Navigating the complex world of taxes is an integral part of running a successful business, and in Singapore, the Goods and Services Tax (GST) is a fundamental component of the tax landscape. GST-registered businesses play a pivotal role in the collection and remittance of this consumption tax. But what are the responsibilities of a GST-registered business, and why are they so crucial to the tax system? In this blog, we will delve into the core responsibilities that GST-registered businesses in Singapore must fulfil. Whether you are a seasoned business owner or just starting, understanding these responsibilities is vital for compliance, financial management, and the overall success of your enterprise.
Responsibilities of a GST-registered Business
1. Charge & Account for GST on Standard-Rated Supplies
As a GST-registered business in Singapore, you have the responsibility to charge and account for Goods and Services Tax (GST) on standard-rated supplies. Standard-rated supplies refer to goods and services made within Singapore, and the current GST rate is 8%. However, there are specific changes in the GST regime to note:
- As of January 1, 2020, GST is applicable to Business-to-Business (B2B) supplies of imported services under the Reverse Charge regime and Business-to-Consumer (B2C) supplies of imported digital services under the Overseas Vendor Registration regime.
- Starting from January 1, 2023, GST will be extended to imported low-value goods and B2C imported non-digital services.
It’s essential to understand these changes and correctly charge GST in accordance with the prevailing regulations. However, for relevant supplies that are subject to customer accounting (e.g., local sales of prescribed goods exceeding $10,000 in value), you should not charge GST to your GST-registered customer. Instead, your customer will account for the GST as their output tax.
2. File GST Returns & Pay Tax Due
Compliance with GST regulations requires that you file accurate GST returns and pay the tax due in a timely manner. Here are the key points to note:
- All GST returns must be submitted via mytax.iras.gov.sg within one month from the end of each accounting period. It’s crucial to check your filing due date on myTax Portal and file the return even if there are no transactions to report.
- Late filing or non-filing of GST returns is considered an offence and may result in penalties, including fines of up to $5,000 and the possibility of imprisonment for up to 6 months.
- Timely payment of tax due is also essential. Tax must be paid within one month from the end of each accounting period. If you are on a GIRO plan for GST payment, deductions will occur on the 15th day of the month after the payment due date.
- Non-payment or late payment of GST can lead to penalties. A 5% penalty is levied on the unpaid tax amount by the due date. Additional penalties may be imposed for unpaid tax remaining overdue for more than 60 days.
3. Keep Proper Business & Accounting Records
Maintaining proper business and accounting records is a fundamental requirement for GST-registered businesses. These records must be retained for at least five years, even if your business ceases operations or is deregistered from GST. Keeping accurate records is not only necessary for compliance but also for efficient business management and decision-making.
4. Display Prices with GST
When displaying prices, advertisements, publications, or quotations to the public for goods and services, it’s mandatory to include GST in the prices. If both GST-inclusive and GST-exclusive prices are presented, the GST-inclusive price should be displayed at least as prominently as the GST-exclusive price. Non-compliance with these requirements can result in fines of up to $5,000.
5. Issue Tax Invoices with GST Registration Number
For your standard-rated supplies, you are required to issue tax invoices or customer accounting tax invoices. If the total amount payable for your supply, including GST, does not exceed $1,000, you may issue a simplified tax invoice. Ensure that your GST Registration Number is included on all tax invoices, simplified tax invoices, and receipts.
6. Notify IRAS of Changes
In the event of any changes to your business circumstances, you are obligated to inform the Comptroller within 30 days. These changes encompass alterations in your GST mailing address, business constitution or ownership, changes in partner(s) or their particulars, and the establishment of new partnership businesses with the same composition of partners. Timely reporting of such changes is crucial for maintaining accurate records with the authorities.
7. Account for GST at the Time of De-Registration
When your GST registration is cancelled, you must account for GST on business assets held on the last day of registration if GST was previously claimed on these assets and the total market value of these assets exceeds $10,000. Such assets include inventories, fixed assets, non-residential properties, and goods imported under various GST schemes.
8. Obligations for Voluntary Registrants
If your registration for GST is voluntary, you must adhere to specific obligations, including using GIRO for payment and refund of GST, maintaining GST registration for at least two years, full compliance with the responsibilities of a GST-registered business, making taxable supplies within 2 years (if not initially making taxable supplies at the point of registration), and other conditions that may be imposed by IRAS. Special conditions apply for businesses registered under the overseas vendor registration pay-only regime.
9. Obligations for Compulsory Registrants
For businesses with compulsory GST registration, you must comply with any conditions imposed by IRAS to safeguard revenue. In cases where businesses pose a risk to revenue, IRAS may impose specific conditions on their GST registration. The Comptroller may cancel the compulsory GST registration if evidence suggests participation in or support of a Missing Trader Fraud arrangement.
In conclusion, the responsibilities of a GST-registered business in Singapore are not to be taken lightly. They serve as the cornerstone of a well-functioning tax system, ensuring that taxes are collected and remitted accurately and on time. These responsibilities are not only legal obligations but also opportunities for businesses to demonstrate their credibility, enhance their financial management, and contribute to the country’s economy.
Engaging a corporate service provider can be a strategic move to manage your GST responsibilities effectively. These professionals are well-versed in the intricacies of GST regulations and can offer expert guidance in ensuring compliance. They can assist in filing accurate GST returns, maintaining proper accounting records, and handling the complexities of the tax system. By partnering with a corporate service provider, businesses can streamline their GST-related tasks, reduce the risk of errors, and free up valuable time and resources to focus on their core operations.
In this ever-evolving business landscape, managing your GST responsibilities with the assistance of experts can lead to greater efficiency and peace of mind, allowing your business to flourish while staying in full compliance with Singapore’s tax laws.