As Singapore continues to cement its status as a leading global business hub, the influx of entrepreneurs and international companies seeking to establish their ventures within its borders is on the rise.
Navigating the complexities of starting a new company in Singapore, however, can be daunting for many, especially when it comes to understanding and fulfilling legal and financial obligations such as the Goods and Services Tax (GST) registration.
This guide aims to explain the GST registration process for new Singapore companies, ensuring compliance and a smooth start to your business journey in Lion City.
Understanding GST in Singapore
What is GST?
GST, or Goods and Services Tax, is a broad-based consumption tax levied on the import of goods, as well as nearly all supplies of goods and services in Singapore.
The current rate is 9%.
GST is the Singapore equivalent of VAT (Value Added Tax) in many other countries or sales tax in the United States.
GST exemptions apply to the provision of most financial services, the supply of digital payment tokens, the sale and lease of residential properties, and the importation and local supply of investment precious metals.
Goods that are exported and international services are zero-rated.
Who Needs to Register for GST?
GST registration is mandatory for companies with a taxable turnover exceeding SGD 1 million from the sale of goods and services within Singapore in the past twelve months, or expected to exceed in the next twelve months.
Voluntary registration is also an option for businesses that do not meet this threshold.
It offers certain benefits but requires compliance with specific conditions.
Step-by-Step Guide to GST Registration
Pre-Registration Considerations
Before diving into the GST registration process, new companies in Singapore should assess their need for registration carefully, considering the administrative responsibilities and the potential impact on pricing and competitiveness.
Determining Eligibility
Start by determining if your turnover crosses the mandatory registration threshold.
Utilize accounting software or consult with a financial expert to accurately calculate your taxable turnover.
Voluntary Registration Advantages and Disadvantages
Voluntarily registering for GST can allow you to claim back GST incurred on business expenses, potentially lowering operational costs.
However, it also means you must charge GST on your sales, which could affect pricing strategies.
Registration Process
Applying for GST Registration
GST registration is conducted through the Inland Revenue Authority of Singapore's (IRAS) myTax Portal.
You will need to prepare necessary documents such as details of your company's directors, shareholders, and financial estimates.
Choosing Your Accounting Period
Select an accounting period that aligns with your business cycle. This will be important when filing your periodic GST returns.
Source: Inland Revenue Authority of Singapore (IRAS)
Post-Registration Compliance
Issuing Tax Invoices
Upon successful GST registration, you are required to issue tax invoices for all sales transactions. These invoices must include specific details as outlined by IRAS.
Filing GST Returns
GST-registered businesses must file GST returns and make payments to IRAS quarterly, even if there is no GST to be paid or refunded.
GST Exemption/ Zero-rated Supply of Services
Your services are considered international services, which are zero-rated (i.e. GST is charged at 0%), if they fall within the provisions under Section 21(3) of the GST Act, briefly:
- services comprising the transport of passengers or goods;
- services comprising the transport of goods from a place in Singapore to another place in Singapore
- services (other than the letting on hire of any means of transport) from a place outside Singapore to another place outside Singapore, or from a place in Singapore to a place outside Singapore, or from a place outside Singapore to a place in Singapore;
- the letting on hire of any means of transport for use in a place outside Singapore;
- services supplied directly in connection with land or any improvement thereto situated outside Singapore;
- services supplied directly in connection with goods situated outside Singapore when the services are performed;
- services supplied directly in connection with goods for export outside Singapore and supplied to a person who belongs in a country other than Singapore, at the time the services are performed;
- prescribed financial services supplied in connection with goods for export outside Singapore or the supply of which involves the removal of the goods from a place outside Singapore to another place outside Singapore;
- cultural, artistic, sporting, educational or entertainment services; exhibition or convention services; which are performed wholly outside Singapore:
- services supplied under a contract with a person who belongs in a country outside Singapore and which directly benefit a person who belongs in a country other than Singapore and who is outside Singapore at the time the services are performed; or a registered person who belongs in Singapore;
- prescribed services supplied under a contract with a person wholly in the person’s business capacity (and not in the person’s private or personal capacity) and who in that capacity belongs in a country outside Singapore and which directly benefit a person wholly in the person’s business capacity (and not in the person’s private or personal capacity) and who in that capacity belongs in a country other than Singapore or a registered person who belongs in Singapore;
- prescribed services in connection with the handling of ships or aircraft or the handling or storage of goods carried in any ship or aircraft;
- pilotage, salvage or towage services performed in relation to ships or aircraft;
- services comprising the surveying of any ship or aircraft or the classification of any ship or aircraft for the purposes of any register;
- the supply (including the letting on hire) of any ship or aircraft;
- prescribed services comprising the repair, maintenance, broking or management of any ship or aircraft;
- prescribed services comprising the provision of any means of telecommunication transmitted
- from a place outside Singapore to another place outside Singapore;
- from a place in Singapore to a place outside Singapore; or
- from a place outside Singapore to a place in Singapore;
- services supplied in relation to a trust, where the services and the person supplying the services satisfy such conditions as may be prescribed;
- services supplied under a contract with a person who belongs in a country outside Singapore and which directly benefit a person who belongs in a country other than Singapore or a registered person who belongs in Singapore, relating to the co-location in Singapore of computer server equipment belonging to the person referred to in this section;
- prescribed services in connection with the provision of an electronic system relating to the import of goods into or the export of goods out of Singapore;
- services supplied before 1 January 2022 comprising either of or both the supply of a right to promulgate an advertisement by means of any medium of communication and the promulgation of an advertisement by means of any medium of communication, where the Comptroller is satisfied that the advertisement is intended to be substantially promulgated outside Singapore;
- the supply (including the letting on hire) of any air container or sea container, which is used or to be used for the international transportation of goods and which complies with such other requirements as may be prescribed;
- prescribed services comprising the repair, maintenance or management of any air container or sea container, which is used or to be used for the international transportation of goods and which complies with such other requirements as may be prescribed;
- the supply (including the letting or hire) of qualifying aircraft parts that are certified as airworthy by the relevant certification bodies;
- prescribed services supplied directly in connection with prescribed goods under a contract with a person who belongs in a country outside Singapore and which directly benefit a person who belongs in a country other than Singapore or a registered person who belongs in Singapore, if, at the time the prescribed services are performed, the prescribed goods are at an approved warehouse or at any place from which they may not be removed except with the permission of the proper officer of customs.
Depending on the nature of your services, you may be required to determine your customer's belonging status (i.e. whether the customer is a local or an overseas entity) before your supply of services can be zero-rated.
You can zero-rate your supply of services (i.e. charge GST at 0%) only if it falls within the description of international services under Section 21(3) of the GST Act.
It is important to note that not all services provided to overseas customers can be zero-rated.
Leveraging Support from SAVVY PLATFORM
Navigating the GST registration and compliance process as a new company in Singapore can be challenging.
This is where SAVVY PLATFORM comes into play, offering unwavering support and comprehensive services to ensure your business not only meets its legal obligations but thrives in Singapore’s vibrant economy.
SAVVY Start: Your Launchpad to Success
With SAVVY Start, your company's incorporation and initial setup are handled meticulously. Our team ensures that all paperwork is in order, guiding you through each step of the process.
Streamlined Administrative Tasks with SAVVY Secretary
Post-registration compliance can quickly become overwhelming.
The SAVVY Secretary service takes charge of your administrative needs, from issuing compliant tax invoices to managing GST registration and filings, allowing you to focus on growing your business.
This is an on-demand service, and you can join Savvy Platform at any time.
Embrace Efficiency with SAVVY Smart
For those seeking to optimize their operations, SAVVY Smart offers solutions tailored to enhance your business's efficiency.
Using this service, you can:
- locate the perfect office space;
- hire professionals for your team;
- have your incorporation documents Apostilled;
- order your financial statements preparation;
- build a basic website for your business;
- actually, handle any administrative task of your Singapore company, regardless of whether you are in Singapore or not.
For more information on how SAVVY PLATFORM can assist with your GST registration and other business needs in Singapore, visit us at SAVVY PLATFORM, or contact us directly via email at iamsavvy@iamsavvy.com.sg or phone at +65 9711 8886.
