14 October 2017
The Inland Revenue Authority of Singapore (IRAS) issued a new GST e-Tax Guide on “Customer Accounting for Prescribed Goods” (“GST e-Tax Guide) on 15 September 2017. In this guide, IRAS has indicated that customer accounting for certain prescribed goods will be implemented with effect from 1 January 2019. The purpose of introducing customer accounting is to prevent the loss of GST revenue under fraudulent schemes whereby the sellers abscond with the GST amounts that they have collected from customers but businesses further down the supply chain continue to claim the input tax.
Normally, a supplier of taxable goods and services will account for the output tax. However, under customer accounting, the responsibility to account for the output tax on taxable supplies is shifted from the supplier to the customer. Customer accounting is only applicable to prescribed goods which are defined in the GST e-Tax Guide as mobile phones, memory cards and off-the-shelf software.
Customer accounting shall apply on any local sale of prescribed goods made to a GST-registered customer if the value of the sale (excluding GST) exceeds $10,000 in a single invoice. The customer in this situation will account for the output GST chargeable on the purchase, on behalf of the supplier. The customer can claim the input tax on this purchase if the relevant conditions for claiming input tax are met. The supplier must state in the tax invoice issued to the customer, the amount of output tax due on the supply for which the customer is required to account for on the supplier’s behalf.
The following are specifically excluded from customer accounting:
a) A supply of goods made under the Gross Margin Scheme,
b) A supply of goods made under the Approved Third Party Logistics Company Scheme or Approved Refiner and Consolidator Scheme to an approved/specified person, and
c) A deemed taxable supply of goods arising from the transfer or disposal of goods for no consideration.
The application of the GST e-Tax Guide is subject to the passing of the GST (Amendment) Bill 2017 by Parliament and the assent of the President.
For more detailed information on the mechanics of customer accounting, please refer to the GST e-Tax Guide.
Source: Inland Revenue Authority of Singapore