4 GST Details Every Singaporean Should Be Familiar With

4 GST Details Every Singaporean Should Be Familiar With
by acefinancial

The goods and services tax (GST) as it is known in Singapore is actually referred to as the value-added tax (VAT) in many other countries. For those who are not quite familiar, the goods and services tax is the extra 7% that you pay in taxes every time you make a purchase in Singapore. Since the tax affects every Singaporean citizen and is paid so often, you would think that most if not all of the country’s citizens have a clear understanding of what GST entails. Unfortunately, this is far from the case, since most Singaporeans know very little about the GST and GST registration Singapore process.

With this in mind, here are four important things that every citizen of Singapore should know about the GST:

GST is Only for Businesses with a Taxable Turnover of More than 1 Million

According to Singaporean tax directives, only businesses with taxable turnovers of 1 million and above are required to register for GST.

GST directives demand that these businesses collect the tax amounts payable and remit them to the government. Beware not to fall for tricksters and fraudulent traders who charge you an extra 7% on purchases despite not being GST registered. In fact, you may want to report them to the tax authorities so that disciplinary action can be taken.

There’s No Such Thing as a Double GST Tax Effect

The assumption out there is that products that go through several businesses that are registered with GST are taxed multiple times. This assumption comes into play when a raw material is being converted into a finished product. For instance, a GST-registered company sells product A to another similarly registered company, the company converts product A into product B and sells it to a third GST registered company, the third company turns it into product C and sells it to a final consumer.

Multiple-taxation does not occur since those companies can claim for Qualified GST expenses. This eliminates the need for passing the cost to the next business.

Businesses Must Make Quotations Inclusive of GST

Businesses are required to incorporate GST into their pricing since most people cannot do the math mentally. When advertising, businesses are supposed to include the cost of GST so that everything is clear to the potential customer. It is considered improper for a business to make a quotation for a customer, and then revise it later to include GST when the customer has already committed to the purchase. A lot of fraud can also occur when traders add the 7% GST to the price of an item after a verbal agreement has been made which did not include the 7% increase. Such traders are usually fraudsters, lying about their GST-registered status.

Exemptions Are Made on Some Industries

Industries such as the hospitality industry have some GST exemptions. It is difficult for a hotel or restaurant to display GST inclusive prices since they have service charge which makes it difficult for them to display those figures. They are however required to clearly show that their prices are GST inclusive. This is, however, a deviation from the normal practice in GST registration Singapore businesses are accustomed to.

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