Are you a Singapore business looking to file Goods and Services Tax (GST) returns? If you are not sure how to file GST returns without any mistakes, you are at the right place. In this blog, you will learn about some of the most common GST errors companies make when filing their GST returns.
GST contributes a major portion of tax incomes in Singapore. This is why the Singapore government takes collection of GST returns very seriously. On top of that, the government imposes strict penalties for companies that make GST filing errors. Also read the penalties involved for late submission of GST returns.
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Tip 1: Valid Documents to Submit in Support of Your Tax Claims
Read the conditions and make sure you are eligible to make input tax claims. Additionally, support the claim with valid and relevant supporting documents. You may have to make alterations to your returns and notify Singapore customs if any of your imported items were over-declared or under-declared.
GST on Customer Accounting for Prescribed Goods
Starting from 1 January 2019, customer accounting for prescribed goods has been implemented in Singapore. The intention behind this GST update was to prevent fraud schemes where sellers mishandle the GST collected even though other businesses in the supply chain claim the input tax.
Prescribed goods include items such as off-the-shelf software, mobile phones, and memory cards – all of which are frequently used in fraud schemes.
It is mandatory that companies apply customer accounting on a supply of eligible prescribed goods delivered to a GST-registered customer. The following qualifies as a relevant supply of prescribed goods:
- A local sale of various prescribed goods with GST-exclusive sale value of $10,000 or more in one invoice,
and the supply is not excepted
When practicing customer accounting, suppliers are responsible to report for output tax to the customers.
Tip 2: Know When Your Input Tax can be Apportioned
GST-registered companies that provide exempt supplies such as financial services, residential properties sales and lease, etc. must have the extent of exempt supplies as suggested by the De Minimis Rule.*
*The de minimis rule states that if a discount is less than 0.25% of the face value for each full year from the date of purchase to maturity, then it is too small (that is, de minimis) to be considered a market discount for tax purposes.
You may claim input tax as usual if the De Minimis Rule is satisfied. Otherwise, you cannot claim input tax attributable to the production of exempt supplies.
When filing input tax that cannot be considered as directly attributable to either exempt or taxable supplies, the tax amount that you can claim must be apportioned accordingly.
What is Singapore’s De Minimis Rate?
Among Southeast Asian countries, Singapore stands out as an attractive eCommerce market. The island nation has a digitally savvy population, with an internet penetration of 88%, and 74% of internet users having bought an item online.1 On top of that, it has the highest average revenue generated per user (ARPU) for eCommerce in Southeast Asia, which is forecasted at US$675.71 in 2020.2
De minimis rate is the price threshold where fewer or no taxes are charged on imports entering the country. Singapore’s de minimis rate is SGD 400 or roughly USD 280 as of the time of this writing. This rate takes into account the value of the shipped goods along with the shipping fees and insurance costs if any.
The longer Latin phrase where ‘de minimis’ comes from translates to ‘the law does not concern itself with trifles’.3 The de minimis threshold only applies to B2C international shipments that enter Singapore via air freight. Thus, shipments that enter Singapore through other modes of transport like cross-border trucking are not exempt from import duties and taxes.
Singapore’s high de minimis rate is a welcome sign for international merchants looking to enter the island nation’s market. This is because merchants who sell products that are below SGD 400 to Singaporean customers wouldn’t need to pay extra duties and taxes when their order gets delivered.
| De Minimus Rate in Singapore | For Shipment Values Above SGD 400 |
| SGD 400 | GST 7% Import Duties 0%* *Does not apply to restricted items |
You may claim input tax as usual if the De Minimis Rule is satisfied. Otherwise, you cannot claim input tax attributable to the production of exempt supplies.
Tip 3: Do Not Claim Disallowed Input Tax
Regulations 26 and 27 of GST Regulations do not allow business to claim the below expenditures as Input Tax:
- Benefits offered to the family members and relative of company staff
- Running expenses and cost induced on vehicles that are registered under either business name or an individual, or hired for business or private use.
- Subscription fee payments made to different sports and recreation clubs
- Medical expenses for the staff unless mandated under Work Injury Compensation Act
- Any promotional deals including lotteries, sweepstakes, betting, fruit machines, or games of chance
Tip 4: Claim Input Tax at the Right Time
Make your input tax claim in a period that matches the required date. That is, it should be submitted on the accounting date that corresponds to the period stated in the tax invoice or import permit. Businesses often make GST errors unintentionally.
🏆 Bonus Tip: Get Help from Professionals
Not sure what to do?
If you are filing for GST in Singapore for the first time, you may choose to seek help from a professional firm like Count On Me.
Our GST filing services will help you avoid any of the aforementioned GST Errors. Better safe than sorry.
