The Goods and Services Tax (GST) in Singapore is also known as a value added tax (VAT), levied on all imports and nearly all supplies of goods and services. Sales and leases of residential properties, importation and local supply of investment precious metals, and most financial services are exempt from GST. The export of goods and international services are zero-rated.
GST is an indirect tax in Singapore, currently set at 7%. It applies to the selling price of goods and services provided by GST-registered business entities.
In Budget 2022, the Minister for Finance announced that the GST rate will be increased from:
7% to 8% with effect from 1 Jan 2023; and
8% to 9% with effect from 1 Jan 2024.
If you are a business owner in Singapore, you need to know how to file GST returns. Fortunately, Xero and QuickBooks Online automatically adjust GST rates when the rate changes. Also, accountants can help set up upcoming GST changes.
How does Singapore GST impact your business?
When you are operating a GST-registered business, you need to add GST to the prices that you charge for your goods and services, and then pay these collected GST back to IRAS.
The cost of GST is usually passed down to consumers, who pay it indirectly. Businesses are just the middlemen collecting GST on behalf of IRAS.
GST Registration Requirements
The Singapore government requires all companies that exceed a certain threshold for their GST-applicable revenue (referred to as taxable turnover) to register for GST. Other companies up to the revenue threshold are not required to register for GST but can still register voluntarily after careful consideration. All GST-registered companies are required to collect GST and file GST returns.
GST registration is required if:
Under the retrospective view, more than $1 million at the end of the calendar year, or
Under the prospective view, expected to be more than $1 million in the next 12 months.
Once your revenue exceeds $1 million, you must submit the GST application to IRAS within 30 days. If you fail to register your business with IRAS within this period, you will face penalties.
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Businesses with an annual turnover of less than S$1 million are not required to register for GST. However, they can still register voluntarily if they want to do so.
As part of voluntary registration for GST, the company director, sole-proprietor, partner, trustee, and/ or preparer of GST returns must complete e-Learning courses: Overview of GST. Also, pass the quiz within the course.
However, this is not necessary if:
The company director, sole proprietor, partner, or trustee of the business has experience in managing other existing GST-registered businesses.
GST returns are prepared by a person who is an Accredited Tax Adviser (ATA) or Accredited Tax Practitioners (ATP).
The business is applying for registration under the Overseas Vendor Simplified Pay-only Registration Regime.
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Exemption From Registration
Those who meet the following conditions can apply for exemption from registration:
Your zero-rated supply is more than 90% of your total taxable supply.
If you’re registered for GST, you will be in a net refundable position.
You do not need to collect GST on sales or file GST returns after your exemption request is approved. However, you do not claim the GST incurred on business purchases of goods and services.
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What are the benefits of registering for GST?
If you register your business as a GST-registered company, you'll be able to take advantage of these benefits:
Most large businesses are GST registered. Getting your business registered for GST can signal to customers that your business is an established and trustworthy firm.
Since the real taxpayer is the consumer, not the business, the cost of running your business goes down, resulting in lower prices.
GST does not apply to savings and investments, which encourages people to save and invest more.
Under the GST, the self-employed and wage earners are subject to tax only on their consumption. This makes the GST a fair system.
What is GST Form 5?
GST Form 5 is a document that contains taxpayers' income tax details that need to be lodged with the tax authorities. Business owners are required to file GST returns, including sales, purchases, GST on sales, and GST paid on purchases. Under GST regulations, you are required to file a GST Return form.
When to File GST F5?
The deadline for filing tax returns and paying taxes, if any, is one month after the end of the accounting period. Late submission and payment will be subject to penalties. Click here for more information.
Who Can File GST F5?
Businesses must register for GST when their taxable turnover exceeds S$1 million in the previous financial year. Businesses that do not exceed S$1 million in taxable turnover may still choose to voluntarily register for GST.
According to the IRAS e-Tax Guide, only authorized persons can file GST returns electronically. For businesses registered for GST, it is possible to authorize employees or third parties to file the GST returns for the business. The authorized person can act as a preparer or approver.
A preparer cannot submit a GST return to IRAS until the approver has reviewed the GST return. However, an approver can either complete a GST return and save it as a draft or review a GST return prepared by a preparer. After reviewing the GST return, the approver must submit it to IRAS.
File your GST return in QuickBooks Online or Xero
Do you know? Xero and QuickBooks Online enable you to stay IRAS-compliant by allowing you to prepare your GST returns with automatic recording of GST, generation of GST F5 returns, and IRAS Audit files.
QuickBooks Online helps you avoid late-return penalties by tracking your payment due dates. When it’s time to file, you can review what you owe first to make sure all the numbers look good before using your up-to-date QuickBooks info to fill out your tax form. After you file your GST return, you can keep your GST payable up to date by recording your new tax payment in QuickBooks Online.
On the other hand, Xero recently introduced their latest enhancements to the Singapore GST F5 return experience. One of their latest updates to Xero’s suite of GST F5 features has made setup easy. Therefore, you can access the settings function directly in the GST F5 module. The settings page now features Singapore tax filing periods to ensure the correct setup. Other recent updates are sharing information with your advisor and customizing your transaction reports more efficiently.
Although IRAS offers a basic guide to completing tax forms online, consulting a qualified tax professional can help your business complete and file GST Form 5 efficiently and promptly. If you are still using the manual GST, contact us and we can help you to file your GST return and record tax payments.