If you are a business owner in Singapore, you must be aware of the various requirements and responsibilities that are expected from you by the IRAS (Inland Revenue Authority of Singapore) and ACRA. This includes company incorporation, company registration, GST registration, accounting and tax-related matters, and many other important aspects. One such matter is the issue of GST registration.
If you outsource your accounting and GST-related matters to a professional corporate and accounting firm, they will take care of all your GST-related requirements, filing, audit, and compliance matters in the most efficient way.
GST (Goods and Services Tax) in Singapore is just like a value added tax (VAT) in most countries where this tax is collected by the registered businesses from their customers and it is passed on to the IRAS. This tax is also imposed on imported goods in Singapore. GST was introduced to lessen the burden of direct taxes such as corporate and personal income taxes.
According to the compulsion by IRAS, if a company’s taxable turnover after a year exceeds $1 million, the company will have to register for GST. This is called compulsory registration. However, even if your company is not obligated by the IRAS to be GST registered e.g. in the case that your annual turnover is less than $1 million, you still have the option to opt for voluntary registration.
So why would you want to register for GST even though you are not obligated to do so? Here are some reasons.
Create An Impact In the Market
The companies which are required to be GST-registered are usually big businesses with huge turnovers. These businesses are well settled in the market and establishing a presence in the market with these big businesses can be a challenging task. When you register for GST voluntarily, it makes your business appear established just like the big businesses and people start to notice you.
When vendors and customers see that your business is GST-registered, it automatically creates a psychological effect that you are a well-established company and hence, are attracted towards you. This helps you to get recognized in the market resulting in your business growth, better revenues, and higher profits.
Play Your Role In Creating Relevant Economic Policies
The Government creates income tax and revenue policies based on the data that they have regarding the businesses. This data is taken from the pool of businesses that are GST registered and this helps the Government to plan and create economic policies accordingly.
When you register your business, you play your role in adding more data to the group of GSt registered businesses which in turn shapes the policies that the government will create. These policies, in the end, will affect you and your business. So you are able to shape the policies to some extent.
Decreased Income Tax Rates
When you register for GST, it means that customers are paying taxes whenever they make a purchase or avail your service. This helps to lower the individual income tax rates as the government is aware of the corporate tax payments that are generated because of GST and thus, they allow the personal income tax rates to be as low as possible. This lower income tax rate framework creates a conducive and appealing environment for businesses, new and old.
Better Savings
When a business is GST registered, the consumers pay tax every time they buy a good or service. But this also means that their savings and investments are not taxed and the personal income tax rates are also much lower. People are able to save money and make investments which will not be taxed. This helps to boost savings and investments which in turn helps improve the economy and gives you an opportunity to expand your business.
Lower Costs In The Long Run
When you register your business for GST, you just act as a middle man between the consumer and the IRAS. The consumers are the one who pay the tax and you just pay it all to IRAS without it inflicting any financial burden on you. GST registered business is able to lower its cost of doing business because of the benefits that are offered to GST registered businesses.
If you outsource your GST matters such as GST-filing services to professional firms, it will save you the costs of administration, save you from the hassle of doing GST filing and auditing yourself, and you will end up saving money in the long run. It is wise to get in touch with one early so they can understand your business and best advice you along the way.