Goods and Services Tax (“GST”) is a transactional-based tax applicable on sale and purchase of goods and services. Considering its unique focus on an individual transaction (i.e. sale and purchase), GST-registered retail businesses (“GRRBs”) that have been managing GST risk on a broad level could face a mismatch in expectations and GST compliance level against that of the GST authorities.

 
Together with wholesalers, GRRBs are major contributors to the GST collection for financial year 15/16 and account for S$3 billion out of the total S$10 billion collected. As a result of numerous fraudulent GST claims from incorrect return filed and/or refunds under the electronic tourist refund scheme (“eTRS”), IRAS has recently placed GRRBs in the spotlight.

 

GST pain points

In line with the majority of GRRBs’ intentions to maximise cash flow (i.e. one way is to minimise GST exposure and potential penalties for incorrect classifications) and ensure smooth business operations with minimal disruptions (e.g. avoid handling an unplanned IRAS GST audit), targeted GST risk management in the following areas are recommended for GRRBs: 

  • Understand the details of GST customer accounting which will come into effect from 1 Jan 2018. This applies to GRRBs who supply prescribed goods like mobile phones, memory cards and/or off-the-shelf computer software;
  • Re-align their GST understanding of consignment sales, concessionaire sales, and hire purchase agreements;
  • Look into the details of what is negotiated for them to receive volume rebate (i.e. a discount on its purchase) and conditional rebate (i.e. a supply of marketing services to the brand owners);
  • Identify the differences between Multi-Redemption Vouchers (“MRVs”) and non-MRVs, free gifts and sponsorships, etc;
  • Review partnership with banks and credit card companies for advertising and promotions;
  • Re-align their GST understanding on recovery of expenses paid on the customer’s behalf (e.g. where the supplier’s invoice was addressed to the GRRB, which was subsequently billed and it recovered the expenses incurred, 7% GST or 0% GST would apply); 
  • Comply with rules when displaying prices to the public;
  • GST implications arising from certain payroll deductions made from their employees’ salaries (e.g. co-sharing insurance premiums, recovery of meal and transport expenses paid on employee’s behalf); and
  • The need to reverse GST claims made on expenses should the GRRB’s accounts payable aging records indicate payment to the specific supplier has been outstanding for more than 12 months. 

Your GST compliance partner

By tapping into our in-house GST Analytics expertise, the GST Assisted Self-help Kit (“ASK”) and GST Assisted Compliance Assurance Programme (“ACAP”) initiatives, we assess GRRBs’ GST compliance frameworks and shed light on gaps that may lead to penalties. We help businesses take advantage of the Voluntary Disclosure Programme (VDP), allowing them to disclose incorrect classifications confidently with lower or no penalties. Our team of GST specialists also offers advisory and compliance support to minimise GST risks.

Contact our team of GST professionals:

Richard Ong, Partner
Accredited Tax Advisor (GST)
T +65 6594 7821 
richardong@RSMSingapore.sg

Huang Yanlin, Senior Manager
Accredited Tax Advisor (GST)
T +65 6715 1140
huangyanlin@RSMSingapore.sg

Lee Meow Ling, Senior Manager
Accredited Tax Practitioner (GST)
T +65 6715 1142
leemeowling@RSMSingapore.sg

Victor Poon, Manager
Accredited Tax Advisor (GST)
T +65 6715 1141 
victorpoon@RSMSingapore.sg

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