For the VAT reasons, the taxable supply refers to the sale of taxable goods or the delivery of taxable services. The importation of the taxable goods can also be referred to as the taxable supply. Taxable means that the VAT is imposed on the transactions. There exist two rates of VAT. They include the standard rate which goes at 15% and it is applicable to different goods and services which are mostly imported and sold. The other one is the zero rate at 0% which is applicable to the exports and specific list of commodities following the schedule of the VAT.
How is Value Added Tax (VAT) Applicable on a Taxable Supply?
- The VAT on the standard-rated supplies - When taxable supplies are made, the businesses registered on VAT, gather VAT from their clients, regarding the sales, and they have a responsibility to remit to the SRC. In actual sense, the VAT is usually included on the list items by following the schedule of the VAT.
- VAT Supplies which are Zero Rated - The business registered with VAT, and at the same time making zero-rated supplies charge a VAT of 0% on the price set for selling. The truth of the matter is that there is no VAT charged on the invoice and there will be no VAT that will be collected from the client.
What is GST?
Also referred to as the Value Added Tax, in several other countries, Goods and Service Tax (GST) refers to consumption tax, which is usually levied on the goods and services supplied in Singapore. It is an indirect tax which is usually expressed as a percentage and it is applied to the selling price of the good and services offered by the business organization registered under GST in Singapore. The GST is imposed to the end consumer, this, therefore, ensures GST doesn't become costly to the company.
The Meaning of GST for Singapore Company
If you have a company that is GST registered, you have a responsibility of collecting the GST from different customers for the services and goods supplied to you and then provide tax you have collected to the tax authorities. For example, in a situation where you charge $100 for the services to the customers living in Singapore, you need to invoice the customers $107 such that the $100 goes for the services and the GST of 7%.
The invoiced amount of GST which is collected for the tax authorities from the customers should subsequently be submitted to the tax department of Singapore quarterly through filling the GST returns.
The companies which are incorporated in Singapore do not get an automatic registration to charge the GST. Organizations that have already met some conditions are required to submit the application to IRIS in order to be registered by the GST before they are given the go-ahead to charge and' collect GST.
Types of GST Exempted Supplies
In Singapore, there exist three types of supplies which are exempted from GST. They include:
On this, some goods and services are exempted from GST. They include:
- Financial services provider, for example, sale/issue of shares
- Importation and the local supply of highly precious metals
- Lease and sale of the Residential assets
Out of Scope Supply
The supply of goods and services which takes place outside Singapore are not within the scope of the GST Act and therefore not taxable. This is meant to prove that the transaction took place overseas and not in Singapore. You will be required to maintain some documents.
Learn more about out of scope supplies.
Zero Rated Supply
GST is charged' at a rate of 0% whenever there is a supply of
- Goods which are not exported
- Provision of the services to the clients who are based in a foreign land.
The principle behind the case of zero-rated supplies is that during the point of supply, you need to make sure that goods you are offering are going to be exported alongside the documents that act as a proof that the goods are going to be exported. Nonetheless, you are also allowed to claim input tax deduction on GST tax you remitted for all the inputs which were committed towards the production of zero-rated goods or services.
When considering launching a business in Singapore, it is important to have a clear understanding of different aspects of GST. The rates of GST, modes of supply, and all the available schemes differ from one business to another. To make sure you adhere to the law, ensure the provision of maximum benefits on different schemes, file the GST returns at the right time. It is recommendable to look for assistance from experts and highly reputable corporate services.