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Provide is the easiest place to get quick & affordable GST bonds for your company.
Our rapid turnaround times mean that you can have your insurance needs easily settled, allowing you to focus on running your business.
What are GST Bonds?
A GST Bond is an insurance policy that IRAS sometimes requires when you’re registering your company for GST. Companies registering for GST may potentially have outstanding tax liabilities. A GST Bond provides IRAS with a form of financial security that these liabilities will be paid
How do GST Bonds work?
GST Bonds will pay out their insured amount to IRAS if the business does not pay their outstanding tax liabilities. To better understand how this process works, we need to first establish the main parties that are involved in any GST Bond.
There are 3 parties in a GST Bond:
1. Principal (the company who is registering for GST)
2. Beneficiary (IRAS)
3. Surety (the insurance company)
If the GST-registered company fails to pay their GST liabilities, IRAS can activate the GST Bond. This is also known as “calling” the bond. Once the bond is called, the insurance company will pay IRAS the insured amount. Depending on the exact conditions of the bond, the insurer may then seek to recover certain amounts of their claim from the business who failed to pay their GST liabilities.
When do you need a GST Bond?
Depending on the profile of your company and your directors, IRAS may require you to purchase a GST bonds when you’re registering your business for GST. IRAS may require your business to carry this bond to protect them from businesses defaulting on their GST liabilities.
If your directors meet any of the following criteria, you usually will be required to purchase a GST bond:
- One or more of your company directors have unpaid income tax
- One or more of your company directors have had tax penalties levied on them before
- One or more of your company directors was previously a director, partner, or sole proprietor of another business which owes tax or had tax penalties levied on them before
Why should I purchase a GST bond, instead of just paying the security deposit?
Placing a security deposit means putting aside a large sum of cash with IRAS. You can’t do anything with that cash – you can’t invest it, you can’t use it for working capital, etc.
However, with a GST bond, you only need to pay a small premium, and the insurer will foot the entire security deposit amount for you. For instance, if you need a $10,000 security deposit, you might only have to pay 1-3% of the bond amount as a premium. You can then use the rest of your cash for your business. This is a much more efficient way to utilise your financial resources.
How much coverage do I need?
If IRAS requires you to purchase a GST bond, they will inform you of the specific amount of the bond that you must carry. You will be notified of the amount during the GST registration process.
When running my GST-registered business, what other types of insurance should I have?
First off, consider getting a Business Insurance package deal. These packages are comprehensive, all-in-one solutions that help protect your business against major risks like fire, public liability, injuries to customers, employee injuries, and more. This package deal includes Commercial Property Insurance, Business Interruption Insurance, Public Liability Insurance, and Workman Compensation Insurance (WICA Insurance).
If you provide advice as part of your work (e.g. you’re a consultant), you should carry Professional Indemnity (PI) Insurance. This covers you against business lawsuits.
You should also consider providing your employees and yourself with Company Health Insurance. Premiums start from just $16/month per person, and the health coverage provided is very generous.
How much do GST Bonds cost in Singapore?
The premiums for GST Bonds can range between 1-3% of your security deposit amount. GST Bond premiums can vary significantly depending on the profile of each company and its directors. The major factors that influence price include: financial records of your company, whether the company has unpaid tax, and whether any company directors have had tax penalties or have outstanding tax liabilities.
Because there is a wide variability to each of these factors, every GST Bond application is underwritten and priced individually. The best way to get a quick quote is to send us an enquiry, so that we can begin working on your GST Bond application as soon as possible.
With Provide, you save up to 25% on your premiums. Our digital operating model creates lower overheads, and we pass every dollar saved back to our clients.