Invoicing in Singapore
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.
Why Externalize Client Invoicing in Singapore
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:
- Record of transactions – an extensive system which is well organized, allowing you to easily keep track of all transactions made.
- Reduction in costs – having internal staff or internal processes could end up being a costly endeavor.
- Different currencies could be used to make payment – this allows for your client to make payment in in the local currency, USD or EUR.
- Expertise or knowledge – due to constantly changing regulations and laws, it may be useful to utilize a source who is familiar with the laws and processes in a particular country.
- Time saving – if payments are made directly by a client, it could result in a longer process than anticipated.
Invoices in Singapore
Tax Invoice & Customer Accounting Tax Invoice
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:
- The specific words “Tax Invoice” at the top;
- Supplier’s name and address;
- GST registration number;
- Customer’s name and address;
- Date of the invoice;
- An identification number;
- Description of the goods or services rendered; and
- GST rate, total amount payable excluding GST, total GST and total amount payable including GST.
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):
- The total amount payable excluding GST;
- The total amount payable including GST; and
- Total GST payable.
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 first way is to add the GST amount for each line item; or
- You calculate the total amount payable (excluding GST), and take that amount x 7%.
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.
Customer Accounting Tax Invoice
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.
Simplified Tax Invoice in Singapore
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:
- Your full name, registered address and GST registration number;
- Date the invoice has been issued;
- An identifiable number, such as an ‘invoice number’;
- Description of the goods supplied or services rendered; and
- Total amount that must be paid (including GST), accompanied by a statement which indicates the total amount payable includes GST.
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:
- Name of your business and GST registration number;
- Date the receipt is being issued; and
- The total amount payable (including GST), accompanied by the words “price payable includes GST”.
A credit note is issued to give credit to a customer or to correct a mistake in one of the following situations:
- In correction of a mistake (e.g. goods that have been invoiced as standard rated, but should have been exempt);
- Goods not supplied or services not rendered;
- Charges waived in part or in full;
- Goods have been returned or services have not been accepted;
- A discount is given for a previous transaction; and
- Goods or services have been accepted, however the terms of the contract have not been met in full.
A credit note is required to have the following details:
- Your name, registered address and GST registration number;
- The date the invoice is being issued;
- An identification number/invoice number;
- The date and number of the original tax invoice;
- Reason for the credit;
- Detailed description of the good supplied or services rendered;
- Quantity and amount credited for each item;
- Rate and amount of tax to be credited; and
- Total amount credited, excluding tax as well as including tax.
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.
Let INS Global Help Simplify Your Transactions
Performing transactions across borders may often bring about unexpected challenges, especially with compliance and regulatory issues. Here at INS Global, 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.