Goods and Services Tax

Introduction to Import GST Deferment Scheme (IGDS)

Content

1.

– – – – – – – Import GST Deferment Scheme (IGDS) Introduction Qualifying Conditions Responsibilities of IGDS Business Differences between IGDS and MES Misuse of Scheme Application Process Where to get more information?

Page 2

Introduction

Current Situation  Import GST is collected by Singapore Customs (SC) on all goods imported into Singapore, except where: – Relief has been granted under the GST (Imports Relief) Order; or – Importer is under an import GST suspension scheme (e.g. Major Exporter Scheme)  Business without any GST schemes will need to pay GST upon importation and can only claim back at the time when it files its GST return At point of importation (1 Oct) • Pay import GST to SC End of GST period (31 Oct) • Prepare GST return Submission of GST return (30 Nov) • Make input tax claims for import GST Time lapse between payment of import GST and claiming it back as input tax Page 3

Introduction

 Import GST Deferment Scheme (IGDS) – In Budget 2010, IGDS was introduced with the aim to help GST-registered businesses which suffer tighter cash flow as a result of importing goods.

– Payment of import GST is being deferred from the time of importation to the filing of GST return. This allows importers a credit period of 1 to 2 months, similar to what businesses enjoy for their local purchases.

– Takes effect from 1 October 2010 – Approved businesses will be able to enjoy IGDS status for a period of 3 years till next review At point of importation (1 Oct) End of GST period (31 Oct) Submission of GST return (30 Nov) • Need not pay import GST upfront to SC • Prepare GST return • Pay deferred import GST to IRAS • Make input tax claims for import GST Cash flow eased Page 4

Introduction

GST Reporting Approval date on permit: 12 October 2010 Declared in GST return for period: 1 October to 31 October 2010 Import GST Deferred Importation of Goods Eligible for Input Tax Claims

IGDS Section

“Total Value of Goods Imported under IGDS”

IGDS Section

“Deferred Import GST Payable”

Box 5

“Total Value of Taxable Purchases”

Box 7

“Input tax and refunds claimed” Page 5

Introduction

Numerical Comparison:

1 October 2010 Start of GST Accounting Period 12 October 2010 Import goods with import GST amounting to $10,000 Normal Rules Pay import GST of $10,000 upfront to SC IGDS Need not pay import GST of $10,000 to SC 20 October 2010 Sell goods with output tax amounting to $15,000 31 October 2010 End of GST Accounting Period Normal Rules Pay $5,000 to IRAS IGDS Pay $15,000 to IRAS 30 Nov 2010

GST Reporting and Payment Normal Rules IGDS

Box 6

: Account $15,000 output tax

Box 7

: Claim $10,000 input tax

Box 6

: Account $15,000 output tax

Box 7

: Claim $10,000 input tax Pay

$5,000

net GST Pay

$5,000

net GST before GST deferment

New Box

: Account $10,000 deferred import GST Pay

$15,000

net GST Page 6

Introduction

 Scope of IGDS – To import goods in the course or furtherance of your business – To import goods belonging to an overseas principal for sale in Singapore or re export in the capacity of a GST agent (i.e. Section 33(2) or Section 33(A) agent) – IGDS will apply to both dutiable and non-dutiable overseas goods under the following circumstances: • Direct imports • Imports released from Zero-GST/Licensed warehouses into local market – Not applicable to customs or excise duties Page 7

Qualifying Conditions

GST-registered for at least 3 years • Letter of guarantee (GST-registered < 3 years) Business is active and solvent • Not under bankruptcy, liquidation, receivership or judicial management Have been importing or will be importing goods for business purposes Under monthly GST accounting period Active GIRO account with IRAS for GST payment • Deduction will be made on the 15th day of the month after the due date for payment Good compliance records with Singapore Customs • No major violation of Singapore Customs’ regulations and requirements Page 8

Qualifying Conditions

Good compliance records with IRAS • Good history of payment for GST and other taxes • Prompt submission of GST returns • No overdue GST and other taxes • No overdue GST returns Good internal controls and proper accounting records Complete Assisted Self-help Kit (ASK)  As safeguard against risks: – May impose letter of guarantee prior to approval or during the validity period of the scheme; or – Reject application Page 9

Responsibilities of IGDS Business

 Satisfy all qualifying conditions at all times – IGDS may be revoked at any time if any of the qualifying conditions is not met • Once revoked, business is to make immediate arrangements with Singapore Customs for the payment of import GST on subsequent importations  If there are material changes in the nature of your business such that you no longer meet the qualifying conditions, you are to notify IRAS immediately.

 Value of imports must be reported promptly and accurately in GST return – Valid permits and relevant supporting documents must be maintained for 5 years  IGDS status is not transferable Page 10

Responsibilities of IGDS Business

 Operational Procedures – Clear goods at importation with the relevant permits • TradeNet user and registered with Singapore Customs • Appoint authorised declaring agent – Online Declaration of Agents via

myTax Portal

– Maximum of 20 authorised declaring agents Page 11

Differences between IGDS and MES

Target Group

Importers

IGDS MES

Major exporters

Payment of Import GST Major Requirements

Has been importing or will be importing goods with good compliance records with SC and IRAS 1. Monthly GST reporting 2. GIRO payment 3. Complete ASK Zero-rated supplies > 50% of total supplies or Value of zero-rated supplies > S$10 million for past 12 months Deferred until the submission of GST return, applies to dutiable goods Suspended, does not apply to dutiable goods Submit Positive Assurance Report Page 12

Misuse of Scheme

 Late payment penalties – Late submission of GST returns – Late payment in accounting for deferred import GST  Import goods that are not for the purpose of your business or under any other permissible situations constitute an offence – Re-pay the amount of GST that has been deferred in an unauthorised manner – IGDS status revoked – Possible imposition of penalties and criminal prosecution Page 13

Application Process

 To apply for IGDS status, you are required to submit the following documents: 1. A duly completed and signed application form GST F22 • Review Section 1 (GST Practices) and Section 2 (Pre-filing Checklist) of ASK 2. A duly completed "ASK: Declaration Form on Completing Annual Review & Voluntary Disclosure of Errors" • Review Section 3 of ASK (i.e. Carry out self-review of GST returns filed in past financial year)  Application form GST F22 can be downloaded from www.iras.gov.sg

Quick Links > Tax forms > GST > Page 14

Application Process

 Successful applications – Notified by the Comptroller of GST in writing – IGDS status is valid for 3 years – Any other prior approved GST schemes relating solely to imports will be terminated Page 15

Application Process

Applications made before

1 April 2011

No Interim 1-year IGDS status will be granted Submitted Section 3 of ASK (i.e. Annual Review)?

Yes IGDS status will be valid for a period of 3 years No Submit ASK Declaration Form within 1 year of successful interim IGDS?

IGDS status will be terminated Yes IGDS status extended for another 2 years Page 16

Where to get more information?

TradeNet® Declarations for IGDS:  Singapore Customs’ circular on TradeNet® declaration procedures for IGDS. The circular will cover the following areas: – Application for IGDS TradeNet® Permits (for import GST to be deferred with Singapore Customs) – Rectification of erroneous declarations for IGDS permits (under-declaration or over-declaration of the import value in IGDS permit) General information on IGDS:  IRAS e-Tax Guide on IGDS Page 17