Stripe, a global technology company that builds economic infrastructure for the internet, today announced the launch of Stripe Tax for Singapore to help domestic businesses automatically calculate and collect consumption tax, better known as goods and services tax (GST), in Singapore, as well as sales tax, value-added tax (VAT), and GST in over 35 countries* for cross border operations.
Stripe Tax makes every aspect of global tax compliance as frictionless as the rest of Stripe. It automates tax calculation and collection for transactions on Stripe, tells businesses where they need to collect tax, and creates comprehensive reports to make filing tax returns easy.
The complexity of tax compliance
For years, help with tax compliance has been a top request from Stripe users. Tax compliance has become increasingly complex, with digital and physical goods now taxed in over 170 countries. In the US alone, this means dealing with over 11,000 tax jurisdictions.
Businesses face significant opportunity costs in becoming compliant, but also maintaining a compliant setup globally. As a result, two-thirds of businesses in Europe say managing tax compliance holds back their growth, with a majority saying they would launch more products and expand into more countries if relieved of the burden [Source].
Tax rules and rates are updated frequently in many countries and may often vary based on subtle details. When exporting goods for example, businesses have up to 60 days from the time of supply (i.e. time of issuing invoice or collecting payment) to export the goods and collate the required export documents. If you are unable to export the goods or obtain all documents within the 60-day period, you will have to standard-rate the supply of goods and charge GST. [Source 1, 2]
Recent tax developments in Singapore include:
• The Goods and Services Tax (GST) will gradually increase in two stages from 7% to 8% on 1 Jan 2023, and then 9% on 1 Jan 2024. [Source]
• As from 1 January 2022, media sales are zero rated if the contractual customer is located outside of Singapore or is a GST-registered person in Singapore. [Source]
Non-compliant businesses face legal and financial exposure for late payment as national governments around the world increase penalties for late or inaccurate filings. In Singapore, businesses face a 5% penalty for late payment and charges will increase as payment delay continues. [Source]
How Stripe Tax works
Stripe Tax radically simplifies tax compliance for businesses across more than 35 countries, including Singapore. Features include:
• Tracks obligations: Stripe Tax monitors a businesses Stripe transactions so a business knows when and where they need to collect tax.
• Real time tax calculation: By determining the end customer’s precise location, and matching that to the product or service being sold, Stripe Tax always calculates and collects the right amount of tax, and keeps up to date with rate and rule changes so businesses don’t have to.
• Frictionless checkout: B2C businesses can reduce checkout friction with Stripe Tax, by using location information to calculate and show taxes in the most familiar way to their customers.
• Tax ID management: For B2B businesses, Stripe Tax collects the tax identification number from customers, and automatically validates VAT IDs for European customers, applying a reverse charge or zero VAT rate when necessary.
• Reconciliation: Stripe Tax saves businesses the pain of reconciling thousands of transactions by creating comprehensive reports for each market in which a business is registered to collect tax, speeding up filing and remittance.
Instead of taking weeks of work, all this can be done automatically by adding a single line of code or updating a single setting in a business's Stripe Dashboard.
“Changing tax charges and regulations continues to be a challenge for businesses of all sizes. For businesses looking to expand or go global, they will need to spend more time to understand the local tax considerations and meet compliance requirements in each country. Hence we’re making Stripe Tax available in Singapore and over 35 countries. We want to help forward-looking businesses do the heavy lifting so that they can focus on core business activities, including planning for growth,” says Sarita Singh, Stripe’s Revenue & Growth Lead for Southeast Asia.
Stripe is committed to automating tax compliance for businesses and building a fully standalone platform comprising multiple tax services.
*Stripe Tax covers Consumption Tax, Sales Tax, VAT and GST requirements in Australia, Austria, Belgium, Bulgaria, Canada, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hong Kong, Hungary, Iceland, Ireland, Italy, Japan, Latvia, Lithuania, Luxembourg, Malta, New Zealand, the Netherlands, Norway, Poland, Portugal, Romania, Singapore, Slovakia, Slovenia, Spain, South Africa, Sweden, Switzerland, the United States, and the United Kingdom.