This guide explains key points in a simplified manner and omits certain details. Please consult us for a more thorough understanding before applying the information in practice.
What is GST (Goods & Services Tax)?
This is Singapore’s equivalent of Japan’s consumption tax, with a standard rate of 9% from 2024 onward.
The tax is administered using the invoice-based system (*1), and only GST-registered businesses are allowed to charge 9% GST on their invoices.
There are strict requirements for invoices, including the display of GST registration number, the term “Tax Invoice”, and clear breakdowns of tax rates and amounts. Input GST cannot be claimed if these criteria are not met.
Furthermore, GST cannot be claimed on invoices where your company is not the named recipient (i.e., contractual debtor), even if payment was made.
(*1) Invoice-based system: A system where tax is calculated based on individual invoices, allowing registered businesses to report GST accurately.
Which businesses are required to register for and report GST?
A company must register for GST if it meets either of the following conditions:
(1) The total taxable turnover in the past calendar year exceeds SGD 1 million.
(2) The projected taxable turnover in the next 12 months is expected to exceed SGD 1 million.
Condition (1) is based on the calendar year, while condition (2) requires immediate registration once the threshold is expected to be breached.
Companies approaching the threshold must closely monitor their sales performance and contracts.
Even if not mandatory, companies may apply for voluntary registration, but this requires approval from the tax authority (IRAS), not just notification.
Because Singapore uses the invoice-based system, a business cannot issue Tax Invoices or charge GST before becoming a registered taxpayer. Delayed registration can result in lost revenue, making timely application critical.
What are exempt and zero-rated supplies?
As with Japan’s consumption tax, there are both exempt and zero-rated supplies under Singapore GST.
Exempt supplies refer to financial services such as loan interest and dividends, and the sale or lease of residential property.
Zero-rated supplies refer to exports of goods and certain international services, which are taxed at 0%.
For zero-rated supplies, input tax claims (*2) are allowed on related purchases.
Exempt supplies also include specific items under Regulation 33, such as foreign exchange gains/losses, capital and bond issues, and certain hedging transactions.
(*2) Input tax credit: A mechanism allowing registered businesses to offset GST paid on purchases against GST charged on their sales, reducing the net tax payable.
When should GST be filed and what should you be careful about when filing?
GST returns must be filed quarterly.
The filing deadline is the end of the month following each quarter. Therefore, GST-registered businesses need to have systems in place to prepare accounts or summarize invoices at least quarterly.
If your business has frequent input tax refunds, it is possible to request a switch to monthly filing for faster processing.
The following points should be kept in mind when preparing GST returns:
- Do all invoices meet the requirements of a valid Tax Invoice?
- Are all invoices addressed to the GST-registered company making the claim?
- Are there any exempt supplies that may affect the proportion of input tax claimable?
- Is the GST accounted for based on the earlier of invoice date or payment date?
In practice, it is common for the tax authority (IRAS) to raise queries related to GST filings.
For example, IRAS may request to verify whether input tax claims are appropriate or may ask for invoices to confirm the nature of exempt supplies.
Incorrect claims or misclassification of supplies can lead to penalties, so accurate reporting is essential.
Periodic review and expert support are highly recommended to ensure compliance.
How can you confirm that your GST returns are accurate?
Self-assessment is becoming increasingly important for ensuring accurate GST filing.
In Singapore, tools like the Assisted Self-help Kit (ASK) help businesses proactively review the accuracy of their GST filings.
ASK helps not only in reviewing past filings but also in maintaining ongoing compliance and preventing future errors.
The Voluntary Disclosure Programme (VDP) allows for early correction of errors, with possible reduction of penalties and audit risks.
Participating in the Assisted Compliance Assurance Programme (ACAP) can further enhance your internal GST controls.
ACAP is an IRAS-endorsed programme that assesses the robustness of a company’s GST control framework and serves as a mark of compliance.
Companies awarded ACAP Premium or ACAP Merit status benefit from reduced audit frequency and expedited GST refund processing.
Strengthening internal controls through such programmes supports long-term tax compliance and reduces business risk.
Summary: When in doubt about GST
・At Phoenix Accounting Singapore, we provide end-to-end support for GST matters, including return filing, registration advice, and navigating regulatory changes.
・If you have questions about GST returns or wish to reduce tax audit risks, please contact us through our inquiry form.
・Our experienced team will respond quickly and accurately to your needs.