Should I register for GST if turnover is under $1m?
Wed, May 09, 2007
The Straits Times
SHOULD I register my business for goods and services tax (GST) even though my taxable turnover is less than $1 million and registration is therefore not compulsory?
What factors should I consider?
The following are some factors to assist businesses in deciding whether to register for GST.
Nature of your supplies
If you are registered and you export most of your goods or provide services to overseas customers, you are likely to benefit as the GST you incur on your purchases is likely to exceed the GST that you collect, thus you may claim a refund from Inland Revenue Authority of Singapore (Iras).
This is because export goods and services provided to overseas customers are zero-rated supplies, meaning that GST is charged at 0 per cent.
Your suppliers' profile
If you are GST-registered but your suppliers are not GST-registered, you will not be able to make any claims since your suppliers do not charge any GST on sales made to you.
However, if you purchase from GST-registered suppliers or import goods, you will be able to claim the GST paid.
If you are not GST-registered, you will not be able to claim the GST you paid on your purchases and imports.
Your customers' profile
If you are GST-registered, you will need to charge GST on sales to your customers.
If your customers are GST-registered, they will be able to claim the GST that you charge them.
If your customers are not GST-registered, they will not be able to claim the GST charged to them.
If you are not GST-registered, you need not charge GST on sales to your customers.
Compliance efforts
If you are GST registered, you are required to maintain adequate business records, including tax invoices, receipts, credit notes, import permits and export documentation for at least seven years.
These records are subject to random audits by Iras officers.
You also need to submit your GST returns and pay tax on time, failing which penalties will be imposed.
To maintain the business records and submit GST returns, you need to train your staff to ensure they are able to perform the charging and accounting of GST correctly on behalf of your business.
