print friendly version
Text Size  A  A  A

For GST-registered businesses

GST is a broad-based consumption tax levied on the import of goods (collected by Singapore Customs), as well as nearly all supplies of goods and services in Singapore. The only exemptions are for the sale and lease of residential properties, the importation and local supply of investment precious metals and the provision of most financial services. Export of goods and international services are zero-rated. In some countries, GST is known as the Value Added Tax (VAT).

  Taxable Supplies Non-Taxable Supplies
 

Standard-Rated Supplies

(7% GST)

Zero-Rated Supplies

(0% GST)

Exempt Supplies

(GST is not applicable)

Out-Of-Scope Supplies

(GST is not applicable)

Goods

Most local sales would fall under this category.

E.g. sale of TV set in a Singapore retail shop

Export of goods

E.g. sale of laptop to overseas customer. The laptop is shipped to an overseas address by the supplier 

Sale and rental of unfurnished residential property 

Importation and local supply of investment precious metals
  • Sale where goods are delivered from overseas to another place overseas 
  • Private transactions 

Services

Most local provision of services would fall under this category.

E.g. provision of spa services to customer in Singapore

Services that are classified as international services

E.g. air ticket from Singapore to Thailand (international transportation service) 

Financial services

E.g. issue of a debt security


It is compulsory for businesses to come forward to register for GST when their taxable turnover exceeds $1mil per year. Businesses that do not exceed $1mil in taxable turnover may register for GST voluntarily.

After registration, businesses must charge GST at the prevailing rate. This GST that they charge and collect is known as output tax, which has to be paid to IRAS. GST incurred on business purchases and expenses (including import of goods) are known as input tax. Businesses can claim input tax if conditions for claiming are satisfied. This credit mechanism ensures that only the value added is taxed at each stage of a supply chain. 

Example:

A GST-registered manufacturer imports leather from overseas and uses them to manufacture a bag. The manufacturer sells the bag to a GST-registered retailer. Thereafter, the retailer sells the bag to an end-consumer.

1. Manufacturer
  • Pays GST to Singapore Customs for imports

    Import value = $100
    Import GST paid = 7% X $100=$7 (input tax to claim from IRAS)
  • Charges and collects GST for sale of toys to retailer

    Selling price to retailer = $200
    GST charged to retailer = 7% X $200 = $14 (output tax to pay IRAS)
2. Retailer
  • Pays GST to Manufacturer

    Purchase value = $200
    GST paid = 7% X $200=$14 (input tax to claim from IRAS)
  • Charges and collects GST for sale of toys to end consumer

    Selling price to end consumer = $300
    GST charged to end consumer = 7% X $300 = $21 (output tax to pay IRAS)
3. End-consumer
  • Pays GST to Retailer

    Purchase value = $300
    GST paid = 7% X $300=$21

End consumer is not GST-registered. Therefore, he cannot claim GST paid on his purchase from IRAS.

 

How does a business pay output tax and receive input tax credits?

A GST-registered business is required to submit GST return to IRAS at the end of each prescribed accounting period (usually on a quarterly basis). The business will report its output tax and input tax for that prescribed accounting period in the GST return. The difference between output tax and input tax is the net GST payable to or refundable from IRAS.

Example:

Output tax to be paid = $30

Input tax to be claimed = $10 (i.e. input tax less than output tax)

Net GST payable to IRAS = $20

Example:

Output tax to be paid = $10

Input tax to be claimed = $30 (i.e. input tax more than output tax)

Net GST refundable from IRAS = $20


FAQs

GST was introduced to enable Singapore to shift its reliance from direct taxes to indirect taxes. GST has also enabled Singapore to sustain a lower income tax rate. Being a tax on consumption, and not income, GST inherently encourages savings and investments.


No, if you are not a GST-registered business, you cannot claim the GST incurred on your purchases.


Last Updated on 6 February 2014


© 2014 Inland Revenue Authority of Singapore. All Rights Reserved.