fbpx

Call Us Today

(+65) 6677 4258
(+65) 8262 1713

Office Hours

Monday to Friday: 9.30 am to 6.00 pm
Weekend and Public Holiday: Off

COVID-19: What Can A Company Do To Ensure Sustainability?

COVID-19: What Can A Company Do To Ensure Sustainability?

by | 17 Mar 2020 | Business Tips, News

covid-19

Introduction

From late January 2020 onwards, the world has been plagued with news on the coronavirus disease (COVID-19, previously known as 2019 novel coronavirus). A pneumonia of unknown cause was originated from Wuhan City in Hubei Province of China. Singapore’s strategic location makes it vulnerable to contracting the virus. As of March 16, 2020 (1200 SGT), the accumulated number of cases in Singapore is 243. 109 patients were discharged while the other 134 remain in the hospitals. On March 11, WHO (the World Health Organization) has officially announced COVID-19 outbreak as a global pandemic. The number of cases globally increases daily and different governments impose different strategies and restrictions.

Source: https://experience.arcgis.com

Despite the measures implemented by Singapore Government regarding the containment and prevention of the virus spread, Singapore businesses also play a large part in keeping the community safe, especially those within the company. The Singapore Standard for Business Continuity Management Systems outlined measures to guide Singapore businesses to ensure the safety of their employees and other stakeholders, minimize the disruption in business operations, and help the country in preventing the spread of the virus.

What is COVID-19 (aka Coronavirus Disease 2019)?

The novel coronavirus is a strain of the coronavirus family that also includes Middle East Respiratory Syndrome (MERS-CoV) and Severe Acute Respiratory Syndrome (SARS). The symptoms of COVID-19 are similar to those of the common flu – fever, runny nose, shortness of breath, cough and respiratory symptoms. The virus is spread between people vis close person-to-person contact and respiratory droplets from coughing.

The prevention and containment of the virus are relatively easy but need the diligence, vigilance and socially responsible behavior of everyone in the community. At the community level, measures to follow include personal hygiene, awareness, appropriate social distancing and proactive seclusion when you are unwell. People are encouraged to avoid crowded places like malls, hawker centers, religious venues, theaters and other large public indoor sites. As much as possible, minimize the social contact even if there is no fever or respiratory symptoms and seek early medical consultation once any symptom approaches. On a personal level, wearing protective masks is advised when you are feeling unwell, frequently hand-wash with soap and having healthy diets to fortify one’s immune system are encouraged.

Wear a mask if you are unwell or having a poor immune system.

How to protect your business from COVID-19?

According to a recent guide published by Enterprise Singapore, companies are encouraged to prepare business continuity plans (BCP) to counter the effects of threats and uncertainties. Here are the four areas to be considered in BCP so as to handle the challenges from the virus outbreak:

Human Resource Management

  1. Assign a crisis contact person (Business Continuity Manager). Set up a group chat or open line for employees seeking advice and information, reporting incidents, or seeking help.
  2. Plan for the continuity of leadership in case of any absences of key executives and decision-makers.
  3. Consider alternative working arrangements such as work-from-home and rotating work schedules to reduce the human traffic in the office premise.
  4. Review relevant employee management policies like sick leave, stay-home notices, company-imposed leave of absence and relevant staff insurance plans. Serious communication and monitoring to ensure that the employees comply with the evolving regulations imposed by Ministry of Manpower (MOM) to reduce the spread or importation of COVID-19.
  5. Defer business travels and events. Make use of the convenient technologies, like video-conferencing or teleconferencing instead of overseas travels.
  6. Observe travel bans and other related news. Obtain the required health and travel declarations from employees who have recently traveled to China and other restricted countries (e.g. South Korea, Northern Italy and Iran), as specified by Singapore Government.
  7. Monitor the health conditions of the employees. Temperature checks, 14-day quarantine with annual leaves and seeking medical check-ups are required for those who insist on proceeding with non-essential and personal travels outside Singapore. Allow alternative working arrangements like work-from-home, video-conferencing and teleconferencing for the period of absence.

Process and Business Functions

  1. Identify essential business activities and employees. Cross-train workers to cover other positions in case of absences. Set up alternate teams and physically segregate the teams to reduce the risk of virus spread.
  2. Educate employees on the preventive measures, infection control and good personal hygiene.
  3. Develop plans and procedures to manage and track the human traffic movement within the office area.
  4. Be updated with the latest news, trends and government’s immediate implementations related to the COVID-19 and disseminate the information to the employees.
  5. Closely monitor the health of the working employees.
  6. Maintain an adequate supply of medical and Personal Protection Equipment (PPE) like thermometers, surgical masks, disposable gloves and disinfectants.
  7. Clean and disinfect the frequently-accessed or commonly-exposed company premises and areas, where suspected or confirmed cases have been reported.

Supplier and Customer Management

  1. Communicate with your critical suppliers and service providers on the business continuity plans of both parties and make necessary adjustments to allow seamless transactions without compromising the welfare of employees on both sides.
  2. Announce the measures to your regular customers which your company is implementing to protect them and your employees from the disease, without affecting the customer company’s requirements and operation.
  3. Develop a policy for alternative suppliers and service providers. Also determine a specific situation or timing to opt for the alternative delivery options to your customers.

Communications

  1. Appoint a communication coordinator to broadcast on behalf of your company about your company status and business continuity plans (BCP).
  2. Educate your employees to ensure that they clearly know their respective roles and responsibilities in the BCP. Discussion can be done in small groups to test on their understanding about their portion of the plan. A communication channel could be established for them to report their environment, seek for additional information and be well-informed on the impact of the BCP procedures, policies and progress that the company is taking to ensure their safety and non-disrupted business operations during the virus outbreak.
  3. Inform all the relevant stakeholders of the company – suppliers, customers and service providers about the contingency measures that your company has in place for the virus outbreak.

Please follow us at Facebook and LinkedIn for the constant updates in relation to the business management and operation during the current virus battle.

How To Choose The Right Accountant For Your Business?

How To Choose The Right Accountant For Your Business?

by | 8 Jan 2020 | Accounting, Business Tips

Introduction

The accountant is a vital team member of your business. Accountants are the people to call for your financial reporting, analysis and taxation as part of your company’s compliance requirements in Singapore. The ideal accountant should have the expertise and knowledge of diversified business industries, law and regulations which are important, invaluable and inevitable in business.

Partnering with the right accountant is in the best interest of your business. An experienced, skilled, and capable person to handle your company’s financial reporting, business analysis, and taxation will bring in immeasurable advantage to your organization. While engaging someone who doesn’t have a full grasp of the position and its importance can be disastrous to your company. Thus, the importance of engaging the right person to handle the job is high.

Here are five major considerations when choosing the right accountant for your business:

The Accountant’s Location

Are you looking to hire an internal accountant or looking to outsource your accounting needs? If you need an internal accountant, your candidate pool is limited to those near you. With cloud accounting, connectivity, and availability of safe and reliable accounting software, outsourcing your accounting needs is a viable option. If a virtual office is compatible with your needs, your accountant can be anywhere in the world, then the location wouldn’t matter. For best work arrangements, we recommend engaging an accountant who is cognizant of your local business taxation, regulations, and accounting laws. This is why accounting firms in Singapore are the best option for Singapore businesses.

The Accountant’s Expertise, Credentials and Specialization

Knowing the accountant’s level of expertise, skills, credentials, and prior experiences are vital to find a good fit. Do you need an experienced accountant who can bring in expertise, lead a team, and make decisions? Or are you looking for someone you can train to handle the bookkeeping? Are you looking to hire a team of accountants or just one person? Do you need an expert in taxation or one who is adept in cost accounting?

Workload Allocation

Which areas of the accounting process are you going to delegate and which are you going to keep in-house? As external accountants can be expensive and charge by hours, it is customary for small businesses to outsource the more complex tasks of reviewing the results produced by the bookkeeper, generating financial reports or working on bank reconciliation and taxation while keeping the laborious bookkeeping in. You can resolve this issue and work seamlessly with your accountant by using a user-friendly cloud accounting software, which is compliant with IRAS’s technical requirements, like Xero, QuickBooks, and Financio.

Accounting Software

Most, if not all, accounting firms in Singapore use one or more accounting software to facilitate work, sharing and collaboration with their clients. They would have several names for you to choose an accounting software that will fit your business needs, budget and usage. Some software can be integrated with most of your business processes and financial aspects like banks, invoicing, inventory and collections. The most popular online accounting platforms include Xero, QuickBooks and Financio. Each has its benefits and drawbacks. To choose the best software, it is best to discuss with your accountant.

Check out this article Five Advantages of Million Accounting System

Costs

The cost of hiring an accountant should not exceed the savings you get from the services rendered. If the cost of outsourcing your accounting department to an accounting firm is less than what you are spending to maintain the said department, or if it frees you time to work on other tasks, then outsourcing is a good option for your business. The cheapest accountants are not always the best deal. Expertise, experience and industry knowledge come with a premium. Shop around outsourcing firms in Singapore for comparable rates, consider the inputs that come with the price, and compare the fees and the service scope.

Steps in Hiring an Accountant for your Business

The process of finding, choosing, and hiring an accountant for your business should not be rushed. Careful considerations of the five basic aspects of engaging an accountant mentioned above have to be observed. Sharing your company’s most sensitive data with the wrong person might have serious repercussions. Extra precaution must always be exercised in hiring the right person for any accounting position, regardless junior or senior. Here are the steps in finding and choosing the right accountant for your business and its considerations;

1. Evaluate your company’s needs

Assess the accounting and bookkeeping tasks you need to delegate > volume, complexity and types of data. Can you afford to outsource, or would you rather keep it internal? For small business needs, we recommend engaging an external accountant to provide all your accounting needs. An external accountant can perform all your accounting needs without the need to hire, train and provide workspace.

2. Profile the right accountant

Based on your company’s needs, create a profile of your accountant. This should include his / her experience, prior industry exposure, certifications, location, preferred software used, skills, and expertise.

3. Shortlist the best candidates

Start looking for your accountant. You can do this by posting a job ad, asking for referrals, or going online to search for accounting firms in Singapore. Compile a list of no more than ten possible candidates. Reach out and schedule a face-to-face interview or meeting.

4. Conduct interviews

The goal of the interview or initial meeting with the accountant candidate is to verify the initial information you have gathered about the accountant and his / her firm. Ask the more important details such as the software they are using, price ranges, service coverage and their work processes. Let them share with you as much as they would like.

5. Do background checks

After meeting them for the first time, you will have fewer candidates on your shortlist. Filter further by conducting background checks. Call company partners and affiliations to check out if their claims match. Check for their online profiles and social media presence. Cross out any candidate with any misrepresentations and false claims.

6. Conduct final interviews

You should have no more than three candidates now. Before you make the final selection, ask for a final interview. This time discuss with the candidates as many details of the job as you can and ask how they are going to go about it.

Conclusion

After the final interview, you should have a very good idea of who to pick. If all final interviewees are qualified and ideal for the position, go for the one whom you think can contribute the most to the company in terms of expertise, savings and teamwork.

We offer quality accounting services in Singapore. Connect with us to discuss more of your staffing needs and company compliance requirements in Singapore. We look forward to helping you identify your business needs and providing you with efficient and holistic solutions.

Let’s discuss your business needs today.

What Kind of Services Do Accounting Firms Provide?

What Kind of Services Do Accounting Firms Provide?

by | 4 Dec 2019 | Business Tips

Businesses in Singapore are required to adhere to accounting regulations set by ASC or the Accounting Standards Council. Compliance with accounting standards is important to ensure transparency and reliability of a business’ financial information. Transparency and reliability of financial information enable comparability of global financial data and smooth functioning of international capital markets. The increasing number of businesses in Singapore is another compelling reason for entities to adhere to a uniform financial standard.

As a business, it can be time-consuming, exhausting and even downright intimidating, to maintain your seemingly infinite financial records. Hiring an accounting firm is one of the best ways to manage your business’ financial data. With a reputed accounting service provider, you will have an expert to take care of the financial aspects of your business. You can focus more on your core business knowing that your financial matters will be taken care of duly in compliance with the law. An accounting firm will also ensure a robust accounting system, which will give you a reliable and actionable financial base to make business decisions.

Expertise of an accounting firm is the key to your business success. With Mighty Glory Corporate Solutions, you get a wide range of accounting services delivered by a team with substantial industry experience. We offer a deposit-free accounting service with complete client confidentiality and a transparent fee structure.

If you are in search of a professional accounting firm, then you may want to explore the services such firms offer. Here are some types of services that an accounting firm usually offers business:

Accounting and GST Return

ACCOUNTING AND GST RETURN

Businesses are required to maintain a record of all their transactions to comply with Singapore’s statutory regulations. Details of transactions, sources of business funds, bank statements, employee payroll, and other financial aspects connected with the business need to be recorded. Maintaining clear source documents detailing all transactions is vital.

According to IRAS (Inland Revenue Authority of Singapore), a business’ accounting system must retain financial reports and related documents (collectively, financial records) pertaining to a Year of Assessment (YA) for a period of 5 years from the relevant YA. For example, businesses with the tax basis period from
1 January 2018 to 31 December 2018 (YA 2019) need to retain their financial records until 31 December 2023. The same applies to businesses with non-December financial year-end. If the tax basis period is from 1 October 2018 to 30 September 2019, the business has to retain its records till 31 December 2024. Failure to adhere to this IRAS directive can result in companies facing penalties and / or legal suits.

A professional accounting service provider can help to maintain an efficient accounting system depending on the type of your business. For example, if your business is a sole proprietorship, then the firm handles general ledger and basic account-keeping. Accounting principles for maintaining partnership accounts are similar to that of sole proprietorship. The only difference is that a partner’s income sourced by the partnership is declared in the personal income tax account of the partner, on the basis of his profit sharing ratio.

If your business is a sole proprietorship or partnership, it would be advisable to go for an accounting firm that offers personal income tax filing services as part of its accounting service. At Mighty Glory Corporate Solutions, we do offer personal income tax filing services for sole-traders and partners. We will however need information on other sources of income, such as their investments, rental inflows, etc.

In case of GST-registered businesses, the account preparing and tax-filing processes can be elaborate. An in-depth theoretical and practical knowledge of GST and the associated legal processes are crucial to maintaining a solid accounting system.

GST (Goods and Services Tax) is a consumption tax that is levied on almost all goods and services supplied within Singapore, with certain exemptions.

If you are a business with taxable turnover of more than $1 million, then you must register your business for GST. The tax is calculated according to the value of products and services which your business offers and fall under the category of taxable supplies in the GST Act.

Your business may sometimes be exempted from GST even though your turnover exceeds $1 million. This is when your business’ “prospective view” does not exceed $1 million, that is, you do not expect your business to make more than $1 million turnover in the next 12 months. You need to provide valid documents to support your statement. Late payment or non-payment of GST attracts heavy penalties in addition to business disrepute.

Computing your business’ taxable turnover is a key component of GST calculation. The process varies depending on whether your business is a sole proprietorship, partnership or a private limited company. An accounting firm can help you remove the stress off GST filing with its domain expertise.

As a business maintaining its professional standards, it becomes your responsibility to maintain your accounting system to the required standards. An accounting service provider enables you to maintain a failsafe and reliable accounting system.

Mighty Glory Corporate Solutions, we help GST-registered businesses maintain accurate records and make GST submissions in a timely manner. Even if your financial accounts are managed by an in-house team, our experts can help you derive relevant information for GST submission. Our non-obligation to charge GST on the service fees benefits non-GST-registered companies and individuals.

Financial Reporting

FINANCIAL REPORTING

A company has to report its financial performance to its shareholders, which is done by financial reporting. Financial reporting standards that companies are required to comply with, depending on their types and policies, include the Singapore Financial Reporting Standards (SFRS) or International Financial Reporting Standards (IFRS).

A typical financial statements includes the following:

· A statement by the business head declaring the veracity of the financial information presented;

· An independent auditor’s report giving its expert opinion of the financial statements presented by the business. The auditing firm must explain its audit process and the basis on which a particular conclusion was reached regarding the company’s financial statements;

· A detailed statement of profit and loss for the financial year;

· Statement of financial position;

· Statement of cash flows; and

· A supporting document referred to as the “Notes to the Financial Statements” explaining business’ nature, accounting policies, financial instruments including foreign currencies, revenue channels, subsidiary information, related parties’ transactions, inventories and infrastructure, intangible assets, financial and non-financial assets, financial liabilities, government grants, employee benefits, cash flow details and any other information which would affect users in their strategic decision making.

(Source: ISCA, Institute of Singapore Chartered Accountants)

The objective of financial reporting is to present true and reliable financial information. Misrepresentation can negatively affect the credibility and profitability of market investments. Manipulated information such as fake news can hurt a business’ image and its stock price, sometimes irreparably. Business decisions such as acquisitions and mergers are based on a business’ financial statements. Inaccurate reporting can affect such crucial business decisions, which in turn impacts market investments of the companies involved, and the general financial flow of the market.  

With business models becoming more complex, the standards governing financial reporting are constantly reviewed by the relevant councils. The risk of manipulation of financial information and the increasing concerns regarding corporate social responsibility of businesses have increased the onus on these entities. Businesses have been made more accountable now for the financial information they present.

The Companies Act requires directors of a company to present financial information that complies with the accounting standards set by the ASC and in such a way that it reflects the true financial health of the company.

The ACRA (Accounting and Corporate Regulatory Authority) has a Financial Reporting Surveillance Programme to monitor poor financial reporting which involves unreliable financial information and non-compliance with the required standards.

Given the onus on directors in the presentation of a solid and transparent financial reporting, the services of a professional accounting firm become invaluable. Accounting expertise and an in-depth knowledge of compliance laws of accounting firms can help companies present financial statements that are unbiased and objective.

Cloud Based Accounting System

CLOUD-BASED ACCOUNTING SYSTEM

Cloud-based accounting systems work through accounting software hosted on remote servers. Compared to traditional software deployment on a business’ local server, a cloud-based system is deployed online – on the internet. As a result, the software and its features are available 24/7 from any location, which saves time, cost and resources for businesses.

Financial information is available on demand, which facilitates timely business decisions based on reliable data. Cloud accounting system is very secure, given the strict security policies accompanying the solutions. Once a subscription plan is signed, you will have an efficient system that integrates seamlessly with your business’ accounting process. You will not experience the hassle of manually updating the software. The version upgrades itself automatically with every new release from the vendor. 

Mighty Glory Corporate Solutions partners with Xero, a leading accounting software in the cloud segment. Xero has a footprint in over 180 countries and has a growing customer base, which is currently more than 1.5 million. Xero offers features to track financial aspects of every segment of your business, including sales invoices, inventories, expenses, bank cash flow, purchase bills, expenses claims, projects, fixed assets and GST. We are also a Xero Certified Advisor who offer complete Xero integration and migration support, from setting up the solution to helping you migrate to Xero from your existing solution and preparing financial statements.

As a comprehensive accounting solution, Xero provides access to 700+ apps that can transform the way you do your business. Some key benefits of using these apps on a Xero platform include:

·       Faster and transparent inventory solution that enables you to easily monitor inventory, manage stock and replenish as required.

·       Extract and consolidate information required to process staff claims at your ease.

·       Valuable project tracking app gives you insights into key project factors, including time and money spent on the project. This helps to identify profitable jobs.

·       Make your payment reception faster through integrations with popular services such as PayPal and Stripe.

·       Ability to access sales-related information, either from POS (Point Of Sales) app or Xero.

·       Know easily how your business is performing at any given time with all key parameters projected, in a customized reporting format.

·       Make insightful decisions and allow maintaining business connections easier with a smart contact list through a CRM (Customer Relationship Management) app.

XBRL Reports

XBRL REPORTS

XBRL (eXtensible Business Reporting Language) Reporting is the process of digital business reporting using XBRL language framework. XBRL is an international standard adopted by many countries including Singapore to communicate on business and financial information. Use of XBRL ensures fast, accurate and digital transmission of financial and business information between entities. XBRL is part of XML languages.

XBRL standard is developed by a not-for-profit global consortium XBRL International Inc., or XII. The Consortium consists of executives from different backgrounds including small and large corporations, academics, accounting firms, governments, software companies, and experts in business reporting.

XBRL provides “information about information” (Source: ACRA). It assigns identifying tags to financial information, say “net profit”, so that the receiving end gets to identify what the tag is about. The identifying tags serve more than the purpose of being labels. They offer in-depth information about the entity they are representing such as whether it is a group item of relevance to an organization, or if the entity is a monetary item or a number representing a fraction or percentage.

XBRL is compatible with computer software, which makes it possible to use any electronic function, including searching, exchanging, selection and analysis, on the data being transmitted. The basic function served by XBRL is to enable communication between computers without human involvement.

According to ACRA’s regulations, all companies incorporated in Singapore have to file financial statements in XBRL format except for those that are exempted by ACRA from such submission. Non-exempt companies have to file in XBRL format, in addition to their standard filing.

Companies that are exempt from filing in XBRL format include merchant banks, commercial banks, and financial companies governed by MAS (Monetary Authority of Singapore). Companies that have legal approval to file financial statements in adherence to standards other than IFRS, SFRS and SFRS for Small Entities, are also exempted from such filing.

Mighty Glory Corporation Solutions can help your business to prepare and file the XBRL reports with ACRA in the correct format. Depending on the type of your company, we will prepare only key financial details or complete financial information in XBRL format.

Hiring a professional accounting firm for creating and maintaining your business’ accounting system helps your business cut down substantial costs on resources including infrastructure such as computers and accounting software, data-entry operators, and corresponding staff training on a regular basis. With an accounting firm, you will be acquiring expertise for a much lower cost than that is spent on maintaining a dedicated in-house accounting department. In addition, a professional accounting service provider can provide timely advice on the financial trends that can help you make sound business decisions.Mighty Glory Corporate Solutions specializes in a wide range of accounting services including business accounting, financial reporting and individual and corporate taxation. We are up-to-date with leading accounting technologies including Xero and majority of its connected apps, MYOB, QuickBooks Online or Desktop, ABSS Financio, Million Accounting, AutoEntry, Hubdoc, HReasily, JustLogin, Talenox and more. We offer customized packages tailored to specific business needs. For more information on XBRL reports, you may check us on our accounting and tax services.

Overview of GST Reverse Charge

Overview of GST Reverse Charge

by | 4 Dec 2019 | Bookkeeping, GST, News, Rules and Regulations

In Budget 2018, two regimes to levy GST on imported services, are announced to be implemented from 1 January 2020 onwards, namely Reverse Charge regime for Business-to-Business (“B2B”) supplies and Overseas Vendor Registration regime for Business-to-Consumer (“B2C”) supplies.

Reverse Charge Regime subjects the B2B procurement of imported services to input tax or GST. The current GST rule only requires input taxes to be applied on services procured from local GST-registered persons. The Reverse Charge (RC) regime stipulates the transfer of GST obligation to the buyers of imported services intended for business use.

The advent of technological advancements initiated the influx of virtual business solutions. This offered an option for Singapore businesses to procure service from outside of the country. The goal of the changes is to level the GST treatment for services procured locally and those obtained overseas.

Example

Company A obtains payroll services in Singapore from Payroll Company who is based in Singapore, and marketing services from an online marketing solutions provider.

In the current GST rule, Payroll Company has to report the GST on the payroll services in its GST return, while no GST is chargeable for the marketing services.

With the RC regime, Payroll Company will shoulder the GST for the payroll services, while Company A will be accountable for the GST on the marketing services.

Who are subjected to RC?

The following are covered by the changes in the RC regime;

  • A GST-registered entity who is
    1. A business not entitled to claim input tax in full;
    2. An organization who carries out non-business activities (such as charities or welfare groups who offer free or subsidised services, and investment holding companies which derive dividend income) and receives non-business receipts, is not entitled to claim input tax in full; or
    3. A fully taxable person who chooses to apply RC.
  • A Non-GST registered business
    1. Whose total value of imported services, procured within a 12-month period, exceeds the S$1 million threshold; and
    2. Who is not entitled to claim input tax in full even if it was GST-registered.

Exceptions to the Rule

By announcing these changes in the announcement in Budget 2018, this move gave the affected businesses about 22 months, providing ample time to prepare. Once the law takes into effect, no extension will be granted to anyone who might attempt to request for leniency. However, there are exceptions to the rule:

  1. Businesses that create and provide non-taxable goods and services may qualify for partial GST claims. Products and services include but not limited to:
    • Tax-exempt supplies under the 4th Schedule of the GST Act.
    • Zero-rating supplies under Section 21(3) of the GST Act.
    • Non-taxable government services under the Non-Taxable Government Supplies Order of the GST Act.
  2. Businesses that provide free or subsidized products and services.
  3. Regulations 28 of the GST General Regulations or the De Minimis Rule is not satisfied.
  4. RC is not applicable to supplies that have been previously taxed in Singapore.

Example

Singapore Corporation engages Foreign Services to conduct a market research for $20,000. Foreign Services will outsource the job to Local Research Firm for $15,000. After the completion of the project, GST computation is as follows;

Local Research Firm will bill Foreign Services $15,000 plus the 7% GST of $1,050 to get a total of $16,050.

Foreign Services will bill Singapore Corporation $20,000. Singapore Corporation will account for 7% GST on $5,000 as the $15,000 has already been taxed. GST charged to Singapore Corporation for this transaction is $350.

Which transactions are affected?

Although the law was announced as early as 2018, the blanket implementation of the rule is on 1 January 2020. RC will apply to all transactions of the affected services paid or delivered, whichever is earlier, on or after the implementation date.

  1. General Rule – The earlier of when the invoice in respect of the supply is issued and when the payment is made.
  2. Consistent Application – Businesses may also account for RC at the earlier of when the invoice in respect of the supply is posted and when the payment is made, if all GST returns are prepared on the same basis.
  3. RC Business Applying RC At The End of Longer Periods – The day immediately after the last day of the longer period. If the accounting period end on 30th June, the time of supply is 1st July.
  4. Special Rules
    • Intra-GST group and interbranch transactions – The earliest of when the invoice in respect of the supply is issued, when the payment is made, and 12 months after the basic tax point. This rule done not apply to continuous supply of services.
    • Transactions straddling the registration – Services performed before registration can be (a) excluded from RC or (b) the time of supply set to the service date or when the service was rendered.
    • Transactions straddling the de-registration – Services performed before de-registration are subject to RC, with the time of supply set to the day immediately before the de-registration takes effect.
    • As an administrative concession, GST-registered businesses who are unable to accurately determine if they will be partially exempted from year to year, they may elect to apply RC only at the end of the longer period.

Mighty Glory Corporate Solutions provides accounting and tax services, bookkeeping, payroll services, and more corporate solutions in Singapore. Connect with us today to know more about the Reverse Charge Regime and how it may affect your business. We look forward to helping you identify your business needs and provide customized, efficient and holistic solutions.

GST Implication From Customer Accounting

GST Implication From Customer Accounting

by | 26 Oct 2019 | Bookkeeping, GST, News, Rules and Regulations

Starting from 1 January 2019, customer accounting for prescribed goods is mandatory required under the GST regulations. This is applicable to the supplies of certain prescribed goods acquired by a GST-registered customer intended for business use, provided that it is (a) a local sale of prescribed goods with a GST-exclusive value of over S$10,000 and (b) not an excepted supply.

Customer accounting transfers the responsibility of GST accounting from the seller (or supplier) to the buyer (or customer). The changes are aimed to counter non-reporting and other fraud schemes where the supplier or seller absconds with the collected GST.

Under the Customer Accounting (CA) scheme, the sellers are not allowed to charge and collect GST from their customers. They are, however, required to issue a customer tax invoice that reflects the customer’s GST registration number and a statement to inform the customer of his/her GST accountability, and the application of CA in that purchase. The seller will also have to report the transaction in his GST returns.

What are the Prescribed Goods?

The application of CA is limited to the prescribed goods, which include but are not limited to the following:

  • Mobile Phones – Examples include smartphones, Blackberry, or tablets that can transmit and receive calls and messages over a cellular network. The purchase of a mobile phone is, however, excluded from customer accounting if it comes with a post-paid mobile subscription plan by a local telecommunication service provider. Satellite phones, walkie-talkies, smartwatches, mobile landlines, phones over 17.5 cm in screen size, and smartphone accessories such as chargers, screen protectors, and batteries are not included in the CA scheme.
  • Memory Cards – This category includes memory sticks, Secure Digital (SD) cards and CompactFlash. The exclusions are solid state drive (SSD), thumb drive, dual in-line memory module (DIMM), random access memory (RAM), portable external hard disk, hard disk drive (HDD), and other smart cards with embedded chips such as ATMs, SIM cards, and credit cards.
  • Off-the-Shelf Software – The software included in this category are those that are not specifically customized for the customer. Such software is stored in a CD or similar storage device; or the product can be accessed through a product or license key, activating or other similar code which is provided as part of the purchase. Prescribed goods for CA include software sold in physical boxed packaging like anti-virus, accounting, gaming, design tools, etc. Pre-installed software is not prescribed for CA. Software back-ups stored in CD or similar storage device, Xbox Live, software downloadable from the internet (whose key or code for access is provided via email), and PlayStation Plus are examples of software not qualified for CA.

‘Excepted Goods’ which are not subject to CA, are the supplies of goods made under:

  • Gross Margin Scheme – The computation of GST is based on the gross margin, not the full value, of the goods supplied. This scheme is applicable if (1) the primary business activity is dealing with used goods and (2) the second-handed goods are purchased free of GST.
  • Approved Third Party Logistics (3PL) Company Scheme – Under certain conditions, no import duty or GST is applicable on the supplies of goods from the overseas customers of these approved logistics companies.
  • Approved Refiner and Consolidator Scheme – Either the approved refiner or consolidator can enjoy the certain GST benefits, which are specially designed to ease cash flow and relieve indirect taxability on refining activities for investment precious metals (IPM).
  • A deemed taxability arising from the transfer or disposal of goods at no cost.

When to Apply Customer Accounting

To apply CA, the following conditions must be met;

  • The customer must be a GST-registered person;
  • The purchase of prescribed goods is conducted in the ordinary course of a business; and
  • The value of the prescribed goods exceeds S$10,000.

Connect with us today to learn more about customer accounting and how this may affect and/or apply to your business. We look forward to helping you identify your business and personal needs, and providing you with efficient and holistic solutions.