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Value Added Tax in Singapore

Value Added Tax in Singapore

The value added tax (VAT) is one of the most important levies in Singapore. The Inland Revenue Authority (IRAS) is the main regulatory body of the Singapore taxation system and all companies conducting business operations must register for VAT with the IRAS.

Our company formation specialists in Singapore can assist foreign investors who want to open companies in the city-state and need to register for the value added tax.

How is the value added tax applied in Singapore?

The value added tax, or goods and services tax as it is called in Singapore is a consumption tax applied to all goods and services provided in the city-state. The GST also applies to imported goods. The goods and services tax is considered an indirect tax because it is paid by the final consumer and it is not levied on the company that produces or distributes the product or supplies the service. Singapore companies will only collect the GST.

At the level of 2024, foreign business owners who want to register for VAT in Singapore can file the application for the VAT number online.

Value added tax rates in Singapore

Singapore has enabled the Goods and Services Tax (GST) in 1994. The GST is the equivalent of the value added tax (VAT) in Europe. Introducing the GST marked the beginning of a new taxation system of Singapore. The introduction of GST has taken place in order to reduce the corporate tax and the tax applied to personal incomes.

he first rate of the Singapore value added tax was 3% when it was first introduced in 1994. Ever since it was raised to 4%, 5% and 7% in 2007. Starting with 2024Singapore increased the GST rate to 9% from 8%.

European investors will find the GST system in the Republic very friendly if they choose to open a company in Singapore as they will also benefit from a zero tax rate for certain goods and services, as well as for exemptions from the GST. There is also a category of non-taxable goods and services.

The 0% rate applies to:

  • the sale of goods outside Singapore;
  • services deemed as international supply of services.

The goods and services for which the Singapore value added tax does not apply are:

  • the rental and sale of real estate which has no furniture;
  • the import and local sale of precious metals;
  • financial services.

Our company registration consultants in Singapore can offer more information about the rates of the value added tax in 2024 that have remained unchanged.

Registration for GST in 2024 – a procedure explained by our experts in company formation in Singapore

Not all companies are required to register for VAT with the IRAS in Singapore. However, companies must be aware of their balances all the time and when required they must register for GST. There are situations when GST registration is voluntary and situations when it becomes compulsory. Singapore companies must register for VAT if the turnover of their business undertakings exceeds 1 million S$ in the last 12 months and when the turnover for the next 12 months is expected to exceed 1 million S$.

Companies can opt to register for GST with the tax authorities if the business’ turnover has not exceeded 1 million S$ and if it exports the goods it produces. Financial institutions providing money services that are considered international services are not required to register for GST in Singapore. Companies opting to register for VAT in Singapore have the possibility to claim for refund of the input tax.

In order to register for GST in Singapore in 2024, companies must file certain forms that vary depending on the type of structure. Foreign companies must appoint a local agent to file the documents on their behalf. The registration process will take about 3 weeks to complete. Businesses are required to employ independent auditors who will serve from one annual general meeting to the next. Each set of financial statements to be presented at the annual general meeting of the Company shall be audited and the auditors’ findings shall be disclosed to the shareholders. According to the Companies Act, an auditor’s report must also be written using the International Standards on Auditing.

Please mind the new 8% rate of the VAT in Singapore in 2024.

Filing VAT returns in Singapore in 2024

Companies register for the value added tax in Singapore are required to file VAT returns with the Inland Revenue Authority in the city-state on a quarterly basis. In order to do that they must file Form GST F5 which must contain information about the total sales, exports and purchases from the local companies registered for GST. Singapore companies must also indicate the amount claimed as a GST refund. The GST F5 must be filed electronically. Also, company representatives must be aware that GST schemes and incentives are available for each industry.

In 2024, the Singapore VAT registration procedure has not suffered any modifications, however, it should be noted that traders failing to register for the tax upon meeting the compulsory requirements can be subject to penalties.

VAT changes at the level of 2024

Beginning on January 1st, 2024, Singapore’s Goods and Services Tax was raised to 9%. The government asserts that the primary drivers of this growth are the need to upgrade and maintain the infrastructure as well as higher healthcare costs. A couple of programs, such as GST coupons for those in lower income bands and payouts from Assurance Packages, are meant to help Singaporeans get used to the latest hike in GST. In 2024, Assurance Package payments will be made to all Singaporeans who are at least 21 years old in the form of yearly cash prizes, with values ranging from SGD 200 to SGD 800.

If you want to open a company in Singapore in 2024 and need details about the VAT changes, you can consult our local advisors for this purpose.

Our company formation representatives in Singapore can act on behalf of foreign companies for GST registration. You can also contact us for complete assistance during the process of opening a company in Singapore.