Singapore’s tax landscape encompasses various levies and regulations that businesses must navigate to ensure compliance. From corporate tax to Goods and Services Tax (GST), understanding the requirements and procedures is essential for businesses operating in the country. Additionally, institutions such as ACRA, IRAS, and IMDA play crucial roles in regulating business activities and promoting digitalization initiatives. Let us delve into each aspect in detail to gain a comprehensive understanding of Singapore’s tax and regulatory framework.
1. What types of taxes are levied in Singapore?
2. When is GST registration required in Singapore?
3. How can a business register for GST in Singapore?
4. What is corporate tax in Singapore, & how does a company register for it?
5. What are the several types of corporate tax filings in Singapore?
6. What documentation is required by IRAS to support GST & Corporate Tax submissions?
7. What is Seamless Tax Filing?
8. What is the difference between ACRA, IRAS, and IMDA?
9. What is the Approved Software Register Plus (ASR), and which software options in Singapore are listed under ASR?
Q: What types of taxes are levied in Singapore?
A: Singapore imposes several different kinds of taxes. These include corporate tax, which applies to company earnings, and Goods and Services Tax (GST), a tax on transactions. Companies may also be required to withhold tax for payments related to the consumption of foreign services. Additionally, Singapore charges stamp duty on the transfer of assets and shares, and property tax, which must be paid by owners of investment properties.
Q: When is GST registration required in Singapore?
In Singapore, a business must register for GST when its taxable turnover exceeds SGD 1 million over the past 12 months. This is known as the retrospective basis for registration. Alternatively, a business must also register for GST if it anticipates that its taxable turnover will exceed SGD 1 million in the next 12 months, based on a forecast or confirmed contracts, known as the prospective basis for registration.
It becomes compulsory only if the transaction volume of a company exceeds SGD 1 million within a single calendar year, and these transactions must involve taxable supplies, which include the sales of goods and services that occur within Singapore’s geographical boundaries.
If your sales exceed SGD 1 million but are entirely from outside Singapore, these are treated as non-taxable supplies. In such cases, even if your total sales volume hits the SGD 1 million, you can decide whether to register for GST.
It’s also important to note that businesses can voluntarily register for GST even if their turnover does not exceed this threshold, which might be advantageous for certain businesses in reclaiming input tax. However, voluntary registration requires the approval of the Inland Revenue Authority of Singapore (IRAS), and those who register voluntarily are typically required to remain registered for at least two years.
Q: How can a business register for GST in Singapore?
Registering for GST in Singapore is a straightforward process managed by the Inland Revenue Authority of Singapore (IRAS). Here are the steps involved in registering for GST:
- Determine Eligibility: As previously mentioned, GST registration is mandatory when your company’s taxable turnover exceeds SGD 1 million over the past 12 months, or if you expect it to exceed this amount in the next 12 months. Businesses can also choose to register voluntarily.
- Prepare Required Information and Documents:
- Business and contact details.
- Financial statements or sales records to prove your turnover.
- Description of business activities.
- e-Learning Course: If you are applying for voluntary registration, you (and any other key business personnel) may need to complete the “GST: Do I Need to Register” e-Learning course provided by IRAS unless exempted.
- Submit Application: The GST registration application can be submitted online via myTax Portal. You will need a CorpPass account to log in, which is a corporate digital identity for businesses to transact with government agencies in Singapore.
- Review and Approval:
- Mandatory registration: Processed within three working days.
- Voluntary registration: May take up to two weeks as it includes an additional review to ensure compliance with regulations.
- Receive GST Registration Number and Effective Date: Once your application is approved, you will receive a GST registration number and the effective date of registration. You are required to start charging GST from this date and comply with all GST regulations, such as filing periodic GST returns.
- Attend Further GST Courses (if applicable): After registration, especially for those who registered voluntarily, attending additional courses such as “Introduction to GST” and “How to File GST Returns” might be recommended or required by IRAS to ensure compliance.
GST Registration for below SGD 1 million threshold
Companies that wish to register for GST even if their revenues are below the SGD 1 million threshold can apply for voluntary registration. Approval of voluntary registration depends on the assessment by the Comptroller of GST. Once registered, companies must adhere to specific reporting periods, which are typically set on a quarterly basis aligned with their financial year, rather than the calendar year. For instance, if a company’s financial year starts in July and ends in June, the first quarter would run from July to September, the second from October to December, and so on. Some large companies might be required to report monthly due to high transaction volumes, but for most SMEs, quarterly reporting is standard.
Post Registration
Post-registration, the deadline to file GST returns is one month after the end of a GST quarter. For example, for a quarter running from January to March, the filing deadline would be April 30th. For the April to June quarter, the deadline would be the end of July.
Regarding GST Payments
Regarding GST payments, they are typically managed separately. Registrants are often required to submit a GIRO form, which facilitates direct debits from their bank account to cover GST payments. If the GIRO form is submitted, GST is usually deducted 14 days (about 2 weeks) after the filing deadline, providing a slight cash flow benefit. Without a GIRO arrangement, GST payments must be made by the end of the month following the close of the GST quarter. Setting up GIRO is recommended for smoother financial management, as it extends the payment window and eases cash flow pressures.
For detailed guidelines and resources, visiting the IRAS website or contacting their helpdesk would be beneficial, particularly to stay updated with any changes in the registration process or compliance requirements.
Q: What is corporate tax in Singapore, and how does a company register for it?
Corporate tax applies to all active companies in Singapore, meaning they must file their taxes annually. Even dormant companies are required to file unless they obtain a waiver. To do this, a dormant company can apply for a waiver, and if approved, it will receive a confirmation letter from the Inland Revenue Authority of Singapore (IRAS) stating that it is exempt from filing corporate taxes for the period it remains inactive. However, once the company resumes business activities and starts generating revenue and profits, it must reapply to resume its tax filing obligations.
The corporate tax is calculated based on the financial year of the company, not the calendar year. This financial year end should be specified in the company’s incorporation documents and communicated to IRAS. If not initially specified, it should be declared when filing the first tax return. After this, IRAS will track the company’s fiscal year, which may differ from the calendar year. For example, if a company’s financial year runs from July to June, and the financial year ends in June 2023, then the tax filing for that year would be due in 2024. This process ensures that every company follows a consistent annual cycle based on its declared financial year end.
Q: What are the several types of corporate tax filings in Singapore?
In Singapore, corporations are required to submit two main types of tax filings: the Estimated Chargeable Income (ECI) and the final tax return using Form C or Form C-S.
The ECI must be filed within three months after the end of a company’s financial year. Filing the ECI is mandatory if the company has earned profits; however, it is optional if the company has incurred losses. Despite being optional, it is highly recommended for the companies to file the ECI even when reporting losses. This practice helps inform the Inland Revenue Authority of Singapore (IRAS) that there are no profits, and thus, no tax is payable. If ECI is not filed, IRAS may assume profits were earned and issue a notice of assessment, which if uncontested, would require tax payment within 30 days (about 4 and a half weeks) of the notice.
Form C-S is the standard detailed tax form for filing the final tax return, while Form C-S is a simplified version for eligible companies. These forms are typically filed in the calendar year following the financial year-end. For instance, if a financial year ends in 2023, the forms would be filled in by 2024. The IRAS updates its submission portal post-budget announcement, usually between May and July. Historically, Form C-S is accessible by May or June, with the filing deadline for Form C-S set for November 30th of the following year.
IRAS has introduced a system called Approved Software Register Plus (ASR Plus), which integrates with specific software platforms, allowing for an extended filing deadline. Companies using Tier 3 systems within the ASR Plus are granted an additional 14 days (about 2 weeks), extending their deadline to December 14th. Utilizing these platforms can provide extra convenience and flexibility in meeting tax obligations.
Q: What documentation is required by IRAS to support GST and corporate tax submissions?
For businesses with an annual revenue below $200,000:
- Simplified Documentation Scheme: IRAS introduced this scheme for businesses with revenue below $200,000 per financial year. Under this scheme, only basic documentation is required:
- Listing of sales transactions.
- Listing of costs.
- Purchase documents.
- These records can be maintained manually using an Excel spreadsheet, following the template provided by IRAS on their website. However, it’s recommended to utilize system-generated software for better organization and efficiency in managing invoices, costs, and expenses.
- In case of an audit or when requested by IRAS, providing a listing of sales and purchases is sufficient to meet documentation requirements.
For businesses with a turnover exceeding $200,000:
- Comprehensive Documentation: Companies with a turnover surpassing $200,000 must maintain a more extensive set of documentation to support their tax submissions. This includes:
- Sales invoices.
- Credit notes.
- Purchase bills.
- Expense receipts.
- Rental agreements.
- Loan agreements and statements.
- Bank statements.
- Financial contracts.
- Import-export documentation.
- Both digital and physical documents are accepted by IRAS, and it is permissible to maintain scanned copies alongside physical records. However, original documents should not be altered during scanning.
- Also, companies must keep records of fixed asset purchases and sales schedules and maintain an auditable trail linking accounting records to supporting documents.
Integration of accounting and documentation systems:
- Traditionally, there should be a reference number to trace between manual filing systems and accounting software.
- Modern accounting software often integrates with document management systems, establishing a direct link between current records and digitized documents.
- IRAS provides detailed guidance and FAQs on their website for businesses seeking further information on documentation requirements.
Note: Form F5 and Form F8 refer to the quality submissions for GST. Form F5 is used for monthly submissions, while Form F8 is the final quarterly submission, indicating cessation of GST registration.
Q: What is Seamless Tax Filing?
Seamless Tax Filing, introduced by the Inland Revenue Authority of Singapore (IRAS) in 2009, aims to streamline the tax filing process for businesses. Initially, the program began with pilot studies involving companies such as Autocount and Netiquette. Subsequently, in the following year, IRAS introduced five additional software options in the second batch, including Automate, Metro, Yong, Yo Oci, and Zeta.
These software solutions provided by IRAS offer robust platforms for integrating accounting systems directly with the tax filing process. Businesses are encouraged to consider utilizing these IRAS-listed software for their tax filing needs due to the numerous benefits they offer. One such advantage is the extension of the filing deadline by an additional 14 days (about 2 weeks) for users of these approved software options. This extension can provide businesses with added flexibility and time to ensure accurate and timely tax submissions.
Q: What is the difference between ACRA, IRAS, and IMDA?
- ACRA (Accounting and Corporate Regulatory Authority): ACRA functions like Company Houses in the UK. It is a government institution responsible for enforcing regulations outlined in the Company Act. This includes requirements such as conducting general meetings of shareholders and filing annual returns with ACRA. Annual returns must include shareholder and director particulars, updates on meeting conduct, and filing of annual reports in XBRL format for non-exempt private or public companies.
- IRAS – For all companies in Singapore, compliance with tax regulations falls under the purview of IRAS (Inland Revenue Authority of Singapore). If a company is registered for GST, it must account for GST. However, if a company is exempt or falls below the threshold, GST need not be raised, and only corporate tax filing is required. IRAS requires filing of annual reports and tax computations upon request.
- IMDA (InfoComm Media Development Authority): IMDA is responsible for promoting digitalization culture in Singapore. One of its projects is the implementation of electronic invoicing. While IRAS and ACRA handle tax and regulatory compliance, IMDA focuses on advancing digital initiatives to enhance efficiency and innovation in various sectors.
Q: What is the Approved Software Register Plus (ASR), and which software options in Singapore are listed under ASR?
The Approved Software Register Plus (ASR Plus) is a program introduced by the Inland Revenue Authority of Singapore (IRAS) to categorize software solutions based on their compliance with specific criteria. This program aims to streamline tax-related processes for businesses by identifying software options that meet certain standards set by IRAS.
ASR Plus categorizes software into tiers, with Tier 3 being the highest level of compliance. Software designated as Tier 3 meets all three requirements outlined by IRAS:
- Ability to Prepare and File Form C-S: Tier 3 software must have the capability to prepare and file Form C-S directly from the accounting software platform. Form C-S is the simplified tax form used for filing the final tax return for eligible companies in Singapore.
- Capability to Prepare and File GST Forms (F5 and F8) Directly: Additionally, Tier 3 software must be able to prepare and file GST forms directly. This includes both Form F5, used for monthly GST submissions, and Form F8, which represents the final quarterly submission, indicating the cessation of GST registration.
- Integration with InvoiceNow: Integration with InvoiceNow, a service under the InfoComm Media Development Authority (IMDA), is another requirement for Tier 3 software. InvoiceNow is a nationwide electronic invoicing initiative aimed at promoting digitalization and efficiency in business transactions.
Currently, there are only eight software options designated as Tier 3 ASR Plus software. These options are:
- Autocount
- Countto
- Metro
- Yongyo
- Oci
- Netiquette
- Sita
Businesses using software from this list can benefit from enhanced capabilities and seamless integration with tax-related processes, improving efficiency and compliance with regulatory requirements. Additionally, Tier 3 software users may also receive certain privileges, such as an extended filing deadline, providing added flexibility in meeting tax obligations.
Embrace the efficiency and compliance benefits offered by Automa8e Accounting Software, ensuring seamless integration with tax-related processes. With its Tier 3 ASR Plus designation, Automa8e guarantees enhanced capabilities and privileges, facilitating accurate and timely tax submissions. Don’t miss out on the opportunity to streamline your tax filing experience and stay ahead in Singapore’s dynamic business landscape.