5 September 2011

The Minister for Finance, had in his 2011 Budget Statement, announced new measures aimed at simplifying GST compliance along the supply chain for the marine industry. This is part of the Government’s on-going efforts to position Singapore as a leading international maritime centre.

Pursuant to the Budget announcent, IRAS has issued guidance on the following changes that will take effect from 1 October 2011:

1.    New Approved Marine Customer Scheme to zero-rate supplies relating to goods to “approved marine customers”

With effect from 1 October 2011, a new GST scheme, known as Approved Marine Customer Scheme (AMCS), will be introduced to allow Approved Marine Customers to buy or rent goods for use or installation on a commercial ship that is wholly for international travel without having to pay GST.

This means the supplier may zero-rate the supply of goods to an Approved Marine Customer without having to maintain the documentary proof spelt out in the IRAS e-Tax guide, “GST Guide for the Marine Industry – 2010 Budget Changes”, provided the goods are for:

• use as stores or fuel on;
• installation on; or
• use in the maintenance or operation of

a commercial ship that is wholly for international travel.

Taxpayers who want to apply for AMCS status must complete and submit an application form to the IRAS.  The IRAS has indicated that, to assist suppliers to verify the customer’s AMCS status, the names of all businesses with AMCS status will be published on the IRAS website.

Prior to 1 October 2011, in order to zero-rate the supply of goods for use or installation on a ship as provided for under section 21(6A) of the GST Act, businesses must maintain the requisite documentary evidence.

2.    Expansion of the scope of zero-rating of repair and maintenance services relating to ship parts or components

With effect from 1 October 2011, the scope of zero-rating of repair and maintenance services will be extended to include:

(a) Ship parts or components delivered to a shipyard situated in Singapore or to an Approved Marine Customer (AMC) after repair or maintenance; and

(b) Scenarios where the repairer invoices its customer for repair services but provides a reconditioned ship part or component in exchange for the faulty part and:

• installs the part or component on the ship;
• brings the part or component onto the ship as a spare; or
• delivers the part or component to a shipyard situated in Singapore or to an AMC.

Prior to 1 October 2011, under section 21(3)(p) of the GST Act, the supply of repair and maintenance services of ship and ship parts or components is zero-rated only if:

• the repair or maintenance is carried out on board the ship;
• any part or component of the ship is removed for repair and reinstalled on the ship;
• any part or component of the ship is removed for repair and returned to the ship as a spare; or
• any part or component of the ship is removed and replaced by an identical part or component.

The changes will take effect by way of Ministerial Remission, from 1 October 2011, until the relevant GST legislation is amended.

In relation to the Budget 2011 changes relating to the marine industry, the following has also been introduced by Singapore Customs wef 1 October 2011:

• Documentary requirements (for GST relief) removed for a ship engaged in pleasure, recreation, sports or other similar events which is in Singapore only for a temporary period of time (and intend to leave Singapore as soon as possible).
• Import GST relief granted (and documentary requirement waived) on goods shipped and remaining on board a ship which is in Singapore only for a temporary period of time (and intend to leave Singapore as soon as possible).

For full details, please refer to:

• IRAS e-Tax Guide: GST Guide for the Marine Industry – 2011 Budget Changes
• Singapore Customs’ Circular “GST Relief and Documentary Waiver for Ships Temporarily in Singapore” (Circular 19/2011).

Source: Inland Revenue Authority of Singapore (IRAS) and Singapore Customs