All Goods and Services Tax (GST) Questions Answered

All Goods and Services Tax (GST) Questions Answered
by acefinancial

Goods and Services Tax is a combination of several indirect taxes levied on goods, products, and services. It is imposed on the import of goods along with almost all supplies of products and services in Singapore.

In other countries, Goods and Services Tax is referred to as the Value-Added Tax (VAT). It is applied to all supplies of goods and services; however, there are some exemptions, which include the lease and sale of residential properties, provision of financial services as well as the local supply and importation or investment precious metals. Exported goods and international services are not subject to GST.

Where does the money go?

Tax money goes to many different places. Other than taking care of all government workers salaries, it also helps to support common resources like the fire-fighters and police. The money is also instrumental in ensuring that you travel on well maintained, for your safety, along with funding public parks and libraries.

Why is GST important?

Given the importance of taxes, the government of Singapore has made it a requirement for every business owner to pay GST if their turnover exceeds the $1 million mark – or if it is likely to surpass it. Tax compliance is essential, because one, it is the only way that your business can ensure compliance with the regulation of the government, and two, it helps you save the costly penalties associated with it.

What are the penalties for not paying?

You attract a late fee penalty when you don’t file your taxes on time. Late submission penalty of $200 will be applied with immediate effect if you don’t submit your GST returns on time. Often, these penalties won’t be waved, unless you prove beyond reasonable doubt that an exceptional circumstance occurred.

If you fail to file at all, then you won’t be able to file subsequent returns, meaning your return will have a cascading effect, which will result in hefty fines and penalty.

If you are committing the offense with a deliberate intent of fraud, you become subject to prosecution under the Goods and Services Tax, that is, face criminal charges. Some examples of the offenses might include, but not limited to:

  1. Issuing invoice without supplying any services or goods – thereby taking refund or input credit by fraud
  2. Getting a refund of any SGST/CGST (State and Central GST) by fraud
  3. Submitting fake returns or financial documents/records or files to evade tax
  4. Assisting another person to engage in fraud under GST

Charging and collecting GST

After your GST registration Singapore, you are to charge GST on your supplies at the current rate – this GST is referred to as the output tax and is paid to IRAS. The GST that your business spends on expenses and purchases is referred to as the input tax – if your company meets the input tax claiming conditions, you can apply the input tax on your expenses and purchases.

Where do I start?

GST registration Singapore can be an easy and hard process depending on how knowledgeable and experienced you are. If you are just getting started, or wouldn’t want to muddle, only to end up doing it wrong, your best bet would be to work with a professional company.

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