What is GST on sales of commercial or industrial properties?
GST, or Goods and Services Tax, is a consumption tax imposed on the sale and lease of goods and services in Singapore. While residential properties are generally exempt from GST, commercial and industrial properties are subject to GST in most cases.
This means that when buying or renting such properties, the transaction may include an additional GST charge. The GST is applicable when the landlord or seller of the commercial or industrial property is registered for GST. This tax helps generate revenue for the government and contributes to the overall taxation system.
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What are commercial or industrial properties in Singapore?
The following are examples of commercial or non-residential properties:
- Non-residential properties
- Boarding or guest houses
- Chalets, holiday bungalows, or resorts
- Canteens in halls of residence
- Ground-level premises of a shop-house approved for non-residential purposes
How to pay GST on sales of commercial or industrial properties?
When you sell a completed non-residential property, the typical process involves receiving an option fee initially, followed by a deposit upon exercising the option. The property is transferred to the buyer once the sale is finalised.
Booking Fee and Deposit
You are required to calculate the output tax and include it at the earlier of the following occurrences:
- When payment is received
- When an invoice is issued
Remaining Sum
For the remaining payable sum, you must include the GST at the earliest of the following situations:
- When you receive the payment
- When you issue an invoice
- When the property is ready for the buyer to move in
- When the legal transfer of property ownership is completed
Even if your lawyer directly remits the GST charged on the property sale to the Inland Revenue Authority of Singapore (IRAS), you still have to report the sale in your GST return. Specifically, you need to report the property’s sale value (excluding GST) in Box 1 and the corresponding GST amount in Box 6 of your GST return.
Are leased commercial or industrial properties exempt from GST?
No. When you lease non-residential properties, you need to charge GST and account for it at the earliest of two events: when payment is received or when an invoice is issued.
If you issue a single tax invoice for multiple monthly rentals that cover several months in advance, you must specify the due date and GST amount for each rental in the invoice. In this case, you will account for GST for each rental at the earlier of two events: the due date of the rental payment or when you receive the rental payment.
