Benefits of Goods and Services Tax (GST) to the Singapore Businesses
In Singapore, consumption of services and products is taxed with Goods and Services Tax. Its current rate of GST in Singapore, which is also known as the Value-added Tax (VAT) in other countries, is 7%. It is collected by the GST registered businesses from their customers and is passed on to the IRAS (Inland Revenue Authority of Singapore).
GST is a consumption-based indirect tax that was introduced to lessen the burden of direct taxes like, corporate and personal income tax. Whoever consumes the services and goods pays it. It is also imposed on the goods and services imported in Singapore.
GST Registration Singapore
The Singapore businesses having a taxable turnover in excess of S$1 million for the last 12 months or expecting it to cross S$1 million over the period of next 12 months need to compulsorily register for GST in Singapore. Others can also voluntarily register for it.
The benefit of doing so is that these businesses can collect GST credits from the IRAS on their purchase of goods and services from their GST-registered suppliers. This liberty is not available to the non-GST registered businesses.
Singapore Budget 2015: Changes in GST
The Singapore budget 2015 has gone easy on the businesses registering for GST on or after 1 July 2015. Its provisions allow them to claim input tax (GST they paid), incurred up to 6 months before the date of registration. These entities can claim it on the following type of expenditure.
- Goods held at the point of GST registration
- Property rentals, utilities and services paid before registration
GST Schemes for the Benefit of Registered Businesses
Following is a list of GST schemes that a registered company can take benefit of.
- Cash Accounting Scheme
- Discounted Sale Price Scheme
- Gross Margin Scheme
- Hand-Carried Exports Scheme
- Import GST Deferment Scheme
- Major Exporter Scheme
- Tourist Refund Scheme
- Zero GST Warehouse Scheme
However, to participate in schemes like Discounted Sale Price Scheme and Major Exporter Scheme, the businesses need to take prior permission from the IRAS officials.
Accurate Singapore tax filing is a sought after thing because the authorities are strict about that. However, they are even stricter in the case of businesses that try to avoid the GST tax filing or who overcharge their customers in the name of collecting GST.