Zero-rating 0%

Transcription

1 Zero-rating 0% 1

2 Zero-rating Zero-rating Goods Services Exports International Services 2

3 Exports The general principle on zero-rating your supply of goods is that you must, at the point of supply (based on the time of supply rules), be certain that: the goods supplied will be or has been exported, and you have or will have the required documents to support zero-rating. Please refer to the GST: A Guide on Exports for the required supporting documents to substantiate the zero-rating of the goods and exceptions to the 60 day rule. 3

4 Exports 60 day rule You have up to 60 days from the time of supply to export the goods and collate the required export documents. If you fail to obtain all the required documents within the 60-day period, you are required to standardrate the transaction and account for GST accordingly. Please refer to the GST: A Guide on Exports for the required supporting documents to substantiate the zero-rating of the goods. 4

5 Exports To be certain that the goods supplied will be or has been exported, the supplier must : 1) have custody of the goods to be exported and control over the export arrangement direct export arrangement; or 2) deliver the goods to the freight forwarder/ handling agent appointed by overseas customer indirect export arrangement. Please refer to the GST: A Guide on Exports for the different direct & indirect export scenarios that can be zero-rated. 5

6 Exports Example: Local supplier (X) invoices its overseas customer (Y) and delivers the goods to Y s appointed local freight forwarder / handling agent (Z). X can charge 0% GST since Y is an overseas customer. X can only charge 0% GST if X is able to have all these documents : (a) purchase order from Y or equivalent. (b) written instructions from Y to deliver the goods to Z (this may be included in the purchase order). (c) X s sales invoice to Y. 6

7 Exports (d) X s delivery note / packing list endorsed by Z with the following details: (i) a statement stating that "goods delivered are for export"; (ii) name, address and GST registration number of Z; and (iii) date of collection of goods (e) Insurance documents (if applicable) with details of the shipment; (f) Evidence of payment received from Y. (g) For exports via sea or air bill of lading / air waybill showing details of X s goods exported and bearing X s name as the exporter. (h) For exports via land export permit showing X as the exporter and the vehicle number. 7

8 Hand-Carried Exports Applicable if: Supplied to overseas customer Goods are hand-carried out of Singapore via Changi International Airport Steps: 1. Take up an export permit 2. Present the goods for inspection at the airport 3. Bring the goods out of Singapore 4. The carrier returns the endorsed export permit 5. Maintain documents to support the zero-rating of the hand-carried exports 8

9 Exports Common Errors WRONG You have zero-rated your supply of goods sold to an overseas customer but delivered the goods to a local address. You have zero-rated the supply of goods sold and delivered in Singapore to a local customer who informed you that the goods will be exported subsequently. CORRECT You can only zero-rate the supply of goods if you are certain at the point of supply, that: the goods supplied will be or has been exported, and you have or will have the required documents (within 60 days from time of supply) prescribed in the e-tax guide A Guide on Exports to substantiate the zero-rating. 9

10 International Services GST is chargeable at 0% No requirement to issue a tax invoice GST Act ( 21(3)(y Section 21(3)(a) to 10

11 International Services Can be grouped into few broad categories. For example: Industry Section 21(3) Logistics (e.g. Freight Forwarder) Marine and Shipping Telecommunication General a,b,c,d l,m,n,o,p q e,f,g,i,j,k 11

12 International Services S21(3)(a): International transport of goods and passengers Example: Air ticket, freight /courier charges from Singapore to overseas and vice-versa 12

13 International Services S21(3)(b): Services comprising the transport of goods in Singapore as part of the international transportation of goods Example: Transport services provided by DHL to send goods from a warehouse to the airport and then out of Singapore 13

14 International Services S21(3)(c): Insuring or the arranging of the insurance or the arranging of transport of goods / passengers for international transportation Example: Insurance premium charged for insuring the transportation of goods from Singapore to overseas or vice-versa. 14

15 International Services S21(3)(d): Letting on lease / hire of any means of transport for use outside Singapore Example: Rental of buses in Malaysia 15

16 International Services S21(3)(e): Services supplied directly in connection with land situated outside Singapore Example: A Singapore construction company is required to build a building in Vietnam for a Singapore property developer. 16

17 International Services S21(3)(e): Example: Services of Real Estate Agent for managing a landed property in Australia Note: Documents i.e. invoice or contract, must specify the location of the property 17

18 International Services S21(3)(f): Services supplied directly in connection with goods situated outside Singapore when services are performed Example: A workshop sends its technician to Thailand to repair a machine there. The workshop bills a Singapore customer for the services. 18

19 International Services S21(3)(g): Services supplied Directly in connection with goods for export outside Singapore; and Supplied to a person who belongs in a country other than Singapore, at the time the services are performed 19

20 International Services S21(3)(g): Example: 1)A company provides packaging services for goods to be exported outside Singapore and invoices its services to an overseas customer. 2)Under the instruction of its Singapore customer, a company provides packaging services for goods to be exported outside Singapore: Cannot zero-rate the supply of services under S21(3)(g) as the company is making a supply to a person who belongs in Singapore 20

21 International Services S21(3)(j): Services supplied -- under a contract with a person who belongs outside Singapore, and directly benefit a person who belongs outside Singapore, and who is outside Singapore at the time services are performed, and not in connection with land or goods in Singapore [except goods for export] 21

22 International Services S21(3)(j): Example: 1) An IT consulting firm contracts with company in Malaysia to develop a management information system for a company in Thailand. 2) A broker sells SIA shares in SGX for a client in Malaysia and charges commission for his services. 22

23 International Services S21(3)(j): Example: 3) Under the instruction of its overseas customer A, company in Singapore provides accounting services to A s subsidiary in Singapore and invoices A for the services. The services cannot be zero-rated as the benefiting party is in Singapore. 23

24 International Services S21(3)(k): Certain services supplied -- under a contract with a person who belongs outside Singapore (in his business capacity), and directly benefit a person who belongs outside Singapore (in his business capacity). This person may be in Singapore at the time services are performed 24

25 International Services S21(3)(k): Example: 1) Consultancy services provided to overseas company, who came to Singapore, to obtain advice on the feasibility of conducting business in Singapore. 2) Training services provided to overseas company who sent their staff to Singapore to attend course. 25

26 International Services S21(3)(k): Example: 3) Testing of sample of goods taken from or forming part of goods situated outside Singapore i.e. sample testing conducted in Singapore to determine the purity of a bunker oil stored in a barge in USA. 26

27 International Services S21(3)(q) : Prescribed services comprising the provision of any means of telecommunication transmission (except local) can be zero-rated. 27

28 International Services S21(3)(q): Example: Onward supply of international telecommunication services: A and B share the same office premise A subscribes to SingTel for telecommunication services Both A and B use the international telecommunication services provided by SingTel. 28

29 International Services S21(3)(q): Example (continued): SingTel bills A for the supply of international telecommunication services. A in turn bills B for B s share of the international telecommunication charges on a cost-to-cost basis. *A can zero-rate the international telecommunication charges to B. 29

30 International Services Summary : Section 21(3) covers a wide range of services that can be zero-rated. Familiarise the relevant sections that are applicable to your type of business 30

31 Services Does Not Qualify as International Services WRONG You can zero-rate all your supplies of services provided to overseas customer. You can standard rate all your supplies of services provided to local customer. CORRECT You can only zero-rate the supply of services (provided to overseas or local customers) if it is an international service that fall within the provisions of Section 21(3) of the GST Act. 31

32 Services Does Not Qualify as Example: International Services You provide repair services to an overseas customer on computer located in Singapore. Since it is an overseas customer, you charge GST at 0% on your repair services. Since the repair services is on equipment located in Singapore, you should charge GST at 7% to your overseas customer. However if you export the computer after repair, you can charge GST at 0% under Section 21(3)(g) of the GST Act. 32

33 Services Does Not Qualify as Example: International Services You provide repair services to a local customer on computer located in overseas. Since it is a local customer, you charge GST at 7% on your repair services. Since the repairs services is on computer located outside Singapore, you should charge GST at 0% to your local customer under Section 21(3)(f) of the GST Act. 33

34 Quiz 1 You are a freight forwarder. You are required to provide transportation services to bring your customer s goods from Malaysia to your customer s warehouse in Jurong. You can: a) Zero-rate the whole transportation services. b) Zero-rate transportation services up till Woodlands checkpoint and charge GST 7% for transportation charges from Woodlands checkpoint to Jurong Warehouse. c) Standard-rate the whole transportation. 34

35 Quiz 2 You are a freight forwarder. Your local subsidiary company is required to provide transportation services to bring its customer s goods from Malaysia to its customer s warehouse in Jurong. You assisted your local subsidiary to transport the goods from Woodlands checkpoint to Jurong. You:- a) can zero-rate the transportation from Woodlands checkpoint to Jurong. b) should standard-rate the transportation from Woodlands checkpoint to Jurong. c) don t do anything but wait for IRAS officer to do an audit. 35

36 Quiz 3 Our local customer requested us to deliver the goods to their warehouse in Jurong, which they will later export to their own overseas factory. They have promised to provide us with the export documents within 60 days. Hence, we can still zero-rate our supply to them. Are you correct? 36

37 Quiz 4 So long as we have the Bill of Lading or Airway Bill to show that the goods left Singapore, the supply can be zerorated. It doesn t matter if the BL or AWB reflects our freight forwarder s name instead. Are you correct? 37

38 Quiz 5 You are an engineering firm. Your overseas customer requested you to repair an equipment located in Thailand. You can treat your supply as: a) Standard-rated supply b) Zero rated supply c) Out of scope supply 38

39 Quiz 6 You are an engineering firm. Your Singapore customer requested you to repair an equipment located in Thailand. You can treat your supply as: a) Standard-rated supply. b) Zero rated supply. c) Out of scope supply. 39

40 Quiz 7 Singapore customer requested you to repair his equipment, which is in Singapore. After the repair, your Singapore customer requested you to export the goods out of Singapore. You can zero-rate your supplies. a) True. b) False. c) Not sure. 40

41 Quiz 8 A lawyer assisted an overseas client to purchase shares. The service is: a) Zero rated. b) Standard-rated. c) Out-of-scope. 41

42 Quiz 9 A lawyer assisted an overseas client to purchase shares. The shares are purchased under the name of his wife in Singapore. The service is: a) Zero rated. b) Standard-rated. c) Out-of-scope. 42

43 Quiz 10 Your related company uses your phone to make local and overseas calls. The correct GST treatment when you bill your related company is: a) Standard-rate the whole phone bill. b) Zero rate the whole phone bill. c) Standard-rate the overseas calls made and zero rate the local calls made. d) Standard rate the local calls made and zero rate the overseas calls made. 43

44 Quiz 11 Services of an auctioneer for an auction held in Singapore. It is an auction for a property situated in Australia. This can be zero-rated under: ( 21(3)(a a) Section ( 21(3)(e b) Section ( 21(3)(f c) Section 44

45 Quiz 12 Research services on regional markets for medical services contractually to and benefit an overseas client. This can be zero-rated under: ( 21(3)(e a) Section ( 3)(g ) b) Section 21 ( 3)(j ) c) Section 21 45