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Goods and Services Tax (GST)

GST is a broad-based consumption tax levied on the import of goods, as well as nearly all supplies of goods and services in Singapore at the rate of 7%. The only exemptions are for the sales and leases of residential properties and most financial services. Export of goods and international services are zero-rated.

GST is a self-assessed tax. Businesses should register for GST when their turnover exceeds S$ one million per year and then must charge and account for GST at the prevailing rate which known as output tax. GST registered businesses can also claim the GST incurred on their goods and services purchased assuming certain conditions are met which is input tax.

Singapore Customs is responsible for collecting the import GST on import of god from overseas. The GST incurred on imports can also be claimed as input tax, if the goods are used for business. GST is designed such that the end consumer (be it an individual or a business) pays this tax.

The following examples illustrate the concepts of GST.

Example :

Business A imports raw materials from overseas and uses these materials to make a toy. Business A sells the completed toy to Business B, a local retailer. Thereafter, customer A buys the toy. What is the GST involved?

  Business A Business B End Consumer
Imports Raw Materials Pays GST for imports

Claims GST paid for imports from IRAS. (input tax)

NA NA
Sells to B

Charges GST for sale of toys. (output tax)

Reports and pays GST to IRAS

Pays GST to A when purchasing toys.

Claims GST paid to A from IRAS (input tax)

NA
Sells to End Consumer NA

Charges GST for sale of toys. (output tax)

Reports and pays GST to IRAS

Pays GST

The GST incurred for their onward sale of goods for Businesses A and B can be claimed from IRAS (subject to conditions being met). GST incurred for other purchases can also be claimed as input tax, if these purchases were made for the onward sale of goods. For instance, to make the toys, Business A may buy other goods and services locally like paint or packaging materials. Business A would also incur business costs like rental of factory space. Generally, these can be claimed as input tax from IRAS.

Example: (Toy Manufacturing)

Plastic Supplier charges $20 for his goods to the toy manufacturer. The GST is $1.40 (Toy Manufacturer will claim $1.40 from IRAS as input tax). Toy Manufacturer sells the toy to consumer at $30. The GST is $2.10. The consumer will pay the $2.10 GST.

Types of Supplies
For GST purposes, a supply can be a sale of goods or services. It is important to understand the following type of supplies.

  • Standard-Rated Supplies - this refers to most goods and services which are supplied in Singapore. GST is to be charged at the prevailing rate.
  • Zero-Rated Supplies - this refers to goods which are exported or international services.
  • Exempt Supplies - this refers to supplies where there is no GST levied. Consequently, the input tax incurred to make these supplies cannot be claimed.
  • Out-Of-Scope Supplies - this refers to supplies which are outside the scope of the GST Act. In general, they are:
  • Transfer of business as a going concern
    • Private transactions
    • Third country sales - refers to sale of goods from a place outside Singapore to another place outside Singapore
    • Sales made within Zero GST Warehouse

Examples of supplies at a Glance

  Standard-Rated Supplies Zero-Rated Supplies Exempt Supplies Out-Of-Scope Supplies
Goods Most local sales would fall under this category.


Goods that are exported. Sale and rental of unfurnished residential property. Goods which are sold but never enter Singapore.
Services

Most local provision of services would fall under this category.

Services that are classified as International Services.

Financial Services. Not applicable
 
 
 
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