GST is an abbreviation for Goods and Services Tax. This is almost Singapore’s equivalent to the Value-added Tax imposed in most countries around the world. The keyword in that sentence is “almost” since the Goods and Services Tax (GST) has differing features compared to the Value-added Tax (VAT) which is in force in most of the other countries. The Singapore government has given glittering commendations to the GST since it has pleased a lot of business owners and individuals in the country. GST registration in Singapore is either voluntary or involuntary and this is vastly different from tax regimes in other countries.
Despite the fact that your business may not fall under any tax regime in Singapore, it is quite advisable to register for GST. Here are a few reasons why:
1. Boosting Brand Name
The Singapore business market is extremely cutthroat with various businesses jostling to position themselves as industry leaders. A company that is registered for GST gives off the image of an established company and puts you right up there in the big leagues alongside other market giants in your niche.
When customers get wind of your company’s GST registered status, they create positive mental assumptions about your company’s size and probable revenue. This will instill confidence in a lot of people, which will in due time translate into sales and referrals.
2. Enable Tailor-made Policies for Business
When you register your business for GST, you contribute to a pool of financial information. This information can be effectively and accurately analyzed by the government in order to predict the expected growth in income tax revenue. This knowledge will inform the government’s policies which are likely to favor GST registered businesses.
3. Enables Lower Individual Income Tax rates
Singapore is so appealing to most people due to its favorable corporate and personal income tax framework. The government can keep track of the amount of corporate income taxes collected using the tax revenue growth report and is, therefore, able to maintain the personal income tax rates as modest as possible.
4. Encourages Savings and Investment
In Singapore, people are only taxed when they buy consumer goods and services. This translates to lower individual tax rates, and as if that is not enough, money put aside for savings and investments escape the taxman’s ax. Since people in Singapore pay GST every time they make a purchase, it is only fair practice to exempt their savings and investments from further taxation.
5. Reduces Cost of Doing Business
The favorable tax regime in Singapore has been lauded as one of the best in the world due to its efficiency. This tax regime does not only benefit foreign investors, it also lowers the cost of administration and collection for the government. GST registration in Singapore lowers the cost of doing business by passing down tax costs to the final consumer. This means that businesses are spared from paying any tax costs and this does wonders to a company’s bottom-line.