Should Companies Voluntarily Register For GST?

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May 03, 2023

Should Companies Voluntarily Registered For GST?

What Does Goods and Service Tax (GST) Do For Your Business?

GST is essential for small businesses in Singapore. GST registration is a must for any business that has an annual turnover of more than S$1 million.

The Goods and Service Tax (GST) is a tax system that was introduced in Singapore to simplify the taxation process for businesses. It helps businesses save time and money by streamlining their taxation processes, allowing them to focus on their core operations.

GST also makes it easier for businesses to understand their tax obligations and allows them to plan ahead with confidence. Additionally, GST helps businesses create a level playing field by ensuring they pay the same amount of taxes regardless of where they operate in Singapore.

With GST, businesses can rest assured that they are paying the right amount of taxes while still having access to all the benefits that come with being a business in Singapore.

Why You Should Consider Voluntary Registration for GST?

Small businesses should be GST-registered in Singapore 2023 because it will help them to stay competitive and compliant with the law. GST registration allows businesses to claim input tax credits on their purchases, which can reduce their overall costs.

It also helps them to track their expenses and income more accurately, as well as simplifying the process of filing taxes. Furthermore, being registered for GST gives businesses credibility and makes them appear more professional to customers and suppliers alike. For your reference, check out how GST works on IRAS website.

Find out if you are responsible for GST registration under the Reverse Charge and Overseas Vendor Registration here.

Companies with taxable turnover exceeding $1 million-mark by the end of the year must register for GST before Jan 30th. Your GST registration will be effective from 1 March.

The 2019 GST Registration Calculator can help you determine if you need to register for GST.

If you expect your taxable income to be more than $1 million within the next year, you must register for GST within 30 days and become registered on the 31st day.

Evidence is needed to back up the projected value of $1 million. For instance:

Signed legal documents

Customer-approved quotes or verified purchase orders

Customers with a recurring monthly fee are invoiced.

The income statement for the last year was nearly $1 million, and the trend shows it is continuing to grow.

In contrast, if it is uncertain that your projected income will be met, registration for GST is not mandatory. For instance, when using market assessments, business plans or sales targets to make assumptions about future revenue.

Below are some of the conditions when you need to consider registration for GST voluntarily.

Condition 1	When You Have GST-Registered Suppliers And Customers
Condition 2*	When Customers Mostly Are From Overseas
Condition 3	When You Want To Build Your Business Credibility

* For example, a GST-registered supplier charges you 8% GST (change in GST rate starting this January 2023) and you sold the product to an overseas customer, you need not charge the customer GST. However, you can file on your GST return and get back as claims for the GST amount of 8% that you initially paid as input tax.

What Are Required For Voluntary GST Registration?

To register for GST voluntarily, a business must satisfy certain criteria. These criteria include:

The business must not make more than S$1 million per year, and its products are subject to taxation. The supplies made by the company are taxed.

The business specializes in out-of-scope supplies, which are goods that do not enter Singapore or are in transit.

The business offers tax-free global financial services.

GST-registered businesses importing services or low-value goods from overseas suppliers won't be eligible for the full input tax credit.

Unless you are managing other GST-registered businesses, signing up for GIRO payment or refund, or providing a security deposit, you must complete two e-learning courses - Registering for GST and Overview of GST - in order to register.

Pros and Cons

What Are The Underlying Benefits And Costs?

Being GST registered has two key advantages: getting back the tax paid on purchases to increase cash flow and not having to monitor your sales amount if they exceed the SGD1million limit, as you are then required to register for GST.

Voluntary GST registration can come at a cost. Before submitting an application, factors such as the following should be taken into account:

Businesses registered for GST have to file their returns on time and maintain proper records regarding their GST status.

GST-registered suppliers may be eligible to receive GST input tax refunds on the purchases they make.

Companies may be able to increase their sales prices if the customers are GST-registered, as the customers can utilize GST refunds.

Businesses who sell zero-rated items, such as those exported to other countries, will not be affected by registering for GST. However, they may still claim GST input tax credits on their purchases.

Here's How To Register For GST As A Small Business

Determine if you need to register for GST: The first step is to check if your business meets the eligibility criteria for GST registration in Singapore. If your annual taxable revenue exceeds S$1 million, or if you expect your annual taxable revenue to exceed S$1 million, then you are required to register for GST.

Gather the required information and documents: You will need to gather certain information and documents to complete the GST registration process. This includes your business registration number, business bank account details, and information about your business activities and turnover.

Register for GST online: Once you have determined that your business needs to be registered for GST and gathered all the required information and documents, you can proceed with the online registration process through the Inland Revenue Authority of Singapore (IRAS) website. You will need to create a CorpPass account to log in and access the GST registration portal. Companies that register voluntarily may need to do more, such as completing a GIRO application and two e-learning courses mentioned above.

Submit your application and wait for approval: After completing the online registration form, you will need to submit it through the GST registration portal. IRAS will review your application and if all the required information and documents are in order, they will approve your application and issue you a GST registration number within 10 working days.

It can take between two to four weeks for your bank to review the GIRO application form after submission. After it is accepted, you will be notified by your bank - not IRAS - and this could also take up to four weeks. If approved, you will receive a notification from your bank.

If your GST registration is approved, a letter containing your GST Registration number and the effective date of registration will be sent to you at the registered address. This letter can also be viewed on the myTax Portal.

Start charging and collecting GST: Once you have received your GST registration number, you are required to start charging and collecting GST on your taxable supplies.

Do not forget to watch a step-by-step video guide by IRAS for registering for GST on the myTax Portal.

Frequently Asked Questions

What does it mean to register for GST voluntarily in Singapore?

Voluntary GST registration implies that a company with an annual revenue less than SGD 1 million can choose to register for GST voluntarily. As a result, the company must charge GST on taxable deliveries and can claim GST back on business purchases.

Why would a company voluntarily register for GST in Singapore?

A business may voluntarily register for GST in Singapore for a variety of reasons, including the ability to claim GST back on business purchases, gaining a competitive advantage by appearing more established and credible, and expanding into the international market by being able to zero-rate exports.

What are the conditions for registering for GST voluntarily in Singapore?

To voluntarily register for GST in Singapore, a company must have a local business address, operate a taxable business, and be ineligible for the GST exemption. The company must also have an excellent track record of tax compliance with IRAS.

What are the implications of voluntarily registering for GST in Singapore?

A: By voluntarily registering for GST in Singapore, the business will be required to charge GST on its taxable supplies and submit regular GST returns to the tax authorities. The business must also maintain proper accounting and record-keeping practices to comply with GST regulations.

Can I still apply for voluntary GST registration if my company has not yet begun operations?