What are the conditions to claim GST?
To claim GST (Goods and Services Tax) in Singapore, certain conditions must be met. These conditions include:
1. GST Registration:
To be eligible to claim GST, you must be a registered GST entity in Singapore. This means you have successfully registered for GST with the Inland Revenue Authority of Singapore (IRAS) and have been issued a GST registration number.
2. Goods or Services Supplied to You:
You can claim GST on purchases of goods or services that are supplied to you by GST-registered businesses in Singapore. The suppliers must charge you GST on these supplies, and you must have valid tax invoices or relevant supporting documents for these transactions.
3. Imported Goods:
If you import goods into Singapore, you can claim GST on the importation of those goods. The GST amount paid at the point of import can be reclaimed as an input tax credit.
4. Business Purpose:
To claim GST, the goods or services you have purchased must be used for the purpose of your business in making taxable supplies. This means the expenses incurred should be directly related to your business operations and the provision of goods or services that are subject to GST.
It's important to note that GST is not claimable on expenses that are not related to business activities or making taxable supplies. This includes expenses incurred for:
· philanthropic,
· religious,
· political, or
· free activities without commercial reasons.
In such cases, GST cannot be claimed as these expenses are not considered business-related and do not contribute to the production of taxable supplies.
5. Local purchase tax invoice
For local purchases to be eligible for GST claims, they must be supported by a tax invoice that includes the following details:
The words "tax invoice" clearly indicated on the document.
Name, address, and GST registration number of the supplier who issued the invoice.
Invoice date, which specifies the date when the invoice was issued.
Identifying number, also known as the invoice number, which uniquely identifies the invoice for reference purposes.
Name and address of the customer who received the goods or services.
Description of the goods or services supplied, providing a clear and detailed explanation of what was purchased.
GST rate applicable to the transaction, indicating the percentage of GST charged.
Total amount payable excluding GST, which represents the cost of the goods or services before GST is added.
Total amount of GST charged, specifying the calculated GST amount based on the GST rate and the taxable value.
Total amount payable including GST, which reflects the total cost including the GST amount.
6. The input tax claims are not disallowed under the GST Act
To be eligible for input tax claims, it is important to ensure that the claimed input tax falls within the allowed and legitimate business expense categories. Here are examples of such disallowed input tax claims:
Benefits provided to family members or relatives of your staff:
GST claims cannot be made on expenses related to benefits provided to the family members or relatives of your employees. This includes goods or services provided to them that are not directly connected to the business operations.
Costs and running expenses of S-plate motor cars:
Input tax claims are not allowed for costs and expenses associated with S-plate motor cars used for business purposes. This includes expenses such as fuel, maintenance, insurance, and road tax.
Club subscription fees charged by sports and recreation clubs:
Membership fees or subscriptions paid to sports and recreation clubs are not eligible for input tax claims. These expenses are considered personal in nature and not directly related to the business activities.
Transactions involving betting, sweepstakes, lotteries, or games of chance:
Input tax claims cannot be made on expenses incurred in transactions related to betting, sweepstakes, lotteries, or any form of gambling or games of chance. These expenses are not considered valid business expenses.
Medical expenses and medical and accident insurance premiums:
Input tax claims are disallowed on medical expenses and premiums paid for medical and accident insurance. These expenses are generally considered personal and fall outside the scope of valid business expenses for GST claims.
7. Ensure no association with Missing Trader Fraud Arrangements.
It is important to ensure that the goods or services you are claiming input tax on are not associated with a Missing Trader Fraud Arrangement. Missing Trader Fraud, also known as Carousel Fraud, is a type of fraudulent scheme where traders exploit the GST systems by creating a chain of transactions with the intention of evading taxes.
To claim input tax without any issues, you need to confirm that your goods or services were not involved in such fraudulent arrangements. This means that the transactions related to your purchases or supplies were not part of a scheme where the intention was to fraudulently claim input tax credits or evade tax liabilities.
By ensuring that your business transactions are legitimate and not connected to any fraudulent schemes, you can confidently claim input tax credits within the guidelines of the GST Act. It is important to maintain proper documentation and evidence to support your transactions and demonstrate their authenticity in case of any audit or investigation by the tax authorities.
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