A company in Singapore that failed to register for GST
A recent sports and concerts event promoter was ordered by court to pay about $786,000 in penalty and taxes together with a fine of $7,000 just for failing to inform the Comptroller of Goods and Services Tax (“GST”), and of its liability and failure to register for GST.
Who must register for GST?
Under the Singapore law, a business with annual taxable turnover of more than SGD$1 million must register and apply for GST. A GST-registered business is required to charge and collect GST on its sales, and this can be offset against the GST it pays on its purchases before it accounts for the net difference to be either received from or paid to IRAS.
Businesses are required to regularly assess and analyse if they must be registered for GST. In most cases, businesses must register for GST when the business’ taxable turnover for the past 4 quarters is more than SGD$1 million, or when the business’ taxable turnover for the next 12 months is expected to go beyond SGD$1 million. Businesses need to register for GST within 30 days of the date on which their liability to apply for GST arises.
How the Offence was Committed in this Case?
IRAS’ investigations revealed that the taxable turnover already exceeded $1 million for the four quarters ending 30 Jun 2004, 30 Sept 2004, 31 Dec 2004 and 31 Mar 2005. The company failed to inform the Comptroller of GST of its liability to register for GST within 30 days of the end of 31 Mar 2005. In that case, by 30 Apr 2005.
Further checks were conducted by IRAS and they had confirmed that the total value of all the company’s taxable supplies made in Singapore exceeded and were more than $1 million during the relevant period.
As a result of that, a total GST amounting to $714,696.87 between 1 Jun 2005 and 30 Apr 2012 was not accounted for by the Company. In addition to paying the GST, this firm also has to pay a penalty equal to 10% of the amount of the tax due. This amounted to $71,469.69. The company was also fined $7,000 by the Court.
Penalties for Failure to Register for GST
IRAS reminds businesses to follow GST registration rules closely by monitoring their taxable turnover at the end of each quarter, and ensuring that they promptly register for GST when their turnover sales exceeds SGD$1 million per year. Did you know that regular audit programmes are also carried out by IRAS to identify cases that are liable for compulsory GST registration?
Businesses who fails to register for GST even though they are required to do so by law can be fined up to $10,000 and pay a penalty equal to 10% of the tax due from the date on which the business is required to register for GST.
Reminder from J Accounting Services
J Accounting Services would like to remind the public that it is important for you to monitor your taxable turnover closely to ensure that you are in compliance with the GST registration. Failure to register and apply for GST status when the need arises could lead to dire consequences. If you need assistance in this area, you will be glad to know that J Accounting Services do offer GST registration service.
