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EY
One Raffles Quay North Tower, Level 18 Singapore 048583
Singapore
Indirect tax contacts
Kai Eng Yeo +65 6309-8208 kai.eng.yeo@sg.ey.com
Boon Choo Chew +65 6309-8764 boon-choo.chew@sg.ey.com
Goh Seng Geok +65 6309-8644 seng-geok.goh@sg.ey.com
Monica Sum +65 6309-8194 monica.sum@sg.ey.com
Jessie Loh +65 6309-8726 jessie.loh@sg.ey.com
Claren Lai +65 6309-8117 claren.lai@sg.ey.com
A. At a glance
Name of the tax Goods and services tax (GST)
Local name Goods and services tax (GST)
Date introduced 1 April 1994
Trading bloc membership Association of Southeast Asian Nations (ASEAN)
Administered by Inland Revenue Authority of Singapore (IRAS) (http://www.iras.gov.sg)
GST rates
Standard
Other
format
Local M2-1234567-8, MR-1234567-8 and 19-9012345-X
Nonresident F2-1234567-D
GST return periods Quarterly/Monthly (subject to approval)
Thresholds
Registration SGD1 million
Recovery of GST by non-established businesses No (unless the non-established business is registered for GST in Singapore)
B. Scope of the tax
GST applies to the following transactions:
• Taxable supplies of goods and services in Singapore, made in the course of a business by a taxable person
• Imports of goods into Singapore
• Imports of services into Singapore, if received by a taxable person who is not entitled to full input tax credit
• Imports of digital services into Singapore, by an overseas supplier to a Singapore non-registered person
C. Who is liable
A taxable person is a person who is registered or is required to be registered for GST.
The GST registration threshold is SGD1 million. For compulsory registration, the threshold applies in the following ways:
• Retrospectively: prior to 1 January 2019, registration was required if, at the end of any quarter, the value of taxable supplies in that quarter and the preceding three quarters exceeds SGD1 million. From 1 January 2019, registration is required if, at the end of any calendar year, the value of taxable supplies in that calendar year exceeds SGD1 million. However, registration is not required if the Comptroller of GST (the Comptroller) is satisfied that the value of taxable supplies in the next calendar year is not expected to exceed SGD1 million.
• Prospectively: registration is required if at any time reasonable grounds exist for believing that the value of taxable supplies in the next 12 months is expected to exceed SGD1 million.
Under the first test above, a business must notify the Comptroller within 30 days after the end of the relevant calendar year. Under the second test, a business must notify the Comptroller within 30 days after the beginning of the relevant period.
Exemption from registration. Where a taxable person makes substantially zero-rated supplies and the collectible output tax is less than the amount of input tax claimable on the purchases in any 12-month period, the taxable person may request exemption from registration. Approval is sub ject to the Comptroller’s discretion.
However, if any material change occurs with respect to the nature of supplies or the proportion of zero-rated supplies, the taxable person is required to notify the Comptroller within 30 days after the date of the change or, if no particular date is identifiable as the date of the change, within 30 days after the end of the quarter in which the change occurred.
Voluntary registration and small businesses. If the value of taxable supplies made by a business is below the registration limit, the business may register for GST voluntarily. Approval is subject to the Comptroller’s discretion. A business that registers for GST voluntarily must remain regis tered for at least two years, unless otherwise allowed by the Comptroller.
Under GST law, “taxable supply” is defined as a supply of goods or services made in Singapore other than an exempt supply. Based on this definition, businesses that make wholly exempt sup plies would not be eligible for GST registration. However, the GST Act allows a person that is not liable to be registered to apply for voluntary registration if it makes exempt supplies of financial services (as specified in Paragraph 1 of the Fourth Schedule to the GST Act) and the services would have qualified as international services if they were made by a taxable person.
In addition, a person who is not liable for GST registration may also apply for voluntary registra tion if the person makes or intends to make the following supplies:
• Supplies outside Singapore that would be taxable supplies if made in Singapore
• Supplies that are disregarded for GST purposes under the warehousing regime or Approved Contract Manufacturer and Trader Scheme and that would otherwise be taxable supplies.
However, a person in the above scenarios must have a business establishment in Singapore or have its usual place of residence in Singapore.
Group registration. Businesses that are under “common control” may apply to register as a GST group. Each member must be individually registered for GST. After group members are regis tered as a GST group, they are treated as a single taxable person and submit a single GST return. Supplies made between members within the same GST group are disregarded for GST purposes. All members of a GST group in Singapore are jointly and severally liable for all GST debts and penalties.
A person who is not resident in Singapore or does not have an established place of business in Singapore may be part of the GST group if certain criteria are satisfied. If the GST group includes a person not resident in Singapore or not having an established place of business in Singapore, the representative member must satisfy additional criteria.
There is no minimum time period required for the duration of a GST group.
Divisional registration. If a taxable person carries on more than one business or operates several divisions, the person may apply to the Comptroller to register any of the businesses or divisions separately. Divisional registrations ease the GST administration for such businesses. On approval, each division is given a separate GST registration number and submits its own GST return. Supplies made between divisions within the divisional registration are disregarded for GST purposes.
Non-established businesses. A “non-established business” is a business that has no business or fixed establishment in Singapore. A business that is not established in Singapore must register for GST if it makes taxable supplies exceeding the registration threshold of SGD1 million.
Tax representatives. A non-established business must appoint a local tax representative, com monly known as a Section 33(1) Agent, who will act on its behalf for all its GST matters. This local tax representative assumes all the GST responsibilities of the registered non-established business, including the reporting and payment of GST due. A Letter of Authorization confirm ing the appointment of the local tax representative must be submitted, together with the application, for GST registration.
Reverse charge. Reverse charge applies to services procured from overseas suppliers by a taxable person who is not entitled to full input tax credit or belongs to a GST group that is not entitled to full input tax credit. Reverse charge will also apply to a nontaxable person (i.e., a non-GSTregistered local person) who procures services from overseas suppliers in excess of SGD1 million in a 12-month period and who will not be entitled to full input tax credit had it been GST registered. The non-GST-registered local person should assess its liability for GST registration under the reverse-charge mechanism. Note that the value of digital services procured from over seas vendors who are registered under the OVR regime will also be included in the value of the non-GST-registered local person’s imported services when determining the liability for GST registration.
Persons who are not entitled to full input tax credit include persons making significant exempt supplies (for example, financial institutions) or persons significantly engaged in nonbusiness activities (for example, charities). From 1 January 2023, the reverse charge will also apply to all goods imported via air or post that are valued up to (and including) the current GST import relief
threshold of SGD400 (“low-value goods”) purchased from local and overseas suppliers, elec tronic marketplace operators and re-deliverers, regardless of whether they are GST registered or not.
Domestic reverse charge. A domestic reverse charge will apply to the local sale of prescribed goods by a GST-registered supplier to a GST-registered customer for business purposes (i.e., a business-to-business supply [B2B]), if the GST-exclusive value of the sale exceeds SGD10,000 in a single invoice.
The prescribed goods are mobile phones, memory cards and off-the-shelf software. It is termed “customer accounting” because the supplier is responsible for raising the tax invoice (showing the GST chargeable) and the customer is responsible for accounting for the output tax to the IRAS (i.e., onward paying the IRAS the GST charged).
Digital economy. Supplies of goods transacted over the internet does not alter the taxability of the transaction and is subject to the normal GST rules. A sale of digitized goods such as music and software over the internet is regarded as a supply of service.
The supply of digital services by an overseas supplier to a Singapore non-GST registered person (i.e., a business-to-consumer [B2C] supply) is subject to GST via the overseas vendor registration (OVR) regime. This means the nonresident provider must register and account for GST in Singapore. Under the OVR “pay only regime,” the overseas supplier will collect and remit GST without the ability to claim any input tax credits and be subject to simplified GST reporting and documentation requirements. Under certain circumstances, the operator of an electronic market place would also be required to charge and account for GST on digital services made through the electronic marketplace to local consumers, on behalf of the overseas suppliers.
“Digital services” are defined to mean any service supplied over the internet or other electronic network and the nature of which renders its supply essentially automated with minimal or no human intervention, and impossible without the use of information technology, and is inclusive of a non-exhaustive list of prescribed services such as digital products, software and software updates.
Overseas suppliers and overseas electronic marketplace operators whose global turnover exceeds SGD1 million and the sale of digital services to consumers in Singapore exceeds SGD100,000 are liable for registration under the OVR regime. Local non-GST registered electronic market place operators are liable for GST registration if the combined values of digital services made on behalf of overseas suppliers through the electronic marketplace and the electronic marketplace’s own taxable supplies have exceeded SGD1 million at the end of any calendar year or are expect ed to exceed SGD1 million in the next 12 months.
From 1 January 2023, GST will be extended to B2C imported remote services through the OVR regime. All B2C supplies of imported remote services, whether digital or non-digital, will be taxed by way of the extended OVR regime.
“Remote services” are defined to mean any services where, at the time of the performance of the service, there is no necessary connection between the physical location of the recipient and the place of physical performance.
Nonresident providers of electronically supplied services for B2B supplies are not required to register and account for GST in Singapore. Instead, the customer is required to self-account for the GST by way of the reverse-charge mechanism (see the Reverse-charge subsection above). There are no other specific e-commerce rules for imported goods in Singapore.
Online marketplaces and platforms. In Singapore the term “electronic marketplace” is used to define a medium that allows the suppliers to make supplies available to customers and is oper
ated by electronic means. This includes marketplaces operated via a website, internet portal, gateway distribution platform or any other types of electronic interface but excludes payment processors or internet service providers. There are no special GST rules for such marketplaces.
Registration procedures. To register for GST in Singapore, businesses need to complete and sub mit the form GST F1, “Application for GST Registration,” together with the required supporting documents to the Comptroller.
The supporting documents to be submitted would include, where applicable, the completed GST Registration Calculator for the last two years; a copy of the latest profit and loss, including reports and notes to accounts; and a copy of the signed contract(s). For partnership businesses applying for GST registration in Singapore, an additional form, GST F3, “Notification of Liability to be Registered: Details of All Partnerships and Partners,” together with form GST F1, must be com pleted and submitted to the Comptroller.
For an overseas business with no establishment in Singapore and who makes taxable supplies in Singapore, the overseas business must appoint a local tax representative to be responsible for all its GST matters in Singapore such as collecting GST on local taxable supplies made and timely filing of GST returns.
An application for GST registration is typically processed in about 10 working days. In addition, for businesses applying for voluntary GST registration, the sole proprietor, partner, director or trustee of the business is required to complete two e-learning courses, “Registering for GST” and “Overview of GST” and pass the quiz before applying for the voluntary GST registration (subject to exceptions).
Businesses must apply for GST registration online via myTax Portal by the relevant personnel who have been authorized to use the IRAS website’s e-services.
Deregistration. A business that ceases operations must cancel its GST registration. The business must notify the GST authorities within 30 days after ceasing to make taxable supplies.
A GST-registered person whose value of taxable supplies is not expected to exceed SGD1 million in the next 12 months may request deregistration from GST.
Changes to GST registration details. Change in business name or registered office address – the change is to be filed with the Accounting and Corporate Regulatory Authority (ACRA) online. IRAS will update its records based on the information filed with ACRA. Separate notification to IRAS is not required.
Change in mailing address – a business may have separately requested GST-related correspon dences (including any refund checks) to be sent to another address (i.e., GST mailing address). Updates can be made to the mailing address by logging into myTax Portal and accessing “Update GST Contact Details.” Updates should be made in a timely manner to ensure that the business continues to receive the correspondences in a timely manner.
Change in GST return filing frequency or cycle of accounting periods – a business can write in to request a change in filing frequency (e.g., change to monthly GST accounting period) or apply for special accounting periods for its GST returns via myTax Mail (log into myTax Portal). All requests will be subject to IRAS’s approval. In applying for special accounting periods for its GST returns, a business is required to inform the IRAS at least 30 days before the start of the first accounting period. Otherwise, the business will be placed on the standard GST accounting periods by default.
Change in financial year end – a business is required to inform IRAS by logging into myTax Portal and accessing “Update corporate profile/contact details.”
D. Rates
The term “taxable supplies” refers to supplies of goods and services that are liable to a rate of GST, including the zero-rate.
The GST rates are:
• Standard rate: 7%
• Zero-rate: 0%
The standard rate of GST applies to all supplies of goods or services unless a specific measure provides for a reduced rate, the zero-rate or an exemption.
The Singapore government has announced that the standard rate of GST will be raised in two stages, to 8% from 1 January 2023 and to 9% from 1 January 2024.
Examples of goods and services taxed at 0%
• Exports of goods and international services
The term “exempt” refers to supplies of goods and services that are not liable to GST and that do not qualify for input tax deduction.
Examples of exempt supplies of goods and services
• Sale or lease of residential property
• Certain financial transactions
• Importation or supply of investment precious metals
• Supply of digital payment tokens (from 1 January 2020)
Option to tax for exempt supplies. The option to tax exempt supplies is not available in Singapore.
E. Time of supply
The time when GST becomes due is called the “time of supply” or “tax point.” The time of sup ply for both goods and services is generally the earlier of the following events:
• The date of issuance of an invoice Or
• The date of receipt of payment
However, exceptions to the above time-of-supply rules exist.
Deposits and prepayments. Where the deposits form partial payment (i.e., prepayment) for the goods or services supplied, the above mentioned time-of-supply rules applies. GST has to be charged on the amount of deposit and the transaction has to be accounted for in the accounting period in which the deposit is received. This treatment applies even if the business is prepared to refund the deposit to the customer in the event that the supply is subsequently canceled (e.g., the order is canceled). If the deposit is subsequently refunded to the customer, adjustments to the GST previously accounted for in the GST return can be made if the necessary documents (e.g., credit note issued to customer) are maintained.
Where the deposit is refundable and used as a security, the time of supply will not be triggered and GST is not chargeable at this stage.
Where the supply does not take place (e.g., the customer cancels the order), the GST-registered supplier would issue a credit note to the customer and refund the payment received. However, commercially, the GST-registered supplier may seek compensation or recover miscellaneous costs incurred as a result of the order cancellation.
Continuous supplies of services. No separate time of supply treatment for continuous supplies, except where the GST-registered business issues a tax invoice for an advance period not exceed ing 12 months. If the invoice also contains, in addition to the particulars required of a tax invoice, the following particulars:
• The due dates of each payment
• The amount payable (excluding tax) on each due date
And
• The rate of tax and the corresponding GST chargeable
Then GST shall be accounted for at the earlier of:
• The due date of each periodic payment
Or
• The date of receipt of each periodic payment
Goods sent on approval for sale or return. Where goods are supplied on approval or sale or return or similar terms to the customers, no sale takes place until the customer approves the goods and confirms the sale, although goods have been sent to the customer. In such cases, the time of supply will be treated as taking place at the earliest of the following events:
• The date of issuance of an invoice
• The date of receipt of payment
Or
• 12 months after the removal of the goods
Reverse-charge services. There are no special time of supply rules in Singapore for supplies of reverse-charge services. The general time of supply rules will apply (as outlined above). However, there are special time of supply rules for certain transitional rules for reverse-charge services that span 1 January 2020 (i.e., the effective date of reverse-charge implementation).
A supply of imported services would be considered as “straddling 1 January 2020” and hence subject to certain transitional rules when at least one of these events take place wholly or partially on/after 1 January 2020: (a) issuance of invoice, (b) performance of services or (c) settle ment of payment. For example, the supplier’s invoice is issued, and the services are performed before 1 January 2020, but the payment for that service is made on/after 1 January 2020.
With the extension of the overseas vendor registration regime on 1 January 2023, special transi tional rules will apply for supplies of non-digital services made by overseas vendors that straddle 1 January 2023.
•
A supply of low-value goods and discrete supply of non-digital services will be treated as strad dling the implementation date and subject to the transitional rules when: (a) the supplier’s invoice is issued on or after 16 February 2021 but before 1 January 2023, or (b) the goods are removed or made available to the customer/performance of services occurs and payment is received on or after 1 January 2023. Such a supply is subject to GST to the extent of the lower of the value of payment received or the value of the goods removed or made available to the customer/the value of the services performed on or after 1 January 2023.
• A continuous supply of non-digital services will be treated as straddling the implementation date and subject to the transitional rules when: (a) the supplier’s invoice is issued or payment is received before 1 January 2023, (b) the services (or part of the services) are performed on or after 1 January 2023 and (c) the services are performed pursuant to an agreement made on or after 16 February 2021 but before 1 January 2023. The portion of the service performed from 1 January 2023 will be subject to GST.
Leased assets. Where the leased assets are transacted under a “hire purchase agreement,” subject to prescribed conditions, the time of supply for the full value of the goods will be triggered at the time the invoice is issued for the first installment under the “hire purchase agreement.” For other supplies of leased assets, no special time of supply rule applies. As such, the general time of sup ply rules outlined above apply.
Imported goods. The time of supply for imported goods is either the date of importation or the date on which the goods leave a duty suspension regime or free-trade zone.
F. Recovery of GST by taxable persons
A taxable person may recover the GST incurred on its expenses as input tax if the input tax is incurred in the making of taxable supplies or certain prescribed supplies. Input tax refers to GST incurred on goods and services supplied to the taxable person or goods imported into Singapore by the taxable person that are used or to be used for the purpose of any business carried on or to be carried on by the taxable person. A taxable person generally recovers input tax through its GST returns, by deducting it from output tax, which is GST charged on supplies made.
A valid tax invoice or import permit must be held to support a claim for input tax.
A taxable person is required to repay to the IRAS any input tax claimed for which payment has not been made to the supplier for more than 12 months from the due date of the payment.
The time limit for a taxable person to reclaim input tax in Singapore is the accounting period of the date on the invoice. A taxable person can only claim input tax in the accounting period cor responding to the date shown in the tax invoice or import permit. Alternatively, input tax may be claimed based on the date that the tax invoice or import permit is posted/processed in the accounting system (subject to conditions).
Nondeductible input tax. Input tax may not be recovered on purchases of goods and services that are not used for business purposes (for example, goods acquired for private use by a taxable person and fringe benefits provided that these are not for the purpose of business). In addition, input tax may not be recovered for some items of business expenditure. The following lists pro vide some examples of items of expenditure for which input tax is not deductible and examples of items for which input tax is deductible if the expenditure is related to a taxable business use.
Examples of items for which input tax is nondeductible
• Purchases used for nonbusiness purposes
• Purchase, lease, hire, maintenance and running costs of private motor cars
• Medical and insurance expenses for employees
• Recreational club subscriptions
Examples of items for which input tax is deductible (if related to a taxable business use)
• Advertising
• Purchase of inventory
• Purchase, lease, hire and maintenance of trucks and vans
• Business entertainment
• Attendance at conferences
Partial exemption. Input tax directly related to making exempt supplies is generally not recover able. If a taxable person makes both exempt and taxable supplies, the person may not recover input tax in full. This situation is referred to as “partial exemption.” Zero-rated supplies are treated as taxable supplies for these purposes.
Unless otherwise approved by the Comptroller, partial exemption recovery is calculated in the following two stages:
• The first stage identifies the input tax that may be directly attributable to taxable and to exempt supplies. Input tax directly attributable to taxable supplies is deductible (unless specifically not deductible under the GST Act), while input tax directly related to making exempt supplies is generally not deductible (subject to exceptions).
• The second stage identifies the amount of the remaining input tax (for example, input tax on general business overhead) that may be allocated to taxable supplies and recovered. The calcu lation may be performed using the ratio of the value of taxable supplies over the value of total supplies (that is, taxable and exempt supplies), or it may be based on a special calculation agreed with the Comptroller.
Notwithstanding the above provisions, if the value of a taxable person’s exempt supplies for an accounting period does not exceed both the average of SGD40,000 per month and does not exceed 5% of the total value of taxable and exempt supplies made in that accounting period, the input tax relating to the exempt supplies is treated as entirely attributable to taxable supplies. The GST Act provides relief for certain businesses to be treated as fully taxable if they make only certain types of exempt supplies.
Approval from the tax authorities is not required to use the partial exemption standard method in Singapore. Special methods are allowed in Singapore, but approval for them is required (see above).
Capital goods. Capital goods in Singapore are defined as items of capital expenditure that are used in a business over several years. There are no special input tax recovery rules for capital goods. The normal input tax rules for GST apply (as outlined above).
Refunds. If the amount of input tax recoverable in a GST period exceeds the output tax in the same period, the excess is refundable. Refunds are generally made within three months after the date on which the GST authorities receives the GST return. If a taxable person submits monthly returns, the refund is generally made within one month from the date of receipt of the GST returns. Mandatory electronic tax refunds for GST taxable persons will take effect from 3 January 2022.
Interest at the prime lending rate is payable on the amount of any GST refund that is outstanding. Interest is calculated from the date on which the refund is due from the GST authorities.
Pre-registration costs. Subject to certain conditions prescribed under the GST (General) Regulations, businesses may claim the GST incurred on business expenses incurred prior to their effective date of GST registration in their first GST return. Businesses are required to self-review their eligibility for the claims.
Bad debts. A taxable person can apply for bad debt relief from the Comptroller for the return of the output tax previously accounted for and paid if the taxable person satisfies the following conditions:
• Whole or any part of the consideration for the supply as a bad debt in its accounts have been written off
• A period of 12 months beginning with the date of supply has elapse or the debtor has become insolvent before the period of 12 months has elapsed
• Reasonable steps have been taken to recover the debts
• Value of the supply is equal to or less than its open market value
• In the case of goods, the ownership must have been transferred to the debtor
Noneconomic activities. Input tax incurred on purchases that are used for noneconomic activities is not recoverable in Singapore.
G. Recovery of GST by non-established businesses
Input tax incurred by non-established businesses in Singapore is not recoverable.
H. Invoicing
GST invoices. A taxable person must issue a GST invoice for standard-rated supplies made to another taxable person within 30 days from the time of supply.
A GST invoice is necessary to support a claim for input tax credit.
Credit notes. A credit note may be used to reduce the GST charged and reclaimed on a supply of goods or services if a valid adjustment has been made. The document must contain generally the same information as a tax invoice, as well as the amount of tax credited, and it must refer to the date and number of the original tax invoice for the supply. If the date and number of the original tax invoice for the supply cannot be traced or identified, the taxable person must be able to satisfy the Comptroller by other means that the person has accounted for tax on the original supply.
Electronic invoicing. Electronic invoicing is allowed in Singapore, but not mandatory. Taxable persons that wish to issue invoices electronically, need not apply to the Comptroller for approval to do so. If a taxable person decides to issue electronic invoices, the person is required to comply with the following:
• Establish internal controls to ensure that electronic tax invoices issued and transmitted to customers are complete and accurate
• Ensure that the electronic tax invoices issued and transmitted to customers contain all the details required under the GST legislation, where applicable
• Establish internal controls to ensure that electronic tax invoices cannot be manipulated before and during transmission
• Establish internal controls to ensure that all output tax relating to these electronic transmissions will be fully accounted to the Comptroller in the GST returns
• Do not issue tax invoices in paper form to customers that the taxable person has already issued electronic tax invoices; in the event that the taxable person needs to issue tax invoices in paper form, it must take the necessary measures to prevent double claiming of input tax by its customers (e.g., invalidate either the paper form or electronic form of the tax invoices issued)
• Print and keep a hard copy of the electronic tax invoices issued if the business does not store the tax invoices in electronic media
Simplified GST invoices. A simplified GST invoice may be issued if the amount payable (including GST) does not exceed SGD1,000.
Self-billing. Self-billing is a billing arrangement between a GST-registered supplier and a GSTregistered customer (B2B), where the customer, instead of the supplier, prepares the supplier’s tax invoice/customer accounting tax invoice and sends a copy to the supplier. The customer can adopt self-billing if it satisfies all the conditions as follows:
• It is more convenient for the customer to self-bill because the customer will determine and verify the final value of the goods and services purchased from the suppliers; or self-billing facilitates the customer’s internal controls and accounting system given that the supplier will be working with uniform purchase documentation.
• There is a written agreement with each supplier that the supplier will not issue tax invoices and/ or customer accounting tax invoices for goods and services purchased by the customer.
• Instead, the supplier will authorize the customer to issue the tax invoices and/or customer accounting tax invoices on its behalf.
• Each supplier agrees in writing that he will notify the customer immediately if the supplier’s GST registration is canceled or issued with a new GST registration number.
• The customer will provide the suppliers with the tax invoices and/or customer accounting tax invoices issued under self-billing and the customer will retain copies of them. The customer will keep the tax invoices/customer accounting tax invoices issued under self-billing for a period of not less than five years.
• The customer must keep and maintain an up-to-date list showing the names, addresses and registration numbers of all the suppliers covered by the self-billing arrangement.
• Each tax invoice or customer accounting tax invoice issued under self-billing must contain all the details required on a normal tax invoice and customer accounting tax invoice respectively as well as the following details:
“Buyer created tax invoice – Approved by the Comptroller of GST” in place of the words of “Tax invoice”
The statement “The tax shown is your output tax due to the Comptroller of GST”
Proof of exports. Exports of goods are zero-rated for GST purposes if they are supported by evidence confirming the departure of the goods from Singapore within 60 days from the time of supply (subject to exceptions). The evidence required includes the following documents:
• Export permit
• Bill of lading or airway bill
• Original invoice
Export documents prescribed by the Comptroller for supporting the zero-rating GST treatment vary according to the export scenario.
Foreign currency invoices. If a tax invoice is issued in a foreign currency, the total amount payable before GST, the GST chargeable and the total amount payable including GST must be converted to the domestic currency, which is the Singapore dollar (SGD). The foreign currency must be converted to the SGD equivalent based on the selling rate of exchange prevailing at the time of supply. The Comptroller allows taxable persons to adopt their own in-house exchange rates if the rates satisfy the following conditions:
• They are reflective of the Singapore money market at the relevant date. For example, exchange rates obtained from local banks, Singapore Customs, locally circulated newspapers, reputable news agencies and foreign central banks without exchange controls are acceptable to the IRAS.
• They are the daily buying rates, average of the buying and selling rates, or a good approxima tion of the daily exchange rates, corresponding to the time of supply.
• They are updated at least once every three months.
• They are consistently used for internal business reporting, accounting and GST purposes.
• They are used consistently for at least one year from the end of the accounting period in which the method was first used.
If the exchange rates used by taxable persons do not comply with these conditions, it is necessary for the taxable persons involved to seek the Comptroller’s approval of the use of an acceptable exchange rate.
Supplies to nontaxable persons. GST invoices are not required to be issued to non-taxable cus tomers (i.e., private individuals). However, a simplified GST invoice or a receipt must be issued if requested by the customer.
Records. The taxable person must maintain records relating to its income and business expenses such as tax invoices, agreements, credit notes and import/export documents. As records can be kept electronically, the physical location of such records is not relevant.
Record retention period. Taxable persons are required to maintain records for five years.
Electronic archiving. Records can be kept electronically using a computer and/or accounting software. Physical copies of source documents need not be kept substantiating the business trans actions for tax purposes if the source documents are kept electronically. Taxable persons should
ensure that proper internal controls are put in place to ensure the integrity, completeness, accu racy, availability and reliability of the electronic records, including all transactions executed electronically, where applicable.
I. Returns and payment
Periodic returns. Taxable persons generally file GST returns quarterly. However, taxable persons that receive regular refunds of GST may seek approval to file their returns monthly, to ease cash flow. The GST return is generally due one month following the end of the return period.
Periodic payments. The GST payment in full is generally due the same date as the GST return fil ing deadline, i.e., one month following the end of the return period.
The majority of taxable persons use the General Interbank Recurring Order (GIRO) for tax pay ment. Other electronic payment modes, such as internet banking, phone banking, PayNow QR, DBS PayLah! are also available.
Electronic filing. Electronic filing is mandatory in Singapore for taxable persons. All taxable persons must file GST returns (and GST amended returns) electronically (i.e., it is mandatory). Submissions must be made via myTax.iras.gov.sg. Taxable persons are not required to submit any other documents when the GST return is filed. Under exceptional circumstances (e.g., business is under liquidation), a taxable person may file paper GST return.
Payments on account. Payments on account are not required in Singapore.
Special schemes. Major exporter scheme (MES). The MES is designed to ease the cash flow of businesses that import and export goods substantially. Businesses granted the MES can import non-dutiable goods with GST suspended and also enjoy GST suspension on goods removed from a Zero GST warehouse.
Approved contract manufacturer and trader (ACMT) scheme. Contract manufacturers and traders under this scheme are relieved of the need to account for GST on value-added activities supplied to non-GST-registered overseas customers or overseas persons who are registered under the Overseas Vendor Registration (OVR) regime as a pay-only person. The scheme is currently available to contract manufacturers within the semiconductor industry, printing industry and bio medical industry (active pharmaceutical ingredients manufacturing).
Approved marine fuel trader (AMFT) scheme. This scheme is designed to benefit qualifying bus nesses in the bunkering industry that make local purchases of approved marine fuel oil. Under AMFT, qualifying GST-registered businesses need not pay GST on local purchases of approved marine fuel oil from any GST-registered suppliers. This eases the cash flow difficulties of the approved businesses by eliminating the need to pay GST up front and to subsequently claim it back by obtaining a refund from IRAS.
Approved marine customer scheme (AMCS). The scheme is designed to ease compliance for ship owners and ship managers procuring goods for use or installation on internationally bound commercial ships. Under AMCS, qualifying GST-registered businesses enjoy zero-rating on purchases or rental of goods and repair or maintenance services on ship parts or components under qualifying conditions.
Approved third-party logistics (3PL) company scheme. This scheme is designed to increase the competitiveness of logistics companies that provide logistics management services to overseas clients who use Singapore as a logistics hub. Under this scheme, approved logistics companies that provide logistics management services to overseas clients do not need to pay import GST or charge GST on the supplies of their overseas clients’ goods under certain circumstances.
Specialized warehouse scheme (SWS). Under this scheme, qualifying services performed on qualifying goods in approved specialized warehouses and the lease/tenancy/license of storage space in these warehouses can be zero-rated to overseas persons. Operators of zero-GST or licensed warehouses predominantly used for storing qualifying goods may apply for the scheme.
Import GST deferment scheme (IGDS). IGDS allows an approved business to defer the payment of import GST until the submission of the monthly GST return for the prescribed accounting period, instead of at the point of importation. This scheme is not applicable to customs or excise duties, which remain payable up front at the point of importation. Among other requirements, taxable persons must be on a monthly filing frequency and have good compliance records with IRAS and the Singapore Customs to qualify for IGDS.
Cash accounting scheme. Small businesses with an annual taxable turnover (excluding GST) of less than SGD1 million may apply for the cash accounting scheme that allows GST to be accounted for upon receipt of payment from the customers. Similarly, the business will claim the GST on its purchases only upon payment to the suppliers. Once approved, the business is on the scheme for three years. The business also remains on the scheme for the three years even if its taxable supplies exceed SGD1 million per annum during the three years.
Annual returns. Annual returns are not required in Singapore.
Supplementary filings. No supplementary filings are required in Singapore.
Correcting errors in previous returns. Errors made in submitted returns can be corrected by filing GST F7 (return for disclosing errors on GST returns filed previously) electronically via myTax Portal. This GST F7 supersedes the return submitted previously for the same accounting period.
Digital tax administration. There are no transactional reporting requirements in Singapore.
J. Penalties
Penalties for late registration. For late registration or failure to register, taxable persons may be subject to a fine of up to SGD10,000 and a penalty of 10% of the tax due. Penalties may be waived for taxable persons that come forward to register for GST in a timely manner.
Penalties for late payment and filings. A penalty of 5% of the tax due is assessed for late payment of GST. If the amount remains outstanding after 60 days, an additional penalty is assessed, equal to 2% of the tax due for each month, up to a maximum of 50% of the unpaid tax.
A penalty of SGD200 after the submission due date and an additional SGD200 for each com pleted month are assessed for the late submission of a GST return, up to a maximum penalty of SGD10,000.
Penalties for errors. A penalty equal to double the amount of tax that has been undercharged in consequence of such incorrect return or information, or that would have been so undercharged if the return and information had been accepted as correct; and be liable to a fine not exceeding SGD5,000 or to imprisonment for a term not exceeding three years or to both.
For the failure to notify or late notification of a change in a taxable person’s GST registration details, there are no direct penalties that apply. However, this depends on case-by-case basis. For example, for a change in mailing address, the failure to notify the IRAS in a timely manner may in turn cause the taxable person to miss out on correspondences issued by the IRAS. For exam ple, for a change in financial year-end, the late notification would lead to a mismatch between the taxable person’s FYE and GST filing cycle and, as such, a penalty for late notification (as outlined above) may apply.
Penalties for fraud. A penalty of three times the amount of tax that has or would have been under charged in consequence of the offense or that would have been undercharged if the offense had not been detected, and be liable to a fine not exceeding SGD10,000 or to imprisonment for a term not exceeding seven years or both.
Surcharge for tax avoidance arrangements. A surcharge equal to 50% of the amount of additional GST will be imposed by the Comptroller as a result of the adjustments made to counteract a tax avoidance arrangement. It will apply to adjustments made for GST accounting periods starting on or after 1 January 2021.
Personal liability for company officers. A company officer can be held personally liable for errors and omissions in GST declarations and reporting, if the negligence would, under the Companies Act, result in liabilities for the company’s obligations to be imposed on the directors. For exam ple, there may be circumstances when the company officers are held liable for debts incurred by the company, such as where debts are incurred without any reasonable or probable expectation that the company would be able to pay or where debts are incurred when businesses are carried on with the intent to defraud creditors.
Statute of limitations. The statute of limitations in Singapore is five years. Under the Singapore GST legislation, the IRAS is empowered to raise assessments within five years from the end of the prescribed accounting period. Where there is a fraud or willful default, there is no time limit for the IRAS to raise additional assessments.