In a move to streamline compliance for businesses, the Inland Revenue Authority of Singapore (IRAS) has eliminated the mandatory approval process for adopting the Gross Margin Scheme (GMS). This significant regulatory change took effect on 1 July 2025.
Key Change:
- Eligible businesses wishing to commence use of the GMS for calculating Goods and Services Tax (GST) no longer require prior approval from IRAS.
Updated Guidance:
To reflect this deregulation, IRAS has issued updates to the following critical e-Tax Guides:
- GST: Customer Accounting for Prescribed Goods
- GST: Guide for Motor Vehicle Traders
- GST Treatment of Hire Purchase Agreements and Financing Instruments
Businesses operating in sectors covered by these guides, particularly motor vehicle traders and those dealing with prescribed goods or hire purchase agreements, should review the updated documents for the latest procedures.
Business Responsibility:
While the approval requirement is removed, the onus is now on taxpayers to ensure they meet the eligibility criteria for using the GMS. IRAS mandates that businesses:
- Conduct a thorough self-assessment using the official ‘Self-Review of Eligibility to Use the Gross Margin Scheme (GMS)’ checklist.
- This checklist is available on the IRAS website.
Regulatory Basis:
The change is implemented through the deletion of Regulation 81 of the Goods and Services Tax (General) Regulations. This amendment is formalized in the Goods and Services Tax (General) (Amendment) Regulations 2025, published in The Government Gazette on 30 June 2025.
Implications:
This deregulation reduces administrative burden and processing time for eligible businesses seeking to adopt the GMS. However, businesses must diligently self-assess their eligibility using IRAS’s prescribed checklist to ensure correct and compliant application of the scheme.
Source: The Government Gazette, 30 June 2025.