Introduction REQUIREMENT

GST is a self-assessed tax and businesses are required to continually assess the need to be registered for GST. GST registration falls into two categories: compulsory registration and voluntary registration. Compulsory registration Registering for GST is compulsory when

the turnover of your business is more than 1 million SGD for the past 12 months known as the retrospective basis OR you are currently making sales and you can reasonably expect the turnover of your business to exceed 1 million SGD for the next 12 months known as the prospective basis.

Please note that failing to register will attract penalties. There are anti-avoidance provisions to ensure that entities are not established merely to keep turnovers less than the threshold and thereby avoid registration. Voluntary registration You may apply to voluntarily register for GST if you are not liable to compulsorily register and you satisfy the following conditions:

Your annual turnover is not more than 1 million SGD, or You only supply goods outside Singapore (out-of-scope supplies), or You make exempt supplies of financial services that are also deemed as international services

The advantage of voluntary registration is that you can enjoy the benefits of claiming input tax incurred in the course of your business. This is especially so when you make purely zerorated supplies (exports or international services). Please note, once you are voluntarily registered, you must remain registered for at least two years and you have to maintain all your records for at least five years, even after your business has ceased and you have deregistered from GST. You may also have to comply with any additional conditions that are imposed by the tax authority. Exemption from Registration If you make only zero-rated supplies you can apply for an exemption from registration, even if your taxable turnover exceeds the registration limits. This allows you to escape from the administrative requirement of GST registration, as you would only be reclaiming and not paying tax to the IRAS, since the cost to you is the input tax. IRAS will approve the exemption, if more than 90% of your total supplies are zero-rated and if your input tax is greater than your output tax. De-registration

You can cancel your registration when your business stops or when your business is sold as a whole to another person or when your sales figures do not exceed 1 million SGD. You must submit an application form, along with other relevant documents to the tax authority within 30 days from the date of cessation.

GST rate over the years

Year 1 Apr 1994 to 31 Dec 2002 1 Jan 2003 to 31 Dec 2003 1 Jan 2004 to 30 Jun 2007 1 Jul 2007 onwards GST Rate 3% 4% 5% 7%

ADVANTAGE & DISADVANTAGES

Benefits To the government: 1. It generates a stable and predictable tax income in both good and weak economic environment. 2. It is an efficient tax due to the comparatively lower cost of administration and collection. 3. It allows the Government to lower corporate and personal income taxes, which in turn encourages more foreign direct investment. This leads to overall economic growth. To businesses and individuals:

1. Most large, established businesses are GST registered getting your business GST registered is often a signal to customers that your business is an established business and has certain size. 2. GST is a fairer tax system. It taxes the self-employed and wage earners only when they spend their money. 3. GST taxes apply only on consumption. Savings and investment are not taxed. This will encourage people to save and invest in productive activities. 4. Cost of doing business is reduced, thereby contributing to lower prices. Businesses do not suffer a tax cost due to the multi-stage credit mechanism since the real taxpayer is the end-user. Drawbacks 1. The disadvantage of GST registration is the administrative burden that comes with discharging the duties and responsibilities of GST registration. 2. One must either study the intricacies of GST or pay an accountant to undertake this work which in some cases can be a reasonably high cost. 3. Being GST registered effectively increases your selling price by 7%. Your customers who are not GST registered would not be able to recover the GST you charge. So although your costs are reduced because you can recover GST, your customers might not be too pleased. 4. GST can be a burden to lower income groups, especially during times of high inflation when the 7% tax is paid on the increasing price of daily essentials.

GST Schemes to help businesses?

The Singapore Government has introduced several assistance schemes relating to GST. These schemes generally help to ease the cash flow for businesses and help create a pro-business environment. 1. Tourist refund scheme, allows tourists who buy goods in Singapore from participating GST registered retailers to claim a refund of the GST paid if the goods are brought out of Singapore 2. Cash Accounting Scheme, is specifically for small businesses whose annual sales do not exceed SGD 1 million. 3. Under the Gross Margin Scheme, GST is chargeable only on the gross margin of your goods.

4. The Major Exporter Scheme (MES), is designed to help the cash flow of major exporters who have significant imports. 5. Under the Approved Contract Manufacturer and Trader (ACMT) Scheme, you are not required to charge GST when you are instructed by your overseas customer to deliver your finished goods to his customers in Singapore. As per the Approved Marine Fuel trader (MFT) Scheme, you are not required to pay GST when you purchase marine fuel oil from a local GST registered supplier. 6. The Hand Carried Exports Scheme, is if you wish to zero-rate your supply of goods made to an overseas customer and your goods are hand-carried out of Singapore via Changi International Airport. 7. Under the Zero GST Warehouse Scheme, businesses can transform their warehouses into zero-GST warehouses to minimise red tape and bypass the GST process. 8. Approved Third Party Logistics Scheme, allows you to import goods belonging to yourself or your overseas principal without paying GST upon importation.