Goods and Services Tax (GST) What it is and how it works

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What is Goods and Services Tax (GST)?

Goods and Services Tax (GST) is a broad-based consumption tax charged on:

The supply of goods and services in Singapore; and
The import of goods into Singapore.

GST is borne by the final consumer. GST-registered businesses act as collection agents by charging GST on their sales and accounting for it to IRAS.

Why does Singapore have GST?

GST was introduced to enable Singapore to shift its reliance from direct taxes to indirect taxes. As a tax on consumption rather than income, GST:

Helps Singapore sustain lower income tax rates; and
Encourage savings and investments.

How GST works

GST operates on a value added basis at each stage of the supply chain.

In general:

GST is charged by a GST registered business on its taxable supplies. This is its output tax.
The business pays GST charged on goods and services purchased for its business purposes from other GST registered business. This is its input tax.
The difference between its output tax collected and its input tax paid is its net GST, which will either be payable to IRAS or refundable by IRAS.

This mechanism ensures that GST is effectively levied only on the value added at each stage, and not repeatedly on the full selling price.

A manufacturer imports leather for $100 and pays $9 GST to Singapore Customs. They make bags and sell them to a retailer for $200 plus $18 GST. The retailer sells the bags to customers for $300 plus $27 GST.

What each business pays to IRAS, which is its net GST:

Manufacturer: $9 (collected $18, paid $9)
Retailer: $9 (collected $27, paid $18)
Total GST to government: $18 on $200 value-add

This ensures GST is only paid once on the final value, not repeatedly on the same goods.

Who can charge and claim GST?

Only GST-registered businesses can charge and claim GST from their effective date of GST registration. Non-GST registered businesses are not allowed to charge or claim GST.

Charging GST (output tax)
You can charge and collect GST on all taxable sales, based on the prevailing rate. The current GST rate is 9%.You must pay the collected GST to IRAS within a month from end of the accounting period.

Claiming GST (input tax)
Subject to fulfilling the conditions to claim, you may claim back GST paid on business purchases (including imports) and expenses.

You cannot charge GST to customers. If you have wrongfully charged or collected GST, you must remit the GST wrongly collected to IRAS.

Similarly, you are not allowed to claim back GST on purchases. The GST you have paid would therefore be part of your business costs.

Types of taxable supplies and their GST rates

GST is only chargeable on taxable supplies, of which there are 2 types:

Standard-rated supplies that are charged at the prevailing rate of GST (i.e. 9%); and
Zero-rated supplies that are charged at the rate of 0%

Type	Standard-rated supplies (9% GST)	Zero-rated supplies (0% GST)
Goods	Most local sales fall under this category. E.g. sale of TV set in a Singapore retail shop Sale of imported low-value goods (from 1 Jan 2023) E.g. Sale of tennis racquet by overseas online merchant to customer in Singapore at $330, excluding freight and insurance	Export of goods E.g. sale of laptop to an overseas customer, where the laptop is shipped to an overseas address
Services	Most local provision of services fall under this category. E.g. provision of spa services to a customer in Singapore Imported Services E.g. Procurement of marketing services from overseas service provider	Services that are classified as international services E.g. air ticket from Singapore to Thailand (international transportation service)

Types of supplies that do not need to charge GST

GST is not chargeable on 2 types of supplies

Exempt supplies: These are supplies specifically exempted from GST, under the GST Act
Out-of-scope supplies: These are supplies that fall outside the scope of the GST Act

Type	Exempt supplies (GST is not applicable)	Out-of-scope supplies (0% GST)
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 For more information, refer to Out-of-scope supplies .
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	Private transactions. For more information, refer to Out-of-scope supplies .

Who must register for GST

As a business, you must register for GST when your taxable turnover exceeds $1 million.

You may also be required to register under special rules, such as:

Reverse charge (when you buy services from overseas suppliers); and
Overseas vendor registration (when you supply services or low-value goods to Singapore customers from overseas)

For more information, please refer to local businesses importing services and importing or supplying low-value goods.

You may also choose to register voluntarily, after careful consideration, even if your taxable turnover does not exceed $1 million.

Filing GST returns and paying GST

Once GST-registered:

You must submit your GST return within one month from the end of each prescribed accounting period (usually quarterly);
You must report both your output tax and input tax; and
The net GST may be payable to IRAS or refundable by IRAS, depending on your return.

Please refer to our webpage for more information on responsibilities of GST-registered businesses.