An invoice is an important document that serves as a record of transaction between a supplier/seller and a buyer. In Singapore there are various documents that can be served to a buyer when a transaction is made, such as; a tax invoice, a customer accounting tax invoice, a receipt or a credit note. These documents are not only important for tax purposes, but also for tracking your transactions and it can be used as proof of payment.
Many companies have in recent years externalized the process of invoicing clients, especially in the case of global transactions. Externalizing this process could be advantageous in the following ways:
In Singapore the main document for supporting an input tax claim is a tax invoice or customer accounting tax invoice. You are required to keep any invoice received from suppliers or issued to customers for a period of 5 years. However, these tax invoices need not be submitted with your goods and services tax (GST) returns.
A tax invoice is to be issued if your customer is GST registered. As a general rule, tax invoices should be issued within 30 days from the time of supply or performance. It is important for your customers to keep this document in order to claim input tax on standard-rated purchases. Tax invoices do not need to be issued for exempt goods, zero-rated goods or deemed goods to a customer that is not GST registered.
A tax invoice is required to have the following information:
If you are invoicing in a foreign currency the following items should be converted into Singapore dollars (an approved exchange rate for GST must be used):
How to calculate the GST amount on Tax Invoices:
There are 2 ways to calculate the GST amount on a tax invoice where several standard-rated supplies have been purchased. Both methods are acceptable, however once a method is chosen it must be applied consistently. You can calculate GST in one of the following ways:
The total amount of GST to be paid for goods and services can be rounded off to the nearest whole cent. Some businesses may round their bill off to the nearest 5 cents in order to simply transactions with customers.
Unlike an ordinary tax invoice, a customer accounting tax invoice is issued when performance is complete and it is subject to customer accounting by your customer, who is GST registered. Your GST registered customer would need to keep this invoice as it serves as a supporting document; which accounts for both the input tax on his purchase and the output tax on your side for the supply of goods/services.
If the total amount payable (including GST) for the supply of goods/services does not exceed the amount of $1,000, a simple tax invoice may be issued instead of a normal tax invoice. A debit note can also qualify as a simplified tax invoice, provided it meets the necessary requirements of a simplified tax invoice.
The following information should be included on a simplified tax invoice:
Receipts can be issued, as opposed to tax invoices, to non GST registered customers. If you issue a receipt you must keep a duplicate as it can be used a proof of income transactions.
A receipt must have the following information:
A credit note is issued to give credit to a customer or to correct a mistake in one of the following situations:
A credit note is required to have the following details:
Debit notes may be issued in order to request payment for transactions where no GST is charged. For other standard rated supplies to customers who are GST registered, you must issue either a tax invoice or simplified tax invoice. This is done in order to allow the customer to reflect his input tax claims.
A record should be kept of all receipts to suppliers. If normally debit notes are issued to suppliers from whom credit is due, the debit notes must reflect similar details to those required for credit notes. Thereafter, credit notes that are received by the supplier must be compared to debit notes issued. If an adjustment is required, it can only be made once. Debit and credit notes cannot be used simultaneously in accounting practices.
Performing transactions across borders may often bring about unexpected challenges, especially with compliance and regulatory issues. Here at INS Global Consulting, our team of experts can assist you with any query you may have regarding invoicing clients or tax practices in Singapore. It is our objective to simplify tasks such as invoicing, to enable you to run your business more efficiently.