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The Ultimate Guide To GST Accounting Entries In Singapore

GST Accounting Entries In Singapore

GST accounting entries in Singapore are relatively easy to deal with. In fact, most businesses can handle them without any help from accountants.

However, there are some cases where businesses need assistance from accountants in filing their GST accounting entries in Singapore to ensure that they have done everything correctly.

On April 1, 1994, Singapore implemented the Goods and Services Tax (GST). The GST Act is modeled after the VAT legislation in the United Kingdom and the GST legislation in New Zealand.

The Inland Revenue Authority of Singapore (IRAS) administers, assesses, collects, and enforces GST payments on behalf of the Singapore government.

The implementation of GST is viewed as a strategy to lower individual and company income tax rates while retaining the government’s revenue base. It is an indirect tax because it taxes spending. GST is now levied at a rate of 7%.

How do GST Accounting Entries in Singapore Affect a Business?

If your business is GST registered, you must take GST from your consumers for the products and services you provide and then settle the tax collected with the tax authorities.

For example, if you charged a customer in Singapore S$100 for your services, you must bill your customer S$107 (S$100 for your service plus 7% GST).

This invoiced GST amount collected from the customer on behalf of the tax administration must then be paid to the Singapore tax authority on a monthly/quarterly basis via GST tax filing.

Singapore-incorporated businesses are not automatically enrolled to levy GST. Companies that meet specific qualifications must apply to IRAS to become GST registered before they can charge and collect GST.

GST Registration for GST Accounting Entries in Singapore

GST is a self-evaluated tax, and businesses must constantly examine the requirement to register for GST when handling their own GST accounting entries in Singapore. GST registration is classified into two types: voluntary and compulsory registration.

A business is required to register for the Goods and Services Tax (GST) if its annual taxable revenue exceeded S$1 million at the year of the calendar year. This is known as the retrospective view.

It is also obligatory if you are presently making sales and may reasonably anticipate your business’s annual taxable revenue surpassing S$1 million during the following 12 months.

This is referred to as the prospective view. It includes any signed agreements or contracts for which the anticipated revenue over the next year exceeds S$1 million.

You may also proactively register for GST even if you are not required to register based on your business operations. The company must have begun selling in Singapore or have intentions of doing so (taxable supplies).

Remember that there are extra requirements if you opt for voluntarily registration for GST for your company’s GST accounting entries in Singapore.

Even after your firm has terminated and you’ve been deregistered from GST, you must keep your data for the past five years. You may also be required to adhere to any extra conditions the tax authority sets.

If you only have zero-rated supply, you can avoid registration even if your taxable turnover exceeds the threshold. This lets you avoid GST registration and reporting.

If 90% of your taxable goods and services are zero-rated and your input tax is higher than your output tax, IRAS will grant the exemption.

GST Accounting Entries in Singapore – Input and Output Tax

When dealing with GST accounting entries in Singapore, businesses must take note of the GST input and output tax.

According to the regulations, GST input tax refers to tax paid or payable on purchase of goods or services from GST-registered suppliers or importing goods into Singapore.

Meanwhile, the GST output tax refers to the tax levied on sales of goods or services in Singapore.

When you bring goods into Singapore or buy from suppliers who are registered for GST, you may have paid GST input tax. If you meet all the requirements, you can make a claim for GST input tax.

You should claim GST input tax in the same accounting period as the source papers (tax invoice or import permit) or the “date” these details are uploaded in the accounting system.

Input tax on exempt supplies cannot be claimed unless the De Minimis Rule is met.

You can claim GST input tax paid before company incorporation and GST registration. You must reimburse GST input tax if you don’t pay your supplier within 12 months of the due date.

Different Singapore GST Programs to Support Businesses

There are various schemes implemented by the government to help businesses with their GST accounting entries in Singapore. A list of GST programs from which a registered business can benefit from is as follows:

  • Discounted Sale Price Scheme
  • Cash Accounting Scheme
  • Hand-Carried Exports Scheme
  • Gross Margin Scheme
  • Major Exporter Scheme
  • Import GST Deferment Scheme
  • Zero GST Warehouse Scheme
  • Tourist Refund Scheme

Businesses must first obtain IRAS approval to participate in programs like the Major Exporter Scheme and the Discounted Sale Price Scheme.

Because the government is stringent about it, proper Singapore tax filing is sought-after.

They are more stringent, though, when it comes to companies that do not file their GST returns or overcharge their clients on the pretext of collecting GST.

Frequently Asked Questions

Is it necessary for a Singapore business to collect GST?

No. It is only necessary if your firm’s yearly taxable revenue reaches S$1 million or if you have submitted an IRAS application to become a GST registered company.

Can the Singapore company offset the GST tax imposed by its suppliers while paying GST tax collected from customers?

Yes. The GST a business collects from its customers is referred to as output tax, whereas the GST it pays to its suppliers is referred to as input tax.

The difference between your input and output taxes is what you pay to (or are reimbursed for by) the tax authority when calculating your company’s GST accounting entries in Singapore.

Can a Singapore business collect GST if it isn't registered for it?

No, companies that are not GST-registered are not permitted to levy GST. If your firm is not registered for GST, it is illegal for you to charge and collect GST.

Is it advantageous for a business to register for GST even if it is not required?

It depends. In some cases of voluntary GST registration, it may be advantageous whereas in others, the costs may surpass the benefits.

If you are unsure, contact us today for a FREE consultation on your queries regarding GST accounting entries in Singapore!

When a Singapore business exports products or services abroad, is GST required to be collected?

No, GST is not applicable because exports are considered zero-rated supplies and are not subject to GST.

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