Tax invoice in Singapore (All You Need To Know)

By ABSS
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17 Nov, 2023
•

Keeping proper records, such as invoices, receipts, and tax invoices, is crucial for your accounting and financial statements.

At ABSS, your business can concentrate more on increasing sales while we provide you with the accounting software - start your 7 day free trial here.

But first, you need to understand everything about a tax invoice, and this article will give you all the info.

What Is a Tax Invoice?

A tax invoice is an invoice issued for a taxable supply of goods & services.

The document contains crucial details, including the payable tax, quantity, description, and the value of products and services.

With the tax invoice, a seller can claim tax credits on goods they buy for resale.

How Does a Tax Invoice Work in Singapore?

Your tax invoice is a must-have document to support your input tax claim.

IRAS says that you must keep every tax document your business issues to your customers and the ones your suppliers give you.

Tax invoices must remain in your system for a minimum of five years.

However, you shouldn’t submit tax documents together with your Goods and Services Tax returns.

When To Issue a Tax Invoice

You must send a tax invoice to your GST-registered customers.

According to IRAS, you should issue a tax invoice within 30 days of supplying goods.

Your customers will use tax statements as proof of claiming input tax for the standard-rated purchases.

But if you’re dealing with zero-rated products, deemed supplies, and exempted goods or with a non-GST registered buyer, you don’t need a tax statement. Also, you can’t charge Goods & Services Tax if you aren’t registered with IRAS, meaning that you’ll send invoices without tax details to your customers.

If you’re not a registered GST vendor, but your customers ask for a tax invoice, only write that the price excludes GST or enter a zero for Goods & Services Tax.

Calculate GST on Tax Invoices

You can calculate the total Goods & Services Tax amount on the tax invoice for standard-rated supplies in two ways:

Add 7% to the cost of each item (excluding GST), and then total GST for all the products/services
Add 7% to the total amount of all the items (excluding Goods & Services Tax)

You need to choose one method and use it consistently across your products or services.

An Abridged Tax Invoice for Amounts Under $1,000

If your total payable amount for your supply plus Goods & Services Tax is less than $1,000, you can issue an abridged tax invoice. You don’t have to send a regular tax document.

A simplified tax statement has the following details:

Supplier's name, GST registration number, and address
Issue date for the invoice
The invoice’s identifying number
Description of supplied goods or services
The total payable amount, including Goods & Services Tax
A comment like "price payable includes GST."

What Is the Difference Between a Tax Invoice and an Invoice?

Recall that a tax invoice is a document that a registered vendor sends to another to process input tax relief.

Your standard invoice, on the other hand, excludes details about Goods and Services Tax. However, the two invoices show the amount due.

Here are more differences:

Definition

A tax invoice is a bill authorized vendors issue to purchasers, and tax authorities like IRAS recognize it.

It shows the payable tax amount for standard-rated products and services.

An invoice is a statement that a buyer sends to a seller, showing what the customer must pay for the goods or services.

The contents of the tax invoice and the regular one are the same.

But the tax bill shows the tax or owing GST amount. The invoice doesn’t include Goods & Services Tax.

Receiver

A registered business sends a tax invoice to another company for goods for resale or manufacturing.

A business, on the other hand, issues an invoice to the final customer.

Objective

A company prepares a tax invoice to ask for the payment of supplied products and services.

It uses the tax statement to claim tax relief or tax credit.

The giver and recipient of the tax document must be registered with IRAS. However, you only need to be a registered company with the Accounting and Corporate Regulatory Authority (ACRA) to send standard invoices to your customer.

Your tax invoice summarizes the outstanding amount on a taxable sale and may have the info below:

Must have the words “Tax Invoice.”
Seller’s name, contact detail, and address
Invoice number
Issue date for the invoice.
Buyer’s name and address
Tax identification number
Description and quantity of goods/services
The cost per unit
The total amount plus taxes
Tax charged for each item
Item payment details

Be sure to keep all your tax bills and standard invoices for at least five years.

You’ll need regular invoices for your yearly accounts and income statements. Also, tax statements are critical in claiming your tax credits.

What Is the Difference Between Tax Invoice and GST?

A tax invoice is a document showing the amount of payable tax, your Goods & Services Tax, which is an indirect tax on products and services. So, a tax bill shows the amount of tax you add to the final price of purchases.

See the tax document below. 👇

what is a tax invoice — *Source: https://www.iras.gov.sg/irashome/GST/GST-registered-businesses/Learning-the-basics/How-to-implement-GST/Displaying-and-Quoting-Prices/Invoicing-Customers/*

Why Is a Tax Invoice Necessary in Singapore?

Tax invoices are necessary for Singapore for some of the reasons below.

To help a registered vendor claim input credit on standard-rated supplies
To determine the products/services that you need to include in your taxable period
To determine the correct period for claiming the input tax based on the supplier’s tax invoice
The tax invoice’s issue date shows when to account for the taxes

Summary

As a business registered for GST in Singapore, you should send a tax invoice to your customers on all standard-rated supplies. Zero-rated goods and services, exempt supplies, and deemed supplies don’t need a tax bill.

A tax invoice is a document showing the total payable tax on standard-rated supplies in a given period. It serves as a supporting document for claiming tax relief from tax authorities like IRAS. Your business must keep its tax documents for at least five years.

Handling your business's accounting issues may seem overwhelming and challenging.

At ABSS, we’re here to help you with the right accounting software, letting you focus more on managing your business and help you stay compliant with your local tax obligations. ABSS-formerly MYOB-is a local, reliable brand that many companies in Singapore have trusted since 1990.

Tax invoice in Singapore (All You Need To Know)

What Is a Tax Invoice?

How Does a Tax Invoice Work in Singapore?

When To Issue a Tax Invoice

Calculate GST on Tax Invoices

An Abridged Tax Invoice for Amounts Under $1,000

What Is the Difference Between a Tax Invoice and an Invoice?

Definition

Contents

Receiver

Objective

What Is the Difference Between Tax Invoice and GST?

Why Is a Tax Invoice Necessary in Singapore?

Summary

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