Feeling The Urge To De-Register GST To Stay Competitive Or Conserve Your Cash Flow?
I received some enquiries recently on de-registering GST to remain competitive, increase their bottom line and to conserve some cash.
Consider this…
Eg 1) You are in the F&B industry, and by charging GST on a cup of coffee you are selling would render your pricing not competitive in the vicinity.
Eg 2) Your clients are so used to your fee schedule all this while for the service package you are providing ( such as Tuition fees or Branding Services ). When you start to be GST registered simply because your revenue starts to exceed S$1m and hence need to compulsory charge GST, you may lose your clients to your competitors who are not charging GST. You may hence consider absorbing the GST. By doing so, there will be sacrifice in your cash flow by way of carving part of your fees already collected to be paid to the government in the form of GST.
My advice is to do a sound Business Plan and then Structure your group companies carefully at the beginning to avoid having to “unwind” and “rectify” later when you know you would hit this problem sooner or later for a revenue of S$1m per year would just mean a mere S$80+K per month.
However, you are welcome to contact me should you need either to “plan” at the start or to “rectify” at later stage. Welcome your enquiries. I shall not elaborate on this part for now.
Meanwhile, let me elaborate on the hassle of the whole GST De-registration Process…
Here you go…
Let me use my company as an example to illustrate how your tax agent can help you de-register GST.
For GST deregistration, we will need your authorisation to e-file on MyTax portal, you would hence need to authorise Corporate BackOffice Pte Ltd. We will also need the following info :
1. Tax reference no
2. Gst registration no
3. Acra no
4. Business name
5. Reason for cancelling gst registration
And also choose one of the reason below and provide the details stated below:
1. If business cessation, give date and reason for cessation
2. For transfer of business, please state whether is it full or partial transfer, name of transferee, is turnover for the next 12 months more than S$1 m, tax reference of transferee, and is the transferee gst registered?, date of transfer
3. For change in business constitution, new entity name, tax reference,business constitution of new entity, date of conversion
4. If taxable supplies is < S$1 million, please confirm the below statement:
“My taxable supplies in the past 4 quarters ending on the last day of March, June, September or December have exceeded S$1 million” Yes/No
The expected value of taxable supplies in the next 12 months
Please also select from below the basis for expecting your taxable supplies to be < S$1 million in the next 12 months. Such reasons can be any of the followings :
A) Expiry/termination of high-value sales contract and you are unlikely to enter into new sales contracts in the next 12 months
B) Large-scale downsizing of business
C) Termination of business licence or sales distribution rights, etc that caused part/all of your business activities to cease
D) Cessation of part of your business activities or preparation to cease your business
E) No specific circumstances
Please also provide the supporting documentary evidences of the specified circumstances and the detailed computation showing the projected taxable turnover for the next 12 months was determined to be $1 million or less.
So, your forecast needs to be substantiated.
5. Stopped making taxable supplies
Date when I stopped making taxable supplies and the reason for not making taxable supplies
6. Have not made taxable supply since GST-registered Reason for not making taxable supplies since registered for GST
Depending on the reason for deregistration various information needs to be provided.
IRAS usually takes 1 to 10 working days to process the online applications.
Most cases will receive a confirmation of approval on the day of application.
This is the important part to take note :
When a business owner de-registers his business for GST purposes, he must account and pay IRAS the GST on the value of the business assets if it is > $10,000 as at the last day of GST registration and if he had previously claimed input tax on these assets from IRAS. Business assets include equipment, non-residential properties or other goods or stocks that are bought locally or imported.
So, You would need to confirm whether your company owns non-residential property/properties, and if so, you would need to provide us he following information :
1. Details of all non-residential properties individually,
A) property tax number
B) whether input tax claimed
C) whether taken possession by mortgagee due to default on loan payment
D) state mortgaged name
E) whether granted any option to purchase or entered into any agreement to sell the property
F) expected date of completion
Please also furnish the Full name of director, NRIC no and designation making the declaring of information provided are true and complete
Please note the company deregisters is still required to collect GST on taxable supplies and submit GST returns till the approved effective date of de-registration. If there is no transaction during the period, please fill in the figure ‘zero’ in all the boxes of the return.
What happens upon IRAS’ approval for GST De-registration ?
Upon approval, the you are required to file the final GST return (GST F8) and all returns due for submission prior to the cancellation of your GST registration.
In conclusion, kindly take note of the followings :-
* Basis of forecast has to be provided to ensure bona fide De-registration
* Deemed Output Tax on previous taxable purchase may have to be paid one month after Deregistration ( thus, in addition to the net output tax for the quarter, there may be an additional deemed output tax payable )
* IRAS may ask for latest copy of your prior year’s Balance Sheet to review your Fixed Assets and Inventories on which input GST may have been paid previously
* If you own non-residential properties, please know exactly how much GST you have claimed previously for this amount would be clawed back upon de-registration.
Hope the above clarifies.
If you need help, feel free to contact us at :
(O) +65 63851011
(M) +65 90880669
