Goods and Services Tax or 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. In other countries, GST is known as the Value-Added Tax or VAT.
GST exemptions apply to the provision of most financial services, the supply of digital payment tokens, the sale and lease of residential properties, and the importation and local supply of investment precious metals. Goods that are exported and international services are zero-rated.
The table below lists the categories and types of taxable and non-taxable supplies.
Standard-Rated Supplies
(GST is charged at 7%)
Zero-Rated Supplies
(GST is charged at 0%)
Exempt Supplies
(GST is not applicable)
Out-of-Scope Supplies
Most local sales fall under this category.
E.g. sale of TV set in a Singapore retail shop
Export of goods
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
See Out-of-scope supplies for more information.
E.g. provision of spa services to a customer in Singapore
Services that are classified as international services
Financial services
E.g. issue of a debt security
Digital payment tokens (from 1 Jan 2020)
E.g. exchange of Bitcoin for fiat currency
If your annual taxable supplies exceed $1million, it is compulsory for you to register for GST. Otherwise, you may choose to register for GST voluntarily after careful consideration.
Once you have registered for GST, you must charge GST on your supplies at the prevailing rate. This GST that is charged and collected is known as output tax. Output tax must be paid to IRAS.
The GST that you incur on business purchases and expenses (including import of goods) is known as input tax. If your business satisfies the conditions for claiming input tax, you can claim the input tax on your business purchases and expenses.
This input tax credit mechanism ensures that only the value added is taxed at each stage of a supply chain.
A GST-registered manufacturer imports leather from overseas for the manufacture of a bag. The manufacturer sells the bag to a GST-registered retailer. Thereafter, the retailer sells the bag to a consumer.
This is how GST works at each stage of the value chain:
Pays GST to Retailer Purchase value = $300 GST paid = 7% X $300=$21
As a GST-registered business:
GST was introduced in 1 Apr 1994 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.