Singapore - GST registration to cut cost (Follow-up)

It is compulsory for businesses to register for goods and services tax (GST) once their turnover exceeds $1 million a year, according to the Inland Revenue Authority of Singapore (Iras).

And just like any other company or business, food businesses "may choose to register for GST voluntarily" even if their annual turnover does not exceed this amount, said an Iras spokesman.

Each year more hawkers are becoming GST-registered.

Why would they want to do this?

Because being GST-registered can help the hawkers cut costs.

This is how it works: When hawkers buy items and ingredients used in their business, they pay 7 per cent GST on them. This is known as input tax.

If they are GST-registered, they can add 7 per cent GST when they sell the finished product to you. This is known as output tax.

Hawkers can use the amount of output tax collected to offset the input tax they paid for the items and ingredients.

Under the rules, they are required to file their tax returns and make payment to Iras first.

Records from Iras show that 75 hawkers and stall owners were GST-registered this year, up from 52 in 2008.

This year, Iras recorded a total of 24 hawkers who voluntarily registered for GST, an increase from 15 stalls three years ago.

When asked if Iras expected more hawkers and stall owners to register for GST, the spokesman said that there was "no clear trend" that the number of voluntary GST registration for this industry is increasing.

GST-registered businesses must show GST-inclusive prices on all price displays such as price tags, price lists, advertisements and publicity brochures.

Prices that are quoted, whether written or verbal, must also be GST-inclusive. Failure to do so is an offence and offenders may be fined up to $5,000.

GST was introduced in April 1994 and went through three revisions, with the current rate of 7 per cent set in July 2007.

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