imposed for every month the tax remains unpaid (up to a maximum of 50% of the outstanding tax).
You must keep business and accounting records for at least 5 years, even after the business has ceased or has been deregistered from GST.
A GST-registered business must also ensure that all tax invoices and receipts are issued with its GST registration number. You must also inform IRAS within 30 days of any change to your business circumstances. Such changes include:
- Changes in GST mailing address (notification is required only if you wish for any GST-related correspondence to be mailed to an address that is not the registered address of your business)
- Changes in business constitution/ownership
- Changes in partners or particulars of partners
- Creation of new businesses with the same partners
Prices, advertisements or publications made to the public must be inclusive of GST. If you fail to comply with the display requirement, this may result in a fine of up to $5,000.
Businesses in the hotel and food and beverage industries are excluded from this requirement. They may display prices that are exclusive of GST for goods and services which are subject to service charge. However, such displays must be accompanied by a prominent statement informing customers that prices are subject to GST and service charge.
Obligations of a voluntarily registered business
Certain requirements must be met after voluntary GST registration. These include maintenance of a GIRO account for payment/refund of GST, and making taxable supplies within 2 years of GST registration.
Cancellation of GST Registration
Compulsory cancellation of GST registration
You must cancel your GST registration via myTax Portal within 30 days of:
- Ceasing to make taxable supplies;
- Ceasing to run your business;
- Transferring your entire business to another person; or
- Changing the constitution of your business (e.g. converting from a partnership to a limited-liability partnership).
IRAS will automatically cancel your GST registration upon learning from ACRA that your sole proprietorship business has been converted to a partnership (or vice versa). You will not need to apply for cancellation in these circumstances. However, the new entity will need to decide whether or not to apply for GST registration.
Voluntary cancellation of GST registration
If you are not required to register for GST, you may cancel your GST registration via myTax Portal. However, if you voluntarily registered for GST, you must remain registered for 2 years before you can cancel your registration.
You will be notified by IRAS of the effective date of cancellation of GST registration. It is an offence to charge GST after this date. You should not issue tax invoices after this date. Finally, you will still have to pay GST to Singapore Customs when you import goods.
If you need assistance with GST registration for your business, get in touch with our ACRA-approved corporate service provider.
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