Although GST was designed to be a simple tax, the varied nature of business transactions can result in a great impact on your cash flow. When a business opportunity arises and a contract is drawn up, the implications of GST are commonly overlooked. Special attention should be given to transactions involving cross border movement of goods and the contract should be clear which party is to bear the GST liability.
Where services are concerned, whether GST is chargeable at the standard rate of 7% or zero-rated is contingent on the conditions stipulated in section 21(3) of the GST Act. The billing to a foreign person does not necessarily mean that it qualifies as an international service and GST is zero-rated.
We recommend that when a new contract is being negotiated, you give us a call to discuss the GST implications before signing any new contract. This is because the wordings of the contract are crucial in determining whether your services qualify for zero-rating or will be subject to GST at 7%. We have actual cases where clients had to absorb the 7% GST chargeable to clients.
The IRAS regularly conducts GST Audits. Hence, we recommend a Health Check to identify and resolve any non-compliance issue before the auditors knock on your door.
Most importantly, when you receive an Assessment raised by the Comptroller of GST, you have 30 days to raise any objections to the Comptroller's decision. We can review your case and make substantive written submissions on your behalf pursuant to section 49 of the GST Act. Do note that if you do not submit a written Objection within 30 days, you will have no further recourse under the Law. We have had a few cases where clients approached us after the 30 days deadline as their accountants could not handle the case. It is very sad that these clients lost their opportunity to have a fair hearing under the law and had to make substantial payments to the IRAS.
Where services are concerned, whether GST is chargeable at the standard rate of 7% or zero-rated is contingent on the conditions stipulated in section 21(3) of the GST Act. The billing to a foreign person does not necessarily mean that it qualifies as an international service and GST is zero-rated.
We recommend that when a new contract is being negotiated, you give us a call to discuss the GST implications before signing any new contract. This is because the wordings of the contract are crucial in determining whether your services qualify for zero-rating or will be subject to GST at 7%. We have actual cases where clients had to absorb the 7% GST chargeable to clients.
The IRAS regularly conducts GST Audits. Hence, we recommend a Health Check to identify and resolve any non-compliance issue before the auditors knock on your door.
Most importantly, when you receive an Assessment raised by the Comptroller of GST, you have 30 days to raise any objections to the Comptroller's decision. We can review your case and make substantive written submissions on your behalf pursuant to section 49 of the GST Act. Do note that if you do not submit a written Objection within 30 days, you will have no further recourse under the Law. We have had a few cases where clients approached us after the 30 days deadline as their accountants could not handle the case. It is very sad that these clients lost their opportunity to have a fair hearing under the law and had to make substantial payments to the IRAS.