Goods and Services Tax – Should I Register?
Before we start…
For the purpose of the discussion in this article, it is important to note some of the terminologies used for GST matter:
“Taxable supplies” refer to local sales of goods and services, export sales and provision of international services. However, the following are specifically excluded:
- Sales and leases of residential property (exempt supplies)
- Supplies of financial services (exempt supplies)
- Out-of-scope supplies
“Out-of-scope supplies” refer to sales which the goods did not arrive in Singapore as well as goods in transit. For example, a sale where the goods are delivered directly (back-to-back) from China to India is an out-of-scope supply.
Types of Supplies – there are 4 types of supplies which can be classified into Taxable Supply and Non Taxable Supply.
“Taxable turnover” refers to the total value of all taxable supplies made in Singapore in the course of business.
“Input Tax” refers to the GST paid on purchases and expenses for the GST registered business.
“Output Tax” refers to GST collected from customers by a GST registered business.
Do I Need to Register?
A company is required to register for GST on a compulsory basis if
- Your taxable turnover for the past 4 quarters is more than $1M and you are not certain that your turnover will not exceed $1M in the next 12 months; or
- You can reasonably expect your taxable turnover to exceed $1M in the next 12 months.
If you are a sole proprietor, the turnover will be computed based on the combine turnover of all your sole proprietorship businesses plus any income derive from your trade, profession or vocation.
If you are in a partnership, the turnover will be computed based on the combined turnover of all partnerships with the same composition of partners.
You will need to apply for GST registration within 30 days from the date that your registration liabilities arise.
Voluntary GST Registration
A company can still register for GST on a voluntary basis even if the business turnover is below $1M. For such companies, it is wise to perform a cost-benefit analysis on the impact GST registration has on your business and reporting process. You may consider the factors explained below before making a decision as once registered, you will need to be registered for a minimum period of 2 years.
Registering for GST is an important decision, if you are thinking of voluntary registration. See our next article on some of the factors to consider when deciding if you should register voluntarily.