Why Are Some Companies Voluntarily Registering For GST?

The Goods and Services Tax, most commonly called GST, is a consumption tax imposed on most goods and services that are produced, sold, or imported in Singapore. It is strikingly similar to the Value Added Tax (VAT) that is imposed in most nations. GST registration is mandatory for businesses in Singapore if their taxable turnover hits $1 million and above. However, if your company does not meet the minimum requirements, you still have the option to register for GST, should you want to.

Registering for GST means that once approved, your business is recognised by the Singapore government as a GST collecting agent. This means that your business will have tasks and obligations that are expected to be carried out. While that could mean incurring additional compliance and business costs, it may, in the long run, be beneficial for your business even if you do so voluntarily.

In this article, we will go through critical reasons why, despite that, some companies still decide to register for GST voluntarily.

Early registration saves time and money:

Registering your business early means you are able to begin charging GST on your customers before the authority requires you to. This also means that you will not have to keep on keeping tabs on your taxable turnover for fear that you will cross the threshold limit. Most importantly, you will not have to worry about paying GST out of your cash supposed you are not registered and you missed the deadline to do so.

Improves your business’s image:

When your business is GST-registered, it creates a positive image as customers are shown that you take your business seriously and are as established as the more prominent brands out there. As soon as suppliers, clients, and partners know that your business is GST-registered, it will also help to bring in partnership and collaboration as it creates an impression that your business generates considerable revenue. Remember that the minimum requirement for GST registration is $1 million in taxable turnover.

Provides a competitive edge:

In addition to the above benefit, with a positive image, your business will be able to attract more giant corporations and multinational companies. Having a competitive edge over other similar businesses can be achieved by working with such experienced companies. That can be achieved with GST registration.

Receive Input Tax Credit (ITC):

Input Tax Credit refers to the claiming of GST credits paid when purchasing goods and services used for business expansions. In order to be able to claim ITCs, both the goods and services supplier and purchasing business must be GST-registered. For the company purchasing the goods and services from the supplier, they can receive credit for buying and keying that into their system services, such as consultation fees, legal fees, and any other transactional-related costs. This will, in the long run, enhance their base earnings and profit margins.

If you export to overseas customers:

If your business exports goods and services to overseas customers, you are exempted from charging them GST. This is because the imposed GST on exported items is considered equal to zero. Hence, you are able to claim the value-added tax (GST) you have to pay for the supplies you got from GST-registered vendors. For example, you purchased a piece of wood from a GST-registered supplier in Singapore for $1,000. With the 7% GST, you were charged another $70. Suppose you crafted a table using the wood and sold it to a customer living in Australia. You then are exempted from including GST in your product cost. This means that when you submit your GST claims, you are able to get back the $70 that you paid the wood supplier as input tax.

Maintains price stability:

Any business can avoid unnecessary and sudden increases in the price charged to their customers and clients by planning and anticipating GST registration. Registration of GST allows businesses to claim any GST they paid on their purchases.

Voluntarily registering for GST can help individuals who have started a business to claim back whatever GST they paid at the start, even if they earn less than the $1 million minimum threshold. In the beginning, the business might have higher expenses than earnings, but with GST registration, they can quickly regain back.

Conclusion

These are just some of the reasons why some companies are voluntarily registering for GST. However, it is essential to note that GST registration is not a one-size-fits-all solution and should only be done with proper planning and knowledge of what it entails. Once your company is GST-registered, there are GST Act guidelines that need to be adhered to, such as completing returns, maintaining bookkeeping, paying taxes on time, and many more.

Hence, if you decide to go ahead with GST registration voluntarily, it would be recommended to do so with an experienced accounting firm that knows what needs to be done. Ackenting Group can help you with that. We are also one of the best audit firms in Singapore. Besides providing a range of affordable accounting services and auditing services, we also offer branding services, company incorporation services, GST services, as well as financial reporting services, among others. We are indeed a one-stop solution for good company management.

Should you be interested in the range of services we provide, you may contact us at +65 9383 2464 or visit us on our website at https://ag-singapore.com/.

div#stuning-header .dfd-stuning-header-bg-container {background-image: url(https://ag-singapore.com/wp-content/uploads/pexels-photo-24464-1-2.jpg);background-size: cover;background-position: center center;background-attachment: scroll;background-repeat: no-repeat;}#stuning-header div.page-title-inner {min-height: 550px;}#main-content .dfd-content-wrap {margin: 0px;} #main-content .dfd-content-wrap > article {padding: 0px;}@media only screen and (min-width: 1101px) {#layout.dfd-portfolio-loop > .row.full-width > .blog-section.no-sidebars,#layout.dfd-gallery-loop > .row.full-width > .blog-section.no-sidebars {padding: 0 0px;}#layout.dfd-portfolio-loop > .row.full-width > .blog-section.no-sidebars > #main-content > .dfd-content-wrap:first-child,#layout.dfd-gallery-loop > .row.full-width > .blog-section.no-sidebars > #main-content > .dfd-content-wrap:first-child {border-top: 0px solid transparent; border-bottom: 0px solid transparent;}#layout.dfd-portfolio-loop > .row.full-width #right-sidebar,#layout.dfd-gallery-loop > .row.full-width #right-sidebar {padding-top: 0px;padding-bottom: 0px;}#layout.dfd-portfolio-loop > .row.full-width > .blog-section.no-sidebars .sort-panel,#layout.dfd-gallery-loop > .row.full-width > .blog-section.no-sidebars .sort-panel {margin-left: -0px;margin-right: -0px;}}#layout .dfd-content-wrap.layout-side-image,#layout > .row.full-width .dfd-content-wrap.layout-side-image {margin-left: 0;margin-right: 0;}