Goods and Services Tax (GST) was introduced in Singapore on 1 April 1994 at the rate of 3%. This has been progressively increased as follows:
- 4% on 1 January 2003
- 5% on 1 January 2004
- 7% on 1 July 2007
GST is a tax on the domestic consumption of goods and services. In Singapore, Singapore Customs collects GST for imports and GST registered businesses which are registered with the Comptroller of GST. In Malaysia, the collecting agency is RMCD (Royal Malaysian Customs Department).
A GST registered business would need to account GST either on a quarterly or monthly basis as follows:
This refers to the tax collected by a GST registered supplier
The tax paid by a GST registered supplier (claimable from the Comptroller)
Net GST accountable
Output minus Input. If Input is greater than Output, you would receive a refund
Effectively, a GST registered business is not paying the tax. The burden falls on the final consumer who is not entitled to claim a refund on the tax paid except for tourists under the Tourist Refund Scheme.GST is broad based and can be classified as follows:
This means the rate of tax applied is 0% for the export of goods and international services. If you were to export goods, the rate applicable is 0%. Unlike goods, the nature of services which can be zero-rated are listed in the Act.
GST at 7% (Singapore) or 6% (Malaysia) is applicable to taxable supplies of goods and services in by a GST registered businesses. If you are GST registered and decide to give goods free of charge, you might be required to 'deem' output tax. Should you decide to de-register from GST, you may also be required to 'deem' output tax. Send us an e-mail if you need further details.
There are various categories which are specifically exempt from GST. The common example is interest income and rental derived from residential property sale/rental. If you are making exempt supplies, the GST you pay to suppliers is not claimable as your input tax.
Supplies of goods which take place outside Singapore or Malaysia are outside the scope of the GST Act. You will still be required to maintain documents to support that the transaction occured in an overseas location.