The advantage: They can collect back from the Government the GST they pay to their suppliers, and not have to absorb or pass on this cost to customers. GST registration is voluntary for businesses with an annual turnover of less than $1 million.Got this from today which explains the advantage for kopitaim or mom-and-pop retailers to get GST-registered.
Another government's attempt to get more money from the residents....Originally posted by matleep:Got this from today which explains the advantage for kopitaim or mom-and-pop retailers to get GST-registered.
Actually this is really stupid. You collect the GST from government and yet you have to pay an even higher GST back.
Iras also points out it doesn't always save money. and this is especially true for hawkers. somemore you pay for accounting software.
Not really. It all depends on how you look at it.Originally posted by matleep:Got this from today which explains the advantage for kopitaim or mom-and-pop retailers to get GST-registered.
Actually this is really stupid. You collect the GST from government and yet you have to pay an even higher GST back.
Iras also points out it doesn't always save money. and this is especially true for hawkers. somemore you pay for accounting software.
What you say is right. But how many companies, especially the neighbourhood ones, are operating at a loss? And if you operates at a loss after one year, isn't it time for you to close shop?Originally posted by maurizio13:Not really. It all depends on how you look at it.
There are 2 portions to GST, 1) input tax (the GST paid by you), 2) output tax (the GST charged by you).
The amount of GST you pay to government is the difference between the output tax and the input tax.
e.g. If you buy a $100 item (input tax paid by business $5), you sell it for $200 (output tax charged to customers $10). You need to pay the difference of $5 ($10-$5) back to the government.
The only time you can claim GST credits back from government is when your input tax is more than your output tax.
e.g. You buy $100 worth of noodles (input tax $5), you only managed to sell $50 of fishball noodles (output tax of $2.50), since the noodles is perishables (you claim that it's spoilt due to time). You get to claim back $2.50 ($5-$2.50) back from IRAS. Hehehe.......
The only problem is, you need to keep accounting records, which is a big hassle in you neighbourhood coffeeshop.
Other than that, it won't benefit Singapore companies supplying their products in Singapore. Unless they zero rate or exempt certain essentials like rice, sugar, noodles, salt, flour, etc.
In finance, it's not a matter of whether you make losses and should therefore close shop. Whether a company close shop is a cashflow issue, if you have lots of cash, you can sustain alot of losses, there is no need for you to close shop. The problem arises when you cannot meet your debts (interest) payments to the bank, else, if you have the funds to make these payments, though you are making losses, you will still be a going concern.Originally posted by matleep:What you say is right. But how many companies, especially the neighbourhood ones, are operating at a loss? And if you operates at a loss after one year, isn't it time for you to close shop?
So looking at your first example, a GST-registered company pays $10. A non GST-registered company pays $5. A saving of $5. So what advantage is there?
Break up into smaller company has tax advantages mah, each company can have a partial exemption of $100,000 (think it's exempt $52,500 exempt from tax)..Originally posted by ShutterBug:This way, they only make hard for small businesses to submit 'honest' Annual Returns...
Quite a lot of medium setups break-up their earnings into smaller chunks into several accounts under several smaller entities to avoid losing more money to gov...