Forum: GST registration threshold remains adequate

We thank Mr Tan Yong Sang for his letter, "Time to review annual turnover threshold for GST registration" (May 12).

The goods and services tax (GST) registration threshold has been set at $1 million of annual turnover so that most businesses would not need to incur the costs of collecting and accounting for GST.

At this threshold, around 90 per cent of businesses in Singapore are not required to register for GST.

The threshold remains relevant, and is higher than in most other jurisdictions. For example, it is A$75,000 (S$73,000) in Australia, and £85,000 (S$146,700) in Britain.

Businesses that fall below the $1 million threshold can choose whether to voluntarily register for GST. If they charge GST on their sales of goods and services, they can then claim from the Government the GST that they incurred on their business purchases and expenses.

Today, about 70 per cent of businesses that register for GST do so voluntarily, despite having an annual turnover that is less than the threshold.

Businesses registering for GST should consider adopting accounting software to ease GST compliance. Digitalisation programmes such as the Infocomm Media Development Authority's SMEs Go Digital, as well as available government grants through Enterprise Singapore (such as the Productivity Solutions Grant), can aid businesses in making the transition.

By keeping our GST system broad-based, with a single rate and minimal exemptions, we also minimise complexity for businesses, including small and medium-sized enterprises, to comply with their GST responsibilities.

Farah Abdul Rahim

Director, Communications and Engagement

Ministry of Finance

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