The Asian country of Singapore is one of the known jurisdictions for foreign investors to start their business as well as their operational headquarters. Singapore has no natural resources as we know and the survival of her economy is dependent on both international trades and domestic intake of goods and services. GST, Goods & Services Tax, was introduced on the 1st of April, 1994 in Singapore. One objective behind the introduction of the GST system in Singapore was to promote and facilitate a change in focus to indirect taxation from direct taxation from the perspective of a revenue collector.

What categories of transactions relate to GST in Singapore? In simple English, the common rule is that GST is levied on (i) import of goods into Singapore and (ii) local consumption of goods plus services.

GST legislation is made up of many zero-rating offerings that efficiently promote GST at 0% under specifically prescribed situations. Despite the fact that these offerings may sound straightforward to apply, it should be noted that there are pitfalls that should be acknowledged by these entities. To this effect, any non-compliance as regards GST legislation could attract a big penalty from the Singapore tax authorities. There are two particular scenarios when it comes to the application of the zero-rating offerings. These include (i) the provision of international services to overseas persons and (ii) the export of goods out of Singapore.

Export of Goods out of Singapore

A GST registered establishment must make sure the goods in question have already been or will be exported out of Singapore for the application of zero-rating provisions to the export of goods out of the country. This intention must be made known at the moment when a sale happens.

Provision of International Services

A GST registered entity is permitted to zero-rate international services provision to an overseas establishment as long as specific conditions are met. One of the main conditions to fulfil is that services must be provided under a contract with an overseas establishment in addition to its being beneficial to the overseas entity directly.