Comprehensive GST Guide for Singapore Business Owners: Mastering Compliance and Optimising Benefits

As a business owner in Singapore, understanding and navigating the Goods and Services Tax (GST) is crucial for your success, legal compliance, and financial optimisation. This comprehensive guide will walk you through the key aspects of GST, helping you stay compliant, avoid penalties, and leverage potential benefits for your business.

1. Understanding GST in Singapore

GST in Singapore is governed by Section 7 of the GST Act. As of January 1, 2024, the GST rate is 9%. GST applies to:

• The supply of goods and services in Singapore
• The importation of goods into Singapore

1.1 Scope of GST

For GST to apply to your supply of goods or services, four conditions must be met:

• The supply must be made in Singapore
• It must be a taxable supply
• It must be made by a taxable person (GST-registered or required to register)
• It must be made in the course or furtherance of your business

1.2 When is GST Chargeable?

• For goods: GST is chargeable when the goods are physically in Singapore at the time ownership transfers.
• For services: It depends on where your business is established.

Example: If your Singapore company sells goods stored in Malaysia directly to an overseas customer, it’s an out-of-scope supply and doesn’t attract GST.

1.3 Definition of “Supply”

A “supply” includes anything done for consideration, whether goods or services.

Examples:

• A restaurant supplies both goods (food) and services (dining experience)
• A cinema supplies a service (entertainment)
• A manufacturer exporting goods is making a supply

1.4 Deemed Supplies

Some transactions are treated as supplies even without consideration, such as:

• Private use of business goods
• Giving away business goods as gifts or samples

2. Types of Supply and Their GST Treatment

Understanding the different types of supply is crucial for correct GST treatment:

2.1 Standard-rated Supplies (9% GST)

Most goods and services supplied in Singapore fall under this category.

Examples:

• A local café selling coffee and pastries
• A clothing store selling t-shirts and jeans
• A consulting firm providing business advice to local companies

What to do: Charge 9% GST on these sales and report it in your GST returns.

2.2 Zero-rated Supplies (0% GST)

These are goods and services that are sold internationally.

Examples:

• A manufacturer exporting electronics to overseas buyers
• A logistics company providing transportation services from Singapore to Malaysia

What to do: Don’t charge GST, but still report these sales in your GST returns.

2.3 Exempt Supplies (No GST)

Specific goods and services that are exempt from GST by law.

Examples:

• A bank providing loan services
• A landlord renting out a residential apartment

What to do: Don’t charge GST and report these as exempt supplies in your GST returns.

2.4 Out-of-scope Supplies

Transactions that fall outside the GST system entirely.

Examples:

• Selling your entire business as a going concern
• A Singaporean company selling goods that never enter Singapore

What to do: Don’t charge GST and you generally don’t need to report these in your GST returns (except for certain out-of-scope supplies that would be taxable if made in Singapore).

3. GST Registration

3.1 Mandatory Registration

You must register for GST if:

• Your taxable turnover exceeds S$1 million in a calendar year
• You expect your taxable turnover to exceed S$1 million in the next 12 months

3.2 Voluntary Registration

You can choose to register even if you don’t meet the turnover threshold. This can be beneficial if you want to claim input tax credits, but remember that once registered, you must maintain your GST registration for at least two years.

3.3 Registration Process

To register for GST:

• Apply online through IRAS’s MyTax Portal
• Provide necessary documents, including latest financial statements and sales records
• Wait for IRAS approval (typically takes about 2 weeks)
• Receive your GST registration number

✅ Let Counto’s tax specialists handle Singapore’s tax complexities for you. Our comprehensive accounting plans seamlessly integrate GST filing—no extra fees, just straightforward expertise. Explore our plans here.

4. GST on Imports

GST is charged on all imported goods, regardless of the importer’s GST registration status. Key points:

• GST is calculated on the CIF value plus any customs duty
• Certain imports are exempt, such as imports by post under S$400 CIF value
• Goods in Free Trade Zones aren’t considered imported until they enter Singapore proper

5. Charging and Collecting GST

As a GST-registered business:

• Charge 9% GST on all standard-rated supplies
• Include GST in your total price displays
• Issue proper tax invoices for all standard-rated supplies over S$1,000 to GST-registered customers

5.1 Tax Invoice Requirements

• The words “Tax Invoice” prominently displayed
• Your business name, address, and GST registration number
• Your customer’s name and address
• A unique invoice number and date of issue
• Description of goods or services supplied
• For each item: quantity, price (excluding GST), and GST amount
• Total amount payable, excluding GST
• Total GST chargeable
• Total amount payable, including GST

6. Filing GST Returns

• Use the GST F5 form via the IRAS portal
• File quarterly (or monthly if you’ve opted for that)
• Meet the deadline: within one month after the end of each accounting period

Key points to remember:

• Report all supplies made and received, even if no GST is payable
• Declare both standard-rated and zero-rated supplies
• Include the value of exempt supplies made
• File GST on imported goods

7. Claiming Input Tax

You can claim GST incurred on your business purchases (input tax) if:

• You are GST-registered
• The goods or services are used for your business
• The purchases are supported by valid tax invoices
• The input tax is directly attributable to taxable supplies

Be aware of disallowed input tax claims, such as:

• Club subscription fees
• Medical expenses (with some exceptions)
• Costs related to motor cars

8. Record Keeping

Maintain detailed records for at least five years, including:

• Tax invoices issued and received
• Import and export documents
• Bank statements
• Accounting records and schedules

9. Special Schemes to Ease Compliance

Singapore offers several special schemes to help businesses manage their GST obligations more efficiently:

1. Major Exporter Scheme (MES): Allows approved businesses to suspend GST payment on imports
2. Import GST Deferment Scheme (IGDS): Defers import GST payment until submission of GST returns
3. Cash Accounting Scheme: For businesses with annual sales not exceeding S$1 million, allowing accounting for GST upon payment receipt

10. Common Pitfalls to Avoid

• Incorrectly reporting sales and purchases
• Missing filing deadlines
• Applying the wrong GST rate
• Claiming input tax on non-claimable items
• Failing to issue proper tax invoices

11. Penalties for Non-Compliance

Be aware of potential penalties, including:

• Late filing penalties (up to S$10,000 per return)
• Penalties for incorrect returns (up to 200% of tax undercharged)
• Fines and imprisonment for tax evasion

Summary

Understanding and complying with GST regulations is essential for running a successful business in Singapore. While the system may seem complex, grasping these fundamentals will help you stay compliant, optimise your tax position, and make informed business decisions.

Try Counto accounting service 

Counto exists to help small businesses like you save time and money throughout the year. Get direct access to a dedicated Customer Success Manager, who’s backed by a team of accountants and tax specialists. Discover a smarter way to outsource your accounting with confidence. Speak to us directly on our chatbot, email us at [email protected], or contact us using this form.

Here are some articles you might find helpful:

Filing requirements for Pte Ltd companies

GST registration 

Year-end tax strategies

ECI filing

5 important tax deductions

Payroll taxes

Tax deductible expenses