You might be wondering if you must pay the Goods and Services Tax (GST) as a freelancer in Singapore. Due to the fact that it is based on your annual turnover, the answer is not simple. What you should know is as follows.
You must register for GST and bill your customers appropriately if your annual revenue exceeds SGD 100,000. This entails adding 7% to your fees and sending the Inland Revenue Authority of Singapore (IRAS) quarterly GST returns. If you don’t, there could be fines and legal repercussions.
You must first obtain a Unique Entity Number (UEN) from the Accounting and Corporate Regulatory Authority (ACRA) in order to register your freelance business for GST. Online filing or using a registered filing agent are both options. Once you have your UEN, you may submit an online or postal application for GST registration at the IRAS website. You must give information about your bank account, expected turnover, and business details.
But what if your annual sales are less than SGD 100,000? In that instance, while GST registration is not required, it may still be advantageous for you. For instance, you are eligible to get the GST you paid back on tools, software, and office rent. Being GST-registered might also help you project an image of professionalism and credibility as a more serious businessperson.
Can I work as a freelancer in Singapore while I’m employed?
You can, but only if it doesn’t conflict with your job agreement. Check your contract carefully as some employers may forbid moonlighting or working for rival companies. Additionally, you must report your freelancing income to IRAS and pay the appropriate taxes. Do independent contractors need contracts?
To safeguard your rights and obligations, you should have a written contract with each of your clients. A contract should outline the task’s parameters, its due dates, its payment terms, and any supplementary provisions relating to liability, confidentiality, and intellectual property rights. To create a personalized contract, you can either use templates or employ a lawyer.
Your income and allowable deductions will determine how much tax you must pay. Generally speaking, you should set aside between 20 and 30 percent of your gross income for CPF contributions and taxes. To determine your tax liability and adjust your cash flow, utilize the IRAS tax calculator. To claim deductions for things like office rent, equipment, software, and professional development, maintain track of your spending and receipts.
In conclusion, Singaporean independent contractors who earn more than SGD 100,000 year may be required to pay GST. If your revenue is below that amount, GST registration is optional, although it may offer advantages including the ability to recover back GST paid on company expenditures and a professional image for clients. Additionally, independent contractors need to be mindful of their tax responsibilities, contract specifications, and any problems with employee agreements. Freelancing can be a lucrative and long-lasting career route in Singapore with careful planning and compliance.