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SINGAPORE : Some 10,000 small and medium enterprises (SMEs) can expect financial help if they register for Goods and Services Tax voluntarily.

SPRING Singapore says it is setting aside $30 million over two years for this GST Assistance Scheme.

Currently, businesses need not register for GST if their earnings do not exceed a million dollars a year.

But SPRING Singapore says it is beneficial to register for GST voluntarily.

And it is offering a grant of up to $5,000 to each SME to offset initial cost arising from registration.

Png Cheong Boon, Deputy Chief Executive of SPRING Singapore says: "It allows them to collect back the GST that they paid for some of the services and products that they've procured, and that's a savings for them, otherwise they have to bear the GST that they have paid on their own.

"But at the same time, registering for GST means that they have to charge customers for GST, so at the end of the day the company will have to weigh the pros and cons."

The grant will help to defray 100 percent of accounting software cost and half of the setup cost.

But companies will have to bear the incremental cost subsequently.

"They would have to have accounting staff to prepare those returns. They are also expected to issue GST invoices and keep their own invoices for GST claims. From what we know and what we can estimate, the incremental cost a year should be no more than $2,000 a year for small business," says Eng-Tay Geok Lee, Deputy Commissioner, GST and Property, IRAS.

The Inland Revenue Authority (IRAS) sees about 600 GST registrations a month, nearly half of which are on voluntary basis.

Application for the grant will be opened from March 1 and details are available on SPRING Singapore's website www.spring.gov.sg.

The Association of Small- and Medium-sized Enterprises (ASME) welcomes the move and expects companies to seriously consider if they should sign up.

Adrian Chan, Executive Council Member, ASME says: "If you provide business-to-business services, you should be voluntary registered for GST as it will be helpful for your business. Or if you have export goods and services, you should do so too.

"But for business-to-consumer businesses, where you provide goods and services to consumers, if you do become GST-registered, then you will be passing on GST on your margins, and it will affect your margins and pricing."

As for companies who are already GST-registered, the IRAS will help them get ready for the GST increase to 7 percent on July 1.

Businesses will have to update their accounting and billing system, as well as price tags to reflect the change.

IRAS says on record, there are about 17,000 traders who are experiencing the GST rate change for the first time. So it will be holding seminars and workshops to help them make the transition.

IRAS hopes businesses, especially the retailers, can make preparations early as the GST hike will come into effect in the midst of the Great Singapore Sale, which is typically a busy period.

IRAS adds that the switch can be done fairly quickly and expects the exercise to go smoothly. - CNA /ls

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