Goods and Services Tax (GST) in Singapore: What It Is and How It Works

Singapore's Goods and Services Tax (GST) is a key component of its tax system, introduced on 1 April 1994 as part of a broader fiscal strategy to shift towards consumption-based taxation. Originally set at 3%, the GST rate has gradually increased over the years, reaching 9% as of 1 January 2024. This indirect tax, similar to the Value-Added Tax (VAT) in other countries, is levied on the sale of goods and services as well as imported goods. While businesses collect and remit GST, the final tax burden falls on consumers, ensuring a broad-based approach to revenue generation.

This guide provides a comprehensive breakdown of Singapore’s GST framework, covering:

• How is GST levied, collected, and remitted across the supply chain?
• Understanding different GST rates
• Who must register, the process, and key obligations for businesses
• Tax relief programs for businesses, tourists, and import/export companies
• Consequences of late filing, incorrect reporting, and tax evasion

Singapore GST Framework: At a Glance

What is GST in Singapore?

Goods and Services Tax (GST) in Singapore is a broad-based consumption tax levied on selling goods and services and imported goods. It is like a Value-Added Tax (VAT) in other countries. GST is imposed at every stage of the supply chain, but the end consumer bears the actual tax burden.

GST was introduced in Singapore on 1 April 1994 at 3% and has gradually increased over the years. As of 1 January 2024, the GST rate is 9%. GST is governed by the Inland Revenue Authority of Singapore (IRAS), which oversees GST registration, collection, and compliance.

Key Features of GST:

• Charged on goods, services, and imports into Singapore.
• Collected by GST-registered businesses and remitted to the Inland Revenue Authority of Singapore (IRAS).
• Helps Singapore maintain low personal and corporate tax rates while ensuring stable tax revenue.

GST Mechanism: Levy, Collection, and Remittance

GST operates under a multi-stage tax mechanism, meaning that GST is levied at each stage of the supply chain but is ultimately paid by the final consumer.

GST in Singapore involves three key steps:

1. Levying and Charging GST: GST-registered businesses charge GST on their taxable sales (standard-rated supplies at 9%) and issue a tax invoice to customers. This is called Output Tax – the GST collected from customers.
2. Collection of GST: The GST-registered business collects GST from its customers on behalf of the government. If the business purchases goods or services from another GST-registered supplier, it will pay GST on those purchases. This is called Input Tax.
3. Remittance to IRAS: At the end of each GST accounting period (usually quarterly), the business files a GST return (Form F5) with IRAS. The business remits the net GST to IRAS: Net GST Payable=Output Tax−Input Tax

Note: Input Tax is greater than Output the business can claim a GST refund from IRAS.

Example: How GST Works in a Supply Chain?

At each stage, businesses only remit the net GST after deducting input tax, ensuring GST is applied fairly across the supply chain. Consider a furniture supply chain where GST is levied at each stage:

• The manufacturer charges S$9 GST to the supplier and remits it to IRAS.
• The supplier pays S$9 GST to the manufacturer but collects S$18 from the retailer, remitting only the net S$9 (18-9) to IRAS.
• The retailer collects S$45 from the final consumer but deducts input tax of S$18, remitting only S$27 (45-18) to IRAS.
• The final consumer pays S$545, including S$45 GST, and cannot recover it (as consumers do not register for GST).

GST Rates in Singapore: Standard, Zero-Rated, Exempt, and Out-of-Scope Supplies

In Singapore, different types of goods and services are categorized under four main GST classifications:

Standard-Rated Supplies (9%)

Standard-rated supplies are taxable supplies where GST is charged at the prevailing rate, which is currently 9% as of 1 January 2024. Businesses registered for GST must charge GST on these supplies and report the GST collected as output tax in their GST returns.

Examples of Standard-Rated Supplies:

• Sale of goods and services within Singapore (e.g., groceries, clothing, electronics, consultancy services, medical procedures not under government subsidy).
• Leasing of commercial properties (offices, retail spaces, industrial units).
• Restaurant meals, entertainment services, gym memberships, and tuition services (if not specifically exempt).

Zero-Rated Supplies (0%)

Zero-rated supplies are also taxable supplies, but GST is charged at 0%. Businesses making zero-rated supplies do not collect GST from customers, but they can still claim input tax credits for GST incurred on purchases related to these supplies.

Examples of Zero-Rated Supplies:

• Exports of goods (selling goods to overseas customers and shipping them out of Singapore).
• International services (specific services provided to overseas customers, such as international freight and transport services).

Singapore’s GST rate has changed incrementally over the years. When GST was first implemented in 1994 it was 3%. Table below summarizes the historical GST rate changes in Singapore:

Exempt Supplies (No GST Charged, No Input Tax Claimable)

Exempt supplies are not taxable under GST, meaning that GST is not charged to customers. However, businesses cannot claim input tax credits on purchases related to exempt supplies.

Examples of Exempt Supplies:

• Financial Services (e.g., interest on loans, life insurance policies, foreign exchange transactions).
• Sales and lease of residential properties (e.g., HDB flats, private condominiums).
• Supply of investment-grade precious metals (e.g., gold, silver, platinum that meet specified criteria).

Out-of-Scope Supplies (Not Subject to GST)

Out-of-scope supplies are transactions completely outside the scope of Singapore’s GST system, meaning GST does not apply at all, and these supplies are not reported in GST returns.

Examples of Out-of-Scope Supplies:

• Private transactions (e.g., personal sale of a second-hand laptop between individuals).
• Salaries and wages paid to employees (these are not subject to GST).
• Donations made to charities (provided no benefits are received in return).
• Goods supplied from an overseas entity directly to another overseas entity (without entering Singapore).

Comparison Table: GST Rates and Treatment

GST Compliance Obligations in Singapore

Every person or entity involved in the sale or purchase of taxable goods or services in Singapore has some obligations related to GST. While the obligations for consumer is to pay the applicable GST to seller. Businesses have different types of obligations under GST rules and regulations in Singapore

GST Registration

Businesses must register for GST if their taxable turnover exceeds S$1 million within a 12-month period. There are two tests for registration:

• Retrospective Test: If past 12 months' turnover exceeded S$1M, registration is required within 30 days after year-end.
• Prospective Test: If projected turnover in the next 12 months exceeds S$1M, registration is required within 30 days from the forecast date.

Voluntary Registration: Businesses below the S$1M threshold may voluntarily register for GST if they mainly make taxable supplies.

Registration Process: GST registration is completed via the IRAS myTax Portal by submitting Form GST F1. Processing typically takes two to four weeks, and IRAS will issue a GST registration number and effective date upon approval.

Charging GST and Issuing Tax Invoices

GST-registered businesses must charge 9% GST (as of 2024) on standard-rated supplies. Zero-rated, exempt, and out-of-scope supplies follow different tax treatments.

Issuing Tax Invoices: A tax invoice must be issued within 30 days of a taxable supply and must include:

• Business name and GST registration number
• Invoice number and date
• Description of goods or services
• Total amount before GST
• GST amount separately displayed
• Total amount payable, inclusive of GST
• Customer’s name (for invoices above S$1,000)

For transactions ≤ S$1,000, a simplified invoice may be used. Businesses must display GST-inclusive prices to consumers, ensuring transparency in pricing.

Collecting GST from Customers

GST must be collected at the point of sale or when issuing an invoice. Even if a customer refuses to pay GST, the business remains liable to remit the tax to IRAS. For instalment payments, GST must be reported in full upon invoicing rather than upon receipt of payments.

Remitting GST to IRAS

GST collected from customers must be remitted to IRAS after deducting input tax (GST paid on purchases). Payment is made through Form GST F5 during the return filing process. GST can be paid via GIRO, bank transfer, AXS, or internet banking. GIRO payments are deducted automatically on the 15th of the month following the return due date.

Filing GST Returns

All GST-registered businesses must file GST returns online via IRAS myTax Portal. The filing frequency depends on the business's assigned filing cycle:

• Quarterly (default): Due one month after the quarter-end
• Monthly (if applicable): Due by the last day of the following month
• Biannual (for eligible businesses): Due one month after the six-month period ends

GST Return (Form GST F5): Businesses must report:

• Total taxable supplies (sales)
• Output tax collected (GST on sales)
• Input tax claims (GST on purchases)
• Net GST payable or refundable

Record-Keeping and GST Corrections

Businesses must retain invoices, receipts, credit notes, and import/export documents for at least five years. Failure to maintain proper records can result in fines of up to S$5,000 per offense.

Refunds, Claims, and Special Schemes

Singapore's GST system includes various refund mechanisms and special schemes designed to ease cash flow for businesses, support exports, and provide relief for specific groups like tourists and importers.

GST Refunds for Businesses

Businesses registered for GST can claim back the GST paid on business-related purchases, ensuring they only bear tax on final consumption.

• Input Tax Credit: Businesses can offset GST paid on expenses against GST collected on sales. If input GST exceeds output GST, IRAS refunds the excess.
• Bad Debt Relief: If a customer fails to pay for a GST-inclusive invoice after 12 months, businesses can recover the previously paid GST by adjusting their GST return.

Tourist Refund Scheme (TRS)

International tourists can get a refund of the GST paid on shopping, encouraging retail spending by visitors.

Tourists can claim GST refunds on goods purchased in Singapore if they meet criteria such as a minimum S$100 purchase, departing via Changi or Seletar Airport within 2 months, and using the eTRS system at airport kiosks. Services like hotels and food are not eligible.

Import and Export Relief Schemes

Businesses involved in imports and exports can benefit from schemes that reduce GST cash flow burdens.

• Major Exporter Scheme (MES): Approved businesses importing goods for re-export can suspend import GST, improving liquidity.
• Import GST Deferment Scheme (IGDS): Eligible businesses can defer import GST payment to their GST return, rather than paying upfront at customs.
• Hand-Carried Exports Scheme (HCES): Retailers can zero-rate goods carried out of Singapore by overseas buyers, provided proper documentation is submitted.
• Free Trade Zones & Bonded Warehouses: Goods stored in these areas can defer GST payment until removed for local consumption.

GST Relief for Individuals

Singaporeans and travelers receive targeted GST relief to reduce the tax burden in specific circumstances.

• GST Vouchers & Assurance Package: Lower-income Singaporeans receive cash payouts, U-Save rebates, and MediSave top-ups to offset GST costs, especially during rate hikes. Read More about GST Voucher.
• Duty-Free Concessions: Returning travelers enjoy GST relief on goods brought into Singapore, subject to value limits based on their time spent abroad.

Penalties for Non-Compliance and Delays in GST Obligations

Singapore’s Inland Revenue Authority of Singapore (IRAS) imposes strict penalties for non-compliance with GST regulations to ensure businesses fulfill their tax obligations. Late filings, incorrect reporting, or fraudulent activities can lead to financial penalties, asset seizures, or even criminal prosecution. The table below summarizes the key penalties businesses may face for GST-related violations.

Final Thoughts on Singapore GST

Singapore’s GST model ensures stable revenue while keeping corporate and personal taxes low. The consumption-based system supports economic growth and funds public services without excessive tax burdens on businesses or individuals.

Despite the increase to 9% in 2024, Singapore’s GST remains lower than the Asia-Pacific (11-12%) and global average (19%). Many developed nations have VAT/GST rates of 10-20% or higher. This broad-based yet modest GST structure balances revenue generation with targeted rebates to protect lower-income groups.

For businesses, GST compliance is essential to avoid penalties and manage cash flow. With stricter enforcement and digitalization, businesses must stay updated and integrate GST best practices. As Singapore expands GST to the digital economy and e-commerce, the system remains efficient, competitive, and future-ready.