The process of filing for GST involves a number of procedures and ensuring compliance with the current and changing legislation can be a challenge. As we proceed towards the middle of the year 2024, companies in Singapore cannot afford to be aloof to the changes in GST laws. Everything you want to know about the GST filing in Singapore in 2024 from the basics to the use of digital tools in filing will be covered in this guide.
What is GST?
GST, also known as Goods and Services Tax, is an indirect tax charged on supply of goods and services in Singapore. It is a progressive tax, which is paid at each stage in the manufacturing and distribution cycle. Companies are allowed to levy GST on their supplied goods and services (output tax) and can also claim the GST paid on acquired goods and services (input tax). The net GST is then paid to the Inland Revenue Authority of Singapore (IRAS).
Who Needs to Register for GST?
Businesses are required to register for GST in Singapore if their taxable turnover exceeds SGD 1 million per annum. It can be for the last 12 months (retrospective view) or for the next 12 months (prospective view). The businesses with the taxable turnovers not exceeding the prescribed threshold can also register voluntarily which is advantageous in terms of improving business credibility and to be able to recover input tax.
Understanding the GST Filing Process
1. Determine Your Accounting Period
GST returns are normally filed on a quarterly basis, and the common accounting periods are March, June, September and December. However, a business can apply for another accounting period that is more convenient for the financial year they are in.
2. Collect Necessary Documents
To file your GST return, you’ll need the following documents:
- Sales invoices
- Purchase invoices
- Credit and debit notes
- Import permits
- Export documents
It is therefore important that these documents are well drafted and contain all the necessary information.
3. Calculate Output Tax
Output tax is the GST which you collect on your taxable supplies. To calculate the total output tax for the period:
- Total the GST charged on all the sales invoices.
4. Calculate Input Tax
Input tax is the GST charged by the suppliers of goods and services that you buy for your business. To calculate the total input tax for the period:
- Add up the GST charged on all your purchase invoices.
5. Compute Net GST
The net GST payable or refundable is determined by subtracting the total input tax from the total output tax:
- Net GST = Output Tax - Input Tax
If your output tax is higher than your input tax, then you have to remit the difference to IRAS. In the situation where your input tax is more than your output tax, then you are entitled to a refund.
6. File Your GST Return
GST returns (Form GST F5) must be filed electronically via the myTax Portal. Ensure you:
- Complete all required fields accurately.
- Attach any necessary supporting documents.
- Submit the return by the due date (typically one month after the end of the accounting period).
7. Make Payment
In the case of a net GST payable, the payment must be made by the due date. Payment can be made through GIRO, AXS station, or via internet banking.
Important Deadlines
Deadlines should be met to ensure that the business does not incur additional costs due to penalties. Here are key dates to remember:
- Quarterly Filing: It is filed by the last day of the month that follows the closure of the accounting period.
- Annual Filing (for some businesses): Submit it on or before 30th of the following year.
Common Pitfalls and How to Avoid Them
1. Inaccurate Record-Keeping
Proper record keeping is crucial when it comes to GST returns. Set up an efficient accounting system by ensuring that all transactions are recorded thoroughly. This is because regular audits can aid in exposure of such irregularities and rectification before they get out of hand.
2. Missing Deadlines
Failure to file or pay any due amount before the due date can lead to penalties. It is advisable to set reminders in advance so that there is always a strict adherence to the set time.
3. Incorrectly Claiming Input Tax
It is important that all claimed input tax be real and reasonably incurred in the course of your business. Document every cost that is incurred by the business.
4. Not Keeping Up with Regulatory Changes
GST regulations can change. It is advisable to sign up for newsletters from IRAS and attend training or seminars concerning the matter.
Leveraging Technology for Efficient GST Filing
1. Accounting Software
Pay for quality accounting software that could help calculate the GST, prepare specific reports, and ease the filing process. Some of the common ones are Xero, QuickBooks, and Sage.
2. Digital Invoicing
SMBs should adopt digital invoicing to avoid mistakes in preparing the invoices and ensure that the invoice complies with the GST laws. This also simplifies the process of documenting the information and accessing the records when the need arises.
3. Cloud Storage
Save all your documents related to financial matters in a cloud environment. This makes it easy to refer to and recover the data since it is not easily deleted or lost.
4. GST e-Filing Services
One should consider engaging the services of GST e-filing companies that can reduce the time and the chances of errors. Most of these services are compatible with your accounts software to allow data to be transferred efficiently.
Preparing for GST Audits
IRAS may carry out audits so as to confirm to these compliance. To prepare:
- Maintain organized and accessible records.
- Conduct regular internal audits.
- Ensure all financial statements and GST returns are accurate and complete.
Special GST Schemes
1. Major Exporter Scheme (MES)
MES can be sought by businesses who are significant exporters, and it allows them to import goods without having to pay GST. This enhances the amount of cash flow because one does not have to pay GST in advance.
2. Import GST Deferment Scheme (IGDS)
Under IGDS, it is possible to postpone payment of import GST and pay it along with the GST return. It contributes to the management of cash flows.
3. Tourist Refund Scheme (TRS)
Retailers are also allowed to participate in TRS enabling tourists to seek refund on GST charged on goods purchased in Singapore. This can improve the appeal of your retail business to customers from other countries.
Penalties for Non-Compliance
Non-compliance with GST regulations can result in severe penalties, including:
- Late filing penalties
- Late payment penalties
- Penalties for incorrect returns
To avoid these, make sure to file and pay on time and ensure that all these are correct.
As seen from the foregoing discussion, it is advisable to seek the services of a professional on GST issues due to the numerous and complicated regulations. It is especially important to consult a tax consultant or an accountant as they can help with compliance matters, improve your GST systems, and navigate you through audits.
Conclusion
Thus, despite the fact that GST filing in Singapore might appear a complicated process, it can be easily explained and mastered with the help of proper tools and knowledge. Update yourself about the latest rules, keep your records clean and use technology to advantage when filing your GST. In this way, you can guarantee compliance, minimize the possibility of fines and penalties, and develop your business effectively.
I want to emphasise one more time that GST filing is not just a formality; it is a tool for efficient financial planning. When moving into 2024, ensure that GST filing becomes part of your company’s normal process flow.