Singapore new GST regulations
Over the past month, Singapore new GST regulations have been the hot topic among many international investors. Due to the multiple business advantages, many foreign investors have chosen to register Singapore companies for both onshore and offshore businesses. Highly urbanized with a robust economy, Singapore ranks in the world’s top five as a financial center where its free-market economy operates in an open and corruption-free environment with stable prices and high per-capita GDP.
Revised GST compliance measures effective 2021.
On 18 February 2020, the Singapore finance minister Mr Heng Swee Keat confirmed in his budget 2020 speech that the GST will remain at 7% until 2020, but the same will increase to 9% between 2022 and 2025. The increase is mainly to raise the tax revenue to meet Singapore’s predicted future spending requirements.
IRAS concludes that it is personal responsibility of employees to ensure that they arrive at work on time and they may choose the most appropriate mode of transport to work. Thus GST registered business that incur GST on transport expenses such as chartered buses, taxis, drivers, chauffeurs, or other pre-booked forms of transport for carrying the employees between one location to the workplace during ordinary working hours are not allowed to claim GST.
However, GST incurred on all other types of employee transport expenses is claimable (e.g., where arranged transport services transport employees between designated pick-up/drop-off points and the workplace). Prior to the amendments, IRAS only allowed GST to be claimed where the working location was at least a certain specified distance from the nearest public transport.
When an expense is incurred in relation with a motor car as defined under regulation 25 of the GST regulations. Such input tax is not claimable.
Temporary accommodation provided to foreign employees
Input tax relating to temporary accommodation provided to overseas employees of GST registered business whom visit Singapore for business purpose or relocated to Singapore/another country are now claimable. Prior to amendments, entire input tax for temporary accommodation provided for more than 31 days for a single visit was disallowed.
GST Assisted Compliance Assurance Program
GST registered business now have the options to participate in the GST Assisted Compliance Assurance Program (ACAP) in place of GST audit. An entity which doesn’t not wish to participate in the ACAP must provide the IRAS with a contact person with whom the IRAS may liaise over the subsequent GST audits. A business can benefit by participating in the ACAP as there is a one-time waiver of all penalties for disclosure of past errors; where errors are uncovered by the IRAS during the audit. In addition, the business will also have increased flexibility to schedule internal resources to manage IRAS requirements on submission of documents. Generally, an ACAP participant will have 15 months from the date of their acceptance to submit the documents.
It is compulsory that a GST Accredited Tax Advisor who is a member of the Singapore Institute of Accredited Tax Professionals (SIATP) to perform the ACAP review.
Additional Reporting Requirements introduced in Singapore new GST
With the implementation of Reverse Charge and Overseas Vendor Registration, the IRAS has announced on its website that GST returns for periods ending on or after 1 January 2020 will include two new boxes (box 14 and box 15). The first quarterly GST returns including the two new boxes will be for the following periods:
- 1 November 2019 to 31 January 2020;
- 1 December 2019 to 29 February 2020; and
- 1 January 2020 to 31 March 2020.
Box 14 applies only to reverse charge businesses (e.g., financial institutions, residential property developers, etc.), while box 15 applies only to electronic marketplace operators supplying digital services. All other GRB may complete their GST returns as usual.
How does Singapore new GST measures affect your business?
First and foremost, it is important for you to know whether your Singapore business is legally required to register for GST. There are multiple advantages and disadvantages to register GST for your Singapore business. In the event your business is already GST-registered, you should also look at the other accounting and tax obligations in Singapore. Consequently, you will then be able to make adjustments to your business strategies in order to optimize your company taxes.