How Can Companies Claim the Tax Given that They Paid the GST Pre-Registration in Singapore
Given that GST registered businesses fulfill some requirements, they can claim GST incurred before registering for the tax. Furthermore, the process has been simplified to allow businesses to more easily claim the GST incurred during GST pre-registration.
But first, we define GST in Singapore.
The Goods and Services Tax (GST) is a VAT levied on the import of goods and supply of goods and services. The GST rate is 7% in Singapore.
Almost every product and service in Singapore has a GST. However, some sectors and companies are free of the tax, including:
- Financial Services.
- Local Supply for investment precious metals.
- Unfurnished residential properties- in the case of a furnished property, you have to pay the GST for the items.
- International Services.
- The export of items doesn’t have a GST in Singapore.
Simplified GST Pre-Registration: Conditions for Claiming GST
If you have already registered for GST, you can claim the tax, given that you fulfill the following conditions:
Claiming GST for Goods
- Your business purchased or imported the goods for making taxable supplies
- The goods that you acquired within 6 months of the GST registration are still held by your company
- If you acquired the goods before 6 months from the date of the GST registration, the goods haven’t been used or supplied by your business before the date of GST registration
- The pre-registration GST claims are not disallowed under Regulation 26 and 27 of the GST regulations.
As per the regulation 26 and 27, you can’t make input tax claims on these expenses:
- Benefits provided by the company for the family members or relatives of staff.
- Costs and running expenses on cars registered under businesses’ or individuals’ names or hired for business or private use.
- Club subscription and transfer fees of sports and recreation clubs.
- Medical costs, and medical and accident expenses incurred for staff. However, it doesn’t include costs that are obligatory under the Work Injury Compensation Act. On the other hand, it also doesn’t apply to costs under any collective agreement within the meaning of the Industrial Relations Act.
- Betting, Sweepstakes, Lotteries, Fruit machines, and other games of chance.
Claiming GST Pre Registration on Property Rental, Utilities and Services
- The expenses are incurred by the business to make taxable supplies.
- The business incurred the expenses within 6 months before the date of the GST registration.
- Expenses aren’t based on the supplies made by the business before GST registration.
- Similar to the goods and services tax, you don’t make disallowed input tax claims.
- Apportionment of GST Pre-Registration in Singapore
- If you have already sold the goods that you acquired during GST pre-registration you need to apportion the GST according to the units of the item you hold during the registration date. This also applies to items that you transferred or threw away.
- Furthermore, if you have sold or partially consumed the items that you bought before six months of the GST registration, you need to apportion the GST. The same concept applies to property rental, utilities, and related services.
What Are the Documents You Need to Claim Your GST in Singapore?
You need to maintain a stock account with the following information about your goods:
- Purchase Quantity.
- The quantity used in making other goods.
- Purchase Date.
- Date and Manner of disposal of the quantities of items purchased and quantity used in making other goods.
For services, you have to make a list of the following things:
- Service description.
- Purchase Date.
- Disposal Date.
Remember, you also have to show proof for the purchase or disposal of items. This may include bills, import permits, payment evidence, etc.
Are There Any Incentives for GST in Singapore?
Even if GST is associated with most of the products and services in Singapore, some incentives help businesses lower the tax they pay. Other incentives help companies be more flexible while filing their GST. They are:
Cash Accounting Scheme
As per the cash accounting scheme, companies pay output tax upon the receipt of payment of customers. They can only claim the input tax after payment to suppliers.
Discounted Sale Price Scheme
For a second-hand or a used vehicle, you only need to pay GST for 50% of the sale price.
Gross Margin Scheme
Instead of the full value of the goods, the GST is calculated for the gross margin. It is beneficial for second-hand sellers, as the actual value of goods decreases when it is used.
Hand-Carried Exports Scheme
If you carry goods with hands via Changi International Airport you can zero-rate your supplies.
Import GST Deferment Scheme
Approved businesses can pay their GST until the due date, as long as they file the GST every month.
Major Exporter Scheme
Companies don’t need to pay the GST when importing non-dutiable goods and using zero GST warehouses.
Tourist Refund Scheme
If your company is accepted in the Tourist Refund Scheme, you can refund tourist customers.
Zero GST Warehouse Scheme
Import GST is temporarily suspended until the non-dutiable imported goods don’t leave the local market.
A business can claim the GST pre-registration. For that, you will need to prove that you can fulfill the terms. Moreover, some schemes help you become more flexible while paying GST.
Need help with this article? Or, do you want professional assistance for registering or filing for GST? You can contact 3E Accounting Singapore’s GST Registration services. We have the best professionals in the city-state waiting to help you.