Goods and Services Tax (GST): What it is and how it works

Goods and Services Tax or GST is a broad-based consumption tax levied on the import of goods (collected by Singapore Customs), as well as nearly all supplies of goods and services in Singapore. In other countries, GST is known as the Value-Added Tax or VAT.

GST exemptions apply to the provision of most financial services, the supply of digital payment tokens, the sale and lease of residential properties, and the importation and local supply of investment precious metals. Goods that are exported and international services are zero-rated.

Taxable and non-taxable goods and services

Taxable supplies

Most local sales fall under this category.
E.g. sale of TV set in a Singapore retail shop

Sale of imported low-value goods (from 1 Jan 2023)
E.g. Sale of tennis racquet by overseas online merchant to customer in Singapore at $330, excluding freight and insurance

Imported Services
E.g. Procurement of marketing services from overseas service provider

Non-taxable supplies

Financial services
E.g. issue of a debt security

Businesses required to register for GST

As a business, you must register for GST when your taxable turnover exceeds $1 million.

You may also be liable for GST registration under the Reverse Charge and Overseas Vendor Registration regimes. For more information, please refer to the section on Reverse Charge and Overseas Vendor Registration.

If your business taxable turnover does not exceed $1 million, you may still choose to voluntarily register for GST after careful consideration.

Charging and claiming GST

Only GST-registered businesses can charge and claim GST from their effective date of GST registration. Non-GST registered businesses are not allowed to charge or claim GST.

Charging GST

If you are registered for GST, you must charge GST on all taxable supplies at the prevailing GST rate, except for supplies that are subject to customer accounting. The GST that you charge and collect is known as output tax. Output tax must be paid to IRAS within a month from the end of the accounting period. Refer to our page on filing and payment due dates for more information.

Exception

An exception where a non-GST registered person is required to charge and account for GST is when it sells or rents out a GST-registered business assets in satisfaction of a debt owed. This applies to non-GST registered third parties, such as mortgagees, financiers and auctioneers. For details on how to account for GST in such scenario, please refer to our page on selling/ renting out asset in satisfaction of debt.

Claiming GST

If you are registered for GST, you can claim the GST incurred on business purchases (including imports) and expenses, as input tax in your GST return. This is subject to you fulfilling the conditions for claiming input tax.

Exception

There are exceptions where non-GST registered businesses in specific industries are given concessions (subject to conditions) by the Minister to claim the GST incurred. These exceptions are:

Qualifying funds that are managed by a prescribed fund manager in Singapore can claim GST incurred on prescribed expenses at an annual fixed recovery rate via remission.

To claim the GST incurred, qualifying funds, S-REITs and S-RBTs need to submit a quarterly Statement of Claims to IRAS within one month from the end of the respective quarters.

As an administrative concession, funds and trusts may file their quarterly Statement of Claims after the due date, subject to the following conditions:

1. The GST claims are made on tax invoices dated within the relevant quarter; and
   
2. The quarterly Statements of Claims are filed within 5 years from the end of the relevant quarter.

Period of claims: 1 Apr 2023 to 30 Jun 2023

Qualifying funds, S-REITs and S-RBTs can submit the Statement of Claims latest by 30 Jun 2028.

Additionally, you may be able to claim GST incurred before GST registration or incorporation, provided that you fulfil certain conditions. For more information, please refer to our page on claiming GST incurred before GST registration/ incorporation.

This input tax credit mechanism ensures the taxation of only the value-add at each stage of a supply chain.

Example 1: How a business charges output tax and claims input tax

A GST-registered manufacturer imports leather from overseas to manufacture a bag. The manufacturer sells the bag to a GST-registered retailer. Thereafter, the retailer sells the bag to a consumer.

This is how GST works at each stage of the value chain:

Import GST paid = 9% X $100 = $9 (input tax claimable from IRAS)

Pays GST to Retailer
Purchase value = $300
GST paid = 9% X $300 = $27
End consumer is not GST-registered. Therefore, he cannot claim the GST paid on his purchase from IRAS.

Paying output tax and claiming input tax

1. You must submit your GST return to IRAS within a month from the end of each prescribed accounting period. This is usually done on a quarterly basis.
   
2. You should report both your output tax and input tax in your GST return.
   
3. The difference between output tax and input tax is the net GST that is payable to IRAS or refundable by IRAS.

FAQs

Why must Singapore implement GST?

GST was introduced in 1 Apr 1994 to enable Singapore to shift its reliance from direct taxes to indirect taxes. GST has also enabled Singapore to sustain a lower income tax rate. Being a tax on consumption, and not income, GST inherently encourages savings and investments.