Goods and Services Tax (GST) in Singapore: A Comprehensive Guide

Introduction

Goods and Services Tax (GST) is a consumption tax imposed on the supply of goods and services in Singapore and the import of goods into the country. It is similar to Value-Added Tax (VAT) in many other countries. GST was introduced in Singapore on 1 April 1994 to reduce reliance on direct taxation, such as corporate and personal income tax, and to provide a stable revenue source for government expenditure.

As of 1 January 2024, Singapore’s GST rate is 9%, following an increase from 8% in 2023. The GST system is administered by the Inland Revenue Authority of Singapore (IRAS).

1. What is GST?

GST is a broad-based tax levied on the consumption of goods and services in Singapore, including:

• Locally supplied goods and services (by GST-registered businesses)
• Imported goods
• Imported digital services and low-value goods (under the Overseas Vendor Registration (OVR) regime)

GST is a tax on the end consumer, meaning businesses collect GST on behalf of the government and remit it to IRAS.

2. GST Rates in Singapore

Singapore’s government has progressively increased GST to ensure long-term fiscal sustainability while maintaining a low personal and corporate tax regime.

3. Who Needs to Register for GST?

Businesses must register for GST with IRAS if:

1. Their taxable turnover exceeds S$1 million in the past 12 months (compulsory registration).
2. They expect taxable turnover to exceed S$1 million in the next 12 months (compulsory registration).
3. They voluntarily choose to register for GST even if they do not meet the threshold.

Some businesses, such as those that provide exempt supplies (e.g., financial services, residential property rental), may not need to register.

4. GST-Registered Businesses

Once registered, businesses must:

• Charge GST on sales of goods and services (output tax).
• Claim GST incurred on business expenses (input tax).
• File GST returns quarterly and pay the net GST due to IRAS.
• Maintain proper records and issue tax invoices.

5. GST Filing and Payment

GST-registered businesses must submit GST returns to IRAS every quarter via the myTax Portal. The due date for filing is one month after the end of the accounting period.

• Formula for GST Payable to IRAS:

  $$\text{GST Payable}=\text{Output Tax}-\text{Input Tax}$$

• If Output Tax > Input Tax, the business pays GST to IRAS.

• If Input Tax > Output Tax, the business can claim a refund.

Late submission or payment of GST attracts penalties.

6. GST-Exempt and Zero-Rated Supplies

There are three categories of supplies under GST:

1. Standard-rated supplies (9%) – Most goods and services in Singapore.
2. Zero-rated supplies (0%) – Mainly exports of goods and international services.
3. Exempt supplies – Certain financial services, residential property sales, and lease, and the supply of digital payment tokens.

Zero-rated supplies allow businesses to claim input tax, while exempt supplies do not.

7. Overseas Vendor Registration (OVR) for GST

Since 1 January 2020, Singapore implemented GST on:

• Imported digital services (e.g., streaming platforms, cloud services)
• Imported low-value goods (since 1 January 2023)

Overseas businesses that meet the S$100,000 threshold must register for GST and collect it from Singapore customers.

8. GST for Specific Industries

Retail & E-Commerce

Retailers must charge GST on sales if they are registered. For e-commerce businesses, platforms such as Shopee, Lazada, and Amazon may be required to charge GST on behalf of overseas sellers.

Finance & Real Estate

Financial services (e.g., interest payments, forex transactions) and sales of residential properties are GST-exempt, meaning businesses in this sector cannot claim input tax.

Food & Beverage (F&B)

Restaurants and cafes must charge GST on food sales. However, hawker stalls and small F&B businesses below S$1 million in turnover are typically not GST-registered.

9. GST Tourist Refund Scheme (TRS)

Tourists can claim GST refunds for purchases made in Singapore if:

• They spend at least S$100 in a single receipt at a participating retailer.
• They depart from Changi Airport or Seletar Airport (not land checkpoints).
• They use the eTRS (Electronic Tourist Refund Scheme) self-help kiosks before departure.

10. GST Compliance and Penalties

Failure to comply with GST regulations can result in severe penalties, including:

• Failure to register – Fine up to S$10,000 and 10% of unpaid GST.
• Late submission/payment – 5% penalty on overdue tax and additional 2% per month.
• Incorrect GST filing – Up to 200% penalty of under-declared tax.

11. GST Voucher Scheme

The GST Voucher Scheme helps low-income Singaporeans offset the impact of GST. It consists of:

• Cash payouts
• MediSave top-ups
• U-Save rebates (for utilities)

The scheme ensures that GST remains progressive and does not overly burden lower-income groups.

12. GST’s Role in Singapore’s Economy

GST provides a stable revenue base for government spending on healthcare, infrastructure, and social programs. While the increase to 9% may raise costs, Singapore’s low corporate tax rate (17%) and personal income tax rates ensure an overall competitive tax environment.

Conclusion

GST is a crucial part of Singapore’s tax system, contributing to national revenue while keeping corporate and personal tax rates competitive. Businesses must comply with GST regulations to avoid penalties and ensure proper tax filing. With the rise of digital and cross-border transactions, GST is evolving, making compliance even more critical for businesses operating in Singapore.