GST Registration for Companies in Singapore

What is GST?

GST, also known as Goods and Service Tax (GST), is similar to the Value Added Tax (VAT) in many other countries in the world. GST is a consumption tax that is added to the price of most products and services sold for domestic consumption in Singapore. As it’s almost always included in the price on the shelf you probably don’t give it a second thought.

Singapore’s GST is currently at 7%. GST is exempted for the sale and lease of residential properties and most financial services. 

Does my company require GST Registration?

In Singapore, GST is only required for GST Registered Businesses.

Only businesses that exceed S$1 million in annual taxable turnover are required to register. However, companies with revenues below this threshold can voluntarily register as well.

How can GST Registration affect my business/company?

Once the company has registered for GST, the company:

• may need to add GST to your prices

• will need to send that extra money collected from GST to IRAS

• can claim back any GST that are charged on business supplies

How does GST work?

The GST on any item is designed to be paid by the consumer in the end, rather than by the businesses involved in its supply.

For example:
Manufacturer A sells Bread to Supplier B for S$3.69, including S$0.24 of GST. The S$0.24 GST is paid to IRAS.

Supplier B pays S$3.69 to Manufacturer A, but claims back the S$0.24 of GST from IRAS. This essentially means that no GST was paid by B.

Supplier B then sells the bread to Buyer C for S$12.30, including S$0.80 of GST. Buyer C pays the full S$12.30 to Supplier B, of which S$0.80 is paid to IRAS. 

This means that only the consumer at the end of the supply chain paid for the GST.

A business or company may wish to voluntarily register for GST. Some of the considerations may be as follows:  

• The turnover of the company is near S$ 1 million, the minimum amount for GST registration. By voluntarily registering, the company need no constantly monitor their turnover to avoid exceeding the limit. 

• If the company has significant purchases from suppliers who are GST registered, it may be more profitable if they are able to claim the GST paid from IRAS if they are GST registered as only the non-GST registered consumer at the end of the supply chain will have to pay GST. 

• If the company has a significant number of consumers who are also GST registered companies, it may be more preferable for their consumers if the company is also GST registered so that the consumers will also be able to claim the GST returns from IRAS.

• However, if customers are not GST-registered, registering for GST may result in consumers paying a higher price for products and may affect the business in terms of competitiveness.

• Another consideration is the cost and responsibility of GST submission. GST registered companies will have to file tax returns monthly or quarterly. This may result in extra administrative costs for the company as well. 

If the company deems that GST registration will be beneficial for it, the company or business can voluntarily register for GST as well.