You sell on Shopee, Lazada, Shopify or Instagram, and the money lands in your bank a week later. Singapore taxes this income like any other business income. Three questions decide your tax position: how you earn the income, when GST starts, and which records you keep.
Income tax
– A company pays 17% on chargeable income, after the partial exemption on the first S$200,000.
– A sole proprietor or partner pays personal tax rates on the profit. The business is not a separate entity.
– Tax applies to profit, so keep every cost invoice: stock, packaging, courier fees, ads and platform fees.
Book the gross sale
A platform pays you the sale price minus its fees, refunds and shipping charges. Record the full sale price as revenue. Record the fees and refunds as separate lines. The net payout hides your true revenue, and revenue drives three limits: S$200,000 for Form C-S (Lite), S$5 million for Form C-S, and S$1 million for GST.
When GST starts
You must register once your taxable turnover passes S$1 million in the 12 months to a calendar year end. You apply within 30 days of the year end. Late registration risks a fine of up to S$10,000 plus a 10% penalty.
Take a seller with S$85,000 of sales a month. Over 12 months the total is S$1,020,000. After 15% platform fees the payouts total S$867,000. The payout total sits below the line and the sales total sits above the line. The seller must register.
Below S$1 million you are allowed to register early. The conditions bind you. You stay registered for at least 2 years, set up GIRO, complete the IRAS e-learning unless exempt, and follow InvoiceNow. Most small sellers gain nothing by registering early, because your customers are mostly consumers who cannot claim the GST back.
After you register
– Charge 9% GST on local sales.
– File your GST return within 1 month after each accounting period ends. A late return costs S$200 at once plus S$200 for each completed month, up to S$10,000 per return.
– Late payment adds 5% of the tax, and a further 2% a month after 60 days, capped at 50% of the tax.
Overseas customers
Goods you export carry GST at 0% when you hold the export documents. Keep your courier waybills, customs records and proof of delivery for each parcel. Without these, the 0% rate is at risk.
Buying from overseas
Registered sellers who buy services from overseas, such as ad platforms and software, owe the reverse charge at 9% when they lack full input tax credit. Sellers with full input tax credit owe no reverse charge. Low-value goods imported for your business follow the same reverse charge rules from 1 January 2023.
Records
– Download each platform statement every month: orders, gross sales, fees, refunds and payouts.
– Match every payout to your bank statement.
– Keep records for at least 5 years. Electronic copies need no IRAS approval.
Want me to check your sales against the S$1 million line? Send your latest profit figure or your question by WhatsApp to +65 9876 3553 or by email to henry@cschow.com.sg.
Henry Chow
Public Accountant, C S Chow & Co