When to Charge Goods and Services Tax (GST) in Singapore

Goods and Services Tax (GST) is a key component of Singapore’s tax system. If your business is GST-registered, it’s crucial to understand when you need to charge GST on goods and services to ensure compliance with the Inland Revenue Authority of Singapore (IRAS) regulations. This guide provides a detailed explanation of when GST should be charged, the applicable scenarios, and common mistakes to avoid.

What is Goods and Services Tax (GST)?

GST is a consumption tax levied on the supply of goods and services in Singapore and the import of goods into Singapore. The current GST rate is 9% (as of Year 2024) and applies to taxable supplies made by GST-registered businesses.

When Must GST be Charged?

GST must be charged on all taxable supplies of goods and services if your business is GST-registered, unless the supply is exempt or zero-rated. Below are the key scenarios where GST should be charged:

1. Taxable Supplies in Singapore
   • GST must be charged on goods and services supplied in Singapore.
   • Taxable supplies include both standard-rated supplies (subject to GST at 8%) and zero-rated supplies (GST at 0%).
2. Import of Services
   • GST is applicable under the Reverse Charge Mechanism for imported services if your business is not entitled to full input tax claims.
3. Export of Goods and Services
   • Exports are generally zero-rated but must comply with specific documentation and conditions set by IRAS.
4. E-Commerce and Digital Services
   • GST must be charged on digital services and remote services supplied to non-GST registered consumers in Singapore.
   • The Overseas Vendor Registration (OVR) regime applies to overseas vendors supplying digital services to Singapore consumers.
5. Intra-GST Group Transactions
   • Transactions between members of a GST group are disregarded for GST purposes.

When GST is Not Applicable

GST does not apply in the following situations:

1. Exempt Supplies:
   • Certain financial services and the sale/lease of residential properties are exempt from GST.
2. Out-of-Scope Supplies:
   • Transactions outside the scope of Singapore GST (e.g., sales made entirely outside Singapore).
3. Non-GST-Registered Businesses:
   • If your business is not GST-registered, you cannot charge GST.

Types of Supplies and GST Treatment

1. Standard-Rated Supplies
   • These are supplies subject to the prevailing GST rate (9% as of 2024).
2. Zero-Rated Supplies
   • Supplies such as exports and international services are taxed at 0%.
3. Exempt Supplies
   • Examples include the sale/lease of residential properties and most financial services.
4. Out-of-Scope Supplies
   • These include supplies that do not fall within Singapore’s GST regime, such as goods sold overseas.

How to Charge GST

1. Issue a Tax Invoice:
   • GST-registered businesses must issue a tax invoice for all standard-rated supplies.
   • The invoice must include the GST registration number and the amount of GST charged.
2. Display GST Inclusive Prices:
   • Prices displayed to customers must include GST unless clearly stated otherwise.
3. File GST Returns:
   • File accurate GST returns every quarter or month (depending on your filing frequency) to report the GST collected.

Common Mistakes to Avoid

1. Failing to Charge GST on Taxable Supplies:
   • Ensure that GST is charged on all taxable supplies made within Singapore.
2. Incorrect Classification of Supplies:
   • Misclassifying exempt, zero-rated, or standard-rated supplies can lead to penalties.
3. Omitting GST Registration:
   • Businesses exceeding the GST registration threshold of $1 million in taxable turnover must register for GST.
4. Errors in Tax Invoices:
   • Ensure tax invoices include all required details to comply with IRAS regulations.

How Apexia Corporate Advisory Can Help

Navigating GST regulations can be complex, but with expert guidance, your business can ensure compliance while optimizing tax processes. At Apexia Corporate Advisory, we offer:

1. GST Advisory Services
   • Determine whether and when GST should be charged.
   • Assist in the correct classification of supplies.
2. GST Registration Assistance
   • Help businesses register for GST and manage filing obligations.
3. GST Compliance Reviews
   • Conduct reviews to identify and rectify GST reporting errors.
4. Tax Invoice Preparation
   • Assist in preparing compliant tax invoices to avoid penalties.

Conclusion

Understanding when to charge GST is essential for GST-registered businesses in Singapore. By adhering to IRAS regulations, businesses can ensure compliance, avoid penalties, and maintain good standing. For professional advice and support on GST-related matters, contact Apexia Corporate Advisory today.