Gst in Singapore Essay

GST IN SINGAPORE Introduction of GST is seen as a means to lower personal and corporate income tax rates while maintaining a steady revenue base for the government. It is a broad-based consumption tax levied on the import of goods, as well as nearly on all supplies of goods and services in Singapore. The only exemptions are for the sales and leases of residential properties and most financial services.

Export of goods and international services are zero-rated. GST is a self-assessed tax.Businesses are required to continually assess the need to be registered for GST. In most cases, registering for GST is compulsory when: the turnover of your business is more than $1 million for the past 12 months; or you are currently making sales and you can reasonably expect the turnover of your business to be more than $1 million for the next 12 months.

Otherwise, you can choose to be voluntarily registered for GST. One can voluntarily registered when: Your annual turnover is not more than 1 million SGD, orYou only supply goods outside Singapore (out-of-scope supplies), or You make exempt supplies of financial services that are also deemed as international services If you make only zero-rated supplies you can apply for an exemption from registration, even if your taxable turnover exceeds the registration limits. Suppose business A imports raw materials from overseas then it will pay GST for imports and will claim GST paid for imports from IRAS which is called as input tax. Business A uses the raw material to make toys and sells the completed toy to business B. nd then A will charge GST for sale of toys which is called as output tax and report and will pay GST to IRAS.

B will pay GST to A when purchasing toys and will Claim GST paid to A from IRAS (*input tax)*. Than business B sells the toy to the end consumer and will charge GST for sale of toy and will report and pay GST to IRAS. And at the end end consumer will pay GST to B Benefits of GST To the government: It generates a stable and predictable tax income in both good and weak economic environment. It is an efficient tax due to the comparatively ower cost of administration and collection. It allows the Government to lower corporate and personal income taxes, which in turn encourages more foreign direct investment.

This leads to overall economic growth. To businesses and individuals: Most large, established businesses are GST registered – getting your business GST registered is often a signal to customers that your business is an established business and has certain size. GST is a fairer tax system. It taxes the self-employed and wage earners only when they spend their money.

GST taxes apply only on consumption. Savings and investment are not taxed. This will encourage people to save and invest in productive activities. Cost of doing business is reduced, thereby contributing to lower prices.

Businesses do not suffer a tax cost due to the multi-stage credit mechanism since the real taxpayer is the end-user. Drawbacks The disadvantage of GST registration is the administrative burden that comes with discharging the duties and responsibilities of GST registration.One must either study the intricacies of GST or pay an accountant to undertake this work which in some cases can be a reasonably high cost. Being GST registered effectively increases your selling price by 7%. Your customers who are not GST registered would not be able to recover the GST you charge.

So although your costs are reduced because you can recover GST, your customers might not be too pleased. GST can be a burden to lower income groups, especially during times of high inflation when the 7% tax is paid on the increasing price of daily essentials.