Out of Scope Supplies

Definition: Out of scope supplies refer to transactions that are not covered or governed by Singapore's Goods and Services Tax (GST) legislation. These transactions do not attract GST.

No GST Charged: Businesses do not charge GST on out of scope supplies. Consequently, these transactions do not appear in the taxable turnover for determining GST registration liability.

Input Tax Credits: Since out of scope supplies are not considered taxable supplies, businesses cannot claim GST incurred on expenses related to these supplies. This is a crucial aspect to consider, especially for businesses involved in a mix of taxable and out of scope transactions.

Record-Keeping and Reporting: Businesses must maintain clear records and documentation to distinguish out of scope supplies from taxable supplies. This is essential for accurate reporting and compliance during audits.

Impact on GST Registration Threshold: As out of scope supplies are not included in the taxable turnover, they do not count towards the SGD 1 million registration threshold. Businesses primarily dealing in out of scope supplies may not be required to register for GST.

International Transactions: Businesses dealing with international transactions need to carefully assess whether their transactions are out of scope or zero-rated. The distinction can significantly impact GST treatment and ITC claims.

Compliance and Audits: Proper classification of out of scope supplies is critical during audits by the Inland Revenue Authority of Singapore (IRAS). Misclassification can lead to penalties and backdated GST liabilities.