Why You Should Consider Registering Your Business for GST in Singapore

In Singapore, the Goods and Services Tax (GST) is a consumption tax levied on the supply of goods and services and on the import of goods. While GST registration is mandatory for businesses with a taxable turnover exceeding S$1 million, many smaller businesses that do not meet the threshold still choose to register voluntarily. But why would a business opt in to collect and pay tax?

This article explores the advantages, strategic reasons, and considerations for voluntarily registering your business for GST, helping you make an informed decision.

1. Understanding GST in Singapore

GST in Singapore is currently set at 9% (as of 2024). It applies to most goods and services supplied in Singapore as well as to imported goods. Businesses registered for GST must collect this tax from their customers and remit it to the Inland Revenue Authority of Singapore (IRAS). They are also entitled to claim input tax credits on GST paid for business purchases.

2. Who Must Register for GST?

By law, GST registration is compulsory if your business:

• Has a taxable turnover of more than S$1 million at the end of the calendar year (retrospective basis), or

• Is expected to have a taxable turnover of more than S$1 million in the next 12 months (prospective basis).

If your business doesn’t cross this threshold, registration is voluntary, and this is where strategic thinking comes into play.

3. Advantages of Voluntary GST Registration

a. Enhanced Business Credibility

Being GST-registered gives the impression that your business is of a certain size and turnover. This can enhance your credibility in the eyes of potential clients, suppliers, and partners. Many larger companies prefer working with GST-registered vendors because it signals professionalism and legitimacy.

b. Input Tax Claims

When you are GST-registered, you can claim input tax on GST paid for business-related expenses such as:

• Office rental

• Marketing and advertising

• Equipment purchases

• Professional services (accounting, legal, etc.)

This can translate into substantial cost savings, especially for businesses with significant capital or operational expenditures.

c. Competitive Advantage for B2B Businesses

If your business supplies mainly to other GST-registered businesses, they can claim back the GST you charge them. This means being GST-registered doesn’t make your services more expensive for them—instead, it makes you a more desirable vendor because they can claim input tax credits on their purchases from you.

d. Preparation for Future Growth

If your business is scaling and you anticipate crossing the S$1 million threshold soon, registering for GST early can ease the transition. You’ll have time to adapt to compliance requirements, upgrade your accounting systems, and train your team.

Being proactive instead of reactive can also help avoid late registration penalties imposed by IRAS.

4. Considerations Before Voluntary Registration

Despite the advantages, there are also some key responsibilities and implications to consider before registering for GST:

a. Administrative Burden

GST-registered businesses are required to:

• Maintain proper records and accounts

• File quarterly GST returns

• Keep tax invoices and supporting documents

• Manage GST-inclusive pricing in invoices and quotes

This administrative workload may require hiring or outsourcing to an experienced accountant or bookkeeper.

b. Cash Flow Impact

As a GST-registered business, you must collect GST from your customers and remit it to IRAS—regardless of whether you’ve received payment. This can affect your cash flow, especially if your clients delay payments or if you offer long credit terms.

c. Price Sensitivity for B2C Businesses

If you serve end-consumers who are not GST-registered (e.g., individuals), charging GST makes your products or services 9% more expensive compared to non-GST registered competitors. This could affect your pricing competitiveness, especially in highly sensitive retail or consumer markets.

5. Who Should Consider Voluntary GST Registration?

a. Startups with High Expenses

If you’re in a capital-intensive industry such as tech, manufacturing, or F&B, you may incur significant start-up costs. Voluntary GST registration allows you to recover input tax on large purchases like equipment, renovation, and professional services.

b. B2B Service Providers

Consultants, marketing agencies, software developers, and logistics firms that mainly work with other businesses can benefit from GST registration. Since your clients can claim back the GST, you don’t suffer a pricing disadvantage, and you can enjoy input tax credits.

c. Businesses Preparing to Scale

If you foresee hitting S$1 million in turnover soon, registering early makes compliance smoother. You avoid last-minute scrambling and potential penalties for late registration.

6. How to Apply for GST Registration

To register, you need to:

1. Submit the application via IRAS’ myTax Portal.

2. Provide supporting documents (e.g., ACRA BizFile, financial statements, business contracts).

3. Complete the e-Learning course on “Overview of GST” (mandatory for certain cases).

4. Await approval, which typically takes about 10 working days.

Once approved, you must display prices as inclusive of GST, issue tax invoices, and file GST returns on time.

7. Tax Planning and Advisory

Before making the decision, it’s advisable to consult with an accountant or tax advisor. They can:

• Help you assess whether GST registration is financially beneficial

• Evaluate the cost-benefit in terms of administrative burden vs. input tax claims

• Assist in planning your cash flow and compliance obligations

8. Conclusion

Voluntary GST registration in Singapore is more than a compliance decision—it’s a strategic one. For many SMEs, especially those in growth mode or operating in B2B environments, registering early can bring substantial benefits such as input tax recovery, enhanced business reputation, and preparation for expansion.

However, it’s essential to weigh these benefits against the responsibilities and potential pricing impact. By doing a proper assessment and seeking expert advice, you can determine whether GST registration aligns with your business goals.