Goods and Services Tax (“GST”) is a consumption tax levied on most supplies of goods and services in Singapore by any taxable person in the course or furtherance of a business, as well as upon the import of goods into Singapore. GST will also be levied on import of services starting from 1 January 2020.
A taxable person is a person who is already GST registered or is required to be GST registered under the GST Act. It is important that businesses are aware of the GST registration requirements in Singapore as late registration or failure to register when required to do so is an offence and penalties may be imposed.
Businesses are required to register for GST, if at any time, they expect or there is certainty that the taxable turnover1 in the next 12 months will exceed S$1 million. This is referred to as “compulsory registration on a prospective basis”.
Businesses are also required to register for GST if the taxable turnover in the last 12 months had exceeded S$1 million. This is referred to as “compulsory registration on a retrospective basis”.
The rest of this article explains how the compulsory registration on a retrospective basis works including recent changes effective from 1 January 2019.
Prior to 1 January 2019, the S$1 million threshold for compulsory registration under the retrospective basis, was based on any 12-month period at the end of each calendar quarter (i.e. 31 March, 30 June, 30 September and 31 December). This means that businesses must monitor their taxable supplies at the end of every calendar quarter and register for GST if their taxable turnover for the past 12 months exceeds $1 million.
From 1 January 2019, the $1 million threshold will be determined for a 12-month period at the end of each calendar year to determine if there is an obligation to register for GST. The diagram below illustrates how the 12-month period was determined before 1 January 2019 and how it will be determined from 1 January 2019.
Application for Registration for GST
Where a business is liable to register for GST on a compulsory basis, it has to do so online at mytax.iras.gov.sg within 30 days from the date the liability to register arose either on a prospective or retrospective basis.
Thereafter, a letter bearing the GST registration number and the effective date of GST registration will be sent when the registration is approved.
If not required by law to register for GST, businesses may apply for GST registration on a voluntary basis, subject to meeting conditions.
Late Registration or Failure to Register
The consequences for late registration or failure to register include the following:
As GST registration obligation is an on-going obligation which non-GST registered businesses need to monitor on a periodic basis, we will advise businesses to put in place controls or reminders to review their obligation. Failure to comply usually results in material financial hardship to businesses.
1Taxable turnover consists of standard-rated and zero-rated supplies. Exempt supplies and transactions that are out of scope are not included as part of taxable turnover.
Standard-rated supplies include local sales and local provision of services.
Zero-rated supplies include the export of goods from Singapore and provision of international services as described in Section 21(3) of the GST Act.
Exempt supplies include the sale and lease of bare residential property and most financial services.
Out-of-scope supplies include third country sales where the goods do not come into Singapore and private transactions.