GST FILING IN SINGAPORE
GST filing is not a popular economic term like tax and others but it also plays a significant role in the economy. GST simply means Goods and Services Tax. In this article, we will be discussing GST in detail and its use in Singapore. I suggest you read through the entire article to get the proper information about GST filing in Singapore.
What is GST?
The goods and services tax (GST) issaid to be the extra tax that is imposed on domestically consumed goods and services, that is goods and services consumed by the public. Consumers are the people that pay for GST and this payment is forwarded by the people selling out these goods and services to the government. So it is safe to say that GST is a source of revenue for the government. Let me explain further by saying that GST is attached to the cost of some goods and services as an indirect sales tax directed towards the government. GST is added to the cost of a product by the business then the customer pays for the GST as they pay for a good or service. After-sales, the seller gathers the GST and forwards it to the government. GST is also referred to as Value-Added Tax (VAT).
Brief History of GST in Singapore
On the first of April 1994, the Singapore government implemented GST in the economy. There is a section of the Singapore government that is responsible for assessing, administering, enforcing, and collecting GST payments form the public and they are known as The Inland Revenue Authority of Singapore (IRAS).GST was introduced as a way to reduce corporate and personal income tax for the people and at the same time creating a constant revenue inflow for the government. For my economists, you would agree with me that GST is an indirect tax because expenditure is what is been taxed. In Singapore, 7% is the current GST rate.
How GST works in Singapore
You are required to put GST on your goods and services as you sell them to your customers and then gather the GST and pay them to the authorizes in charge of tax. You must do this as a Singapore company that requires GST registration. Let me give an example, let’s say you sell a good to a customer for S$50,on the invoice that would be given to the customer you should input S$57 instead. This way 50 is yours and the other 7 is for the GST and this will be accumulated quarterly and paid to the tax department in Singapore. The process of doing this is called GST tax filing. No incorporated company in Singapore is automatically registered as a GST company, there are certain conditions that need to be met before such a company can apply to IRAS and become a Singapore company that requires GST registration.
Advantages of GST
This is a kind of tax that is used when people spend their money, this is a fairer tax system as it does not cut anyone’s earnings.
GST is good for every economic environment as it creates a stable tax income.
When you have your business registered as a GST company, it shows your customers that you are a genuine establishment and would build trust. This is because almost all the big businesses are all GST registered.
Since the taxpayers are now the final consumers, businesses are not crippled by tax cost as a result of the multi-stage credit mechanism. This will lead to a reduction in the cost of running your business.
The cost of collection and administration is very low and as a result, it is very effective.
With the help of GST, the government will be able to reduce income taxes and this encourages investment from foreigners. As a result of this, the economy will grow.
We are aware that GST only applies to consumption and it doesn’t affect investment and savings, this way people will be motivated to invest and save more.
Disadvantages of GST
When you register your business under IRAS as a GST one it simply means that the price of your goods will increase by 7% and this might be a good thing for customers that GST registered as they will not be able to cover up for the change in price and they will not be happy. Unhappy customers in a business are not good.
It is either you hire an accountant to look after the GST accounts and take care of filing which can be expensive or you make out time to study GST properly and do it yourself.
For small businesses, GST could be a problem in times where there is high inflation.
GST return can be defined as a document that entails the complete detail of purchases, sales, input (tax got from purchases), and output tax(tax got from sales). This needs to be very detailed because this will be used to assess your business. You will need to pay the money that you owe the government immediately you file GST returns.