Category: Goods and Services Tax

IRAS updates GST guide for the aerospace industry

On By taxsgIn Goods and Services Tax, Latest Tax News

10 July 2017

The fourth edition of the e-Tax Guide which outlines the GST treatment for aircraft and aircraft-related supplies was issued by Inland Revenue Authority of Singapore (IRAS) on 19 June 2017.

The revised guide clarifies that for repair and maintenance activities to qualify for zero-rating under section 21(3)(p), the aircraft or aircraft parts on which they are performed must remain airworthy as well as necessary documents specified maintained. This is because zero-rating relief is accorded on the basis that the repaired aircraft part would, following the repair or maintenance, form part of a qualifying aircraft.

The previous edition was published on 1 June 2016.

For full details, please refer to the e-Tax Guide on the IRAS website.

Source: This article was extracted from the Inland Revenue Authority of Singapore’s (IRAS) website. Visit http://www.iras.gov.sg/ for more information.

IRAS updates website content on GST for biomedical industry

On By taxsgIn Goods and Services Tax, Latest Tax News

7 November 2016

The Inland Revenue Authority of Singapore (IRAS) has updated its website on GST for the biomedical industry whereby with effect from 1 November 2016, pharmaceutical products will be categorised as “therapeutic products”, to be regulated under the Health Products Act (HPA).

Notwithstanding the change, GST relief will continue to be applicable for:

  • medicinal and therapeutic products imported into Singapore for use in local regulated clinical trials,
  • therapeutic products imported for re-export for overseas clinical trials, and
  • medicinal and therapeutic products imported for destruction/disposal in Singapore.

For further details, please refer to the IRAS website.

Source: IRAS

IRAS highlights common errors from audit findings of GST compliance programmes in 2014 and 2015

On By taxsgIn Goods and Services Tax, Latest Tax News

4 November 2016

In the last two years, the Inland Revenue Authority of Singapore (IRAS)’s audits of GST compliance programmes were focused on the logistics industry and as well as on the sale of non-residential properties by GST-registered businesses. The audit findings are summarised as follows:

Logistics industry 

Out of the audits conducted on 289 businesses in the logistic sector, 75% of these businesses made GST errors related to incorrect GST treatment of their diverse services and incorrect input tax claims i.e.:

  • Erroneous zero-rated transportation services to local customers
  • Erroneous zero-rated storage services to local customers
  • Erroneous zero-rated storage services to overseas customers with no certainty of when the goods will be exported
  • Wrongful claims of input tax or used Major Exporter Scheme (MES) on imported goods belonging to another local person
  • Non-compliance with GST requirements as a GST agent under section 33(2) or section 33A

Sale of non-residential properties

Out of the 284 GST-registered businesses that sold non-residential properties during the period 1 October 2013 to 31 December 2015, 55 businesses were found to have failed to charge and/or account for GST collected on the sale of non-residential properties in their GST returns. This was largely due to an inadequate understanding of the GST rules on the following property transactions:

  • Sales of properties owned by sole-proprietors / partnerships
  • Transfers of properties not involving any monetary consideration
  • Sales of properties in-satisfaction of debt by liquidators/receivers

Some other common mistakes made include late accounting of GST on the receipt of booking fee/option money, no tax invoice for the option money/deposit received and over-claiming of input tax.

A total of $12.7 million in taxes and penalties had been recovered from these audits.

In 2016 and 2017, IRAS will be focusing their audits on large businesses with more complex business arrangements, as well as on businesses’ display of GST-inclusive prices.

GST errors or omissions discovered through IRAS’s audits will attract penalties of up to two times the tax underpaid and a 5% late payment penalty. Penalties may be reduced for voluntary disclosures which meet the qualifying conditions of IRAS’ Voluntary Disclosure Programme.

For further details, please refer to the IRAS’s website.

Source: IRAS

 

 

IRAS issues new GST Guide on zero-rating telecommunication and related services under section 21(3)(q)

On By taxsgIn Goods and Services Tax, Latest Tax News

24 October 2016

On 14 October 2016, the Inland Revenue Authority of Singapore (IRAS) issued an e-Tax Guide, “GST: GST Guide on Zero-rating Telecommunication and Related Services under section 21(3)(q)”.

Section 21(3) of the GST Act provides zero-rating relief on the supply of international services and section 21(3)(q) specifies that prescribed services involving international telecommunication transmission can qualify for zero-rating (i.e. charging GST at 0%). The qualifying telecommunication services that can be zero-rated under section 21(3)(q) are prescribed under Fifth Schedule of the GST (International Services Order).

GST-registered business will have to charge and account for GST, at the prevailing tax rate, on their supply of telecommunication service unless it qualifies as an international service under section 21(3)(q). To be zero-rated as an international service under section 21(3)(q), the telecommunication service has to satisfy both the conditions below:

(1) Falls within paragraphs 1 to 5 of the prescribed services in the Fifth Schedule, and

(2) Comprises international transmission, i.e. the provision of any means of telecommunication transmitted:

  • from a place outside Singapore to another place outside Singapore,
  • from a place in Singapore to a place outside Singapore, or
  • from a place outside Singapore to a place in Singapore.

The telecommunication service cannot qualify for zero-rating under section 21(3)(q) if the transmission is from a place in Singapore to another place in Singapore (i.e. local transmission).

This e-Tax Guide explains the application of the zero-rating relief for telecommunication and telecommunication-related services, namely:

  • Fifth Schedule – Paragraph 1: Transmission services
  • Fifth Schedule – Paragraph 2: Leased circuit, line or network
  • Fifth Schedule – Paragraph 3: Right to access or use
  • Fifth Schedule – Paragraph 4: Onward supply of international calls
  • Fifth Schedule – Paragraph 5: Ancillary services
  • Fifth Schedule – Paragraph 6: Supplies that are specifically excluded from the Fifth Schedule
  • Apportionment of Supplies

Annex A of the e-Tax Guide lists the prescribed telecommunication services under Fifth Schedule of the GST (International Services Order). Annex B provides a list of the broad categories of services that are commonly provided by telecommunication service providers and the applicability of section 21(3)(q).

This e-Tax Guide replaces the IRAS’s e-Tax Guide “A Guide on Zero-rating Telecommunication and Related Services under section 21(3)(q)” published on 26 April 2007.

For full details, please refer to the e-Tax Guide on the IRAS website.

Source: This article was extracted from the Inland Revenue Authority of Singapore’s (IRAS) website. Visit http://www.iras.gov.sg/ for more information.

IRAS issues third edition of the GST guide on exports

On By taxsgIn Corporate Tax, Goods and Services Tax, Goods and Services Tax Act

19 September 2016

On 19 September 2016, the Inland Revenue Authority of Singapore (IRAS) issued the third edition of the e-Tax Guide, “GST: Guide on Exports (3rd Edition)”.

This Guide explains the various circumstances and documentary requirements for which a supply of goods can be zero-rated.

A general principle for zero-rating exports of goods is that the supplier must, at the point of supply (to be determined based on the time of supply rules), be certain that the goods supplied will be/ has been exported, and the supplier has/ will have the required export evidence to substantiate the zero-rating of this supply.

The onus is on the supplier who zero-rates his exports of goods to support his GST declarations with export evidence. This includes:

  • Commercial transaction documents (e.g. customer’s order, sale invoice, delivery note, packing list, insurance documents, and payment received), and
  • Commercial transport documents (e.g. bill of lading, air waybill, export permit, or any other documents specified by the Comptroller in the Guide).

However, the Comptroller may request for documents and/ or impose conditions not specified in the Guide to support the zero-rating of supplies if it is assessed to be necessary.

In the third edition, the requirement regarding the indication of vehicle number in the export permit for exports via land was updated. For exports via land, the vehicle number should be indicated at the time the export permit is declared. If the vehicle number is not known at the point of the export permit declaration, the vehicle number could be stated on the supporting documents (e.g. invoice, delivery order, packing list upon collection of the goods) subsequently after the permit declaration.

The previous edition was published on 11 February 2016.

For full details, please refer the e-Tax Guide on the IRAS website.

Source: This article was extracted from the Inland Revenue Authority of Singapore’s (IRAS) website. Visit http://www.iras.gov.sg/ for more information.