21 August, 2016
The Inland Revenue Authority of Singapore (IRAS) has updated its guide to how taxpayers can reclaim goods and services tax (GST).
The guide covers rules on what is taxable for businesses, and what is not. The general rule is that businesses can recover tax on products that are used in making further, taxable products, known as 'input' tax. If the end product is not taxable then the input tax cannot be reclaimed, the IRAS said.
However, partial exemption rules do allow some or all input tax to be claimed when making exempt products.
Under a 'de minimis' rule, manufacturers can reclaim all input tax if the total value of all the exempt supplies does not exceed an average of S$40,000 (£22,700) a month, and 5% of the total value of all taxable and exempt supplies made in the period, the guide said.
Other exempt supplies include money deposits and currency exchange, the issue of bonds or shares, and provision of car, housing or study loans to employees. Hedging of interest rates, currency risks and other risks is also exempt.
The exemptions, however, do not cover financial services businesses including banks, insurance companies, moneylenders and pawnbrokers, the guide said.
Singapore-based tax expert Valerie Wu of Pinsent Masons, the law firm behind Out-Law.com said: "The partial exemption rules are generally considered as a positive improvement in the tax law, which provide more flexibility and better liquidity for businesses."
For further information, please contact:
Mohan Pillay, Partner, Pinsent Masons
mohan.pillay@pinsentmasons.com
