24 November 2015

On 20 November 2015, the Inland Revenue Authority of Singapore (IRAS) issued the second edition of the e-Tax Guide, “GST: Guide for motor vehicle traders”.

This Guide is for GST registered businesses selling new and/or second-hand motor vehicles and explains the GST treatment applicable to motor vehicle traders as well as provides illustrations the GST computations for sale of motor vehicles.

The business activities of a motor vehicle trader include the importation of motor vehicles, sales of new and used vehicles, and sales of motor vehicle bodies of de-registered vehicles.

All motor vehicles in Singapore must be registered with LTA. To curb the growth of vehicle population in Singapore, LTA imposes regulatory charges on the sale of new vehicle. Regulatory charges do not attract GST as they do not relate to the provision of goods or services. All other charges or payments received in relation to a supply of motor vehicles are subject to GST.

The GST treatment for the sale of a new motor vehicle differs from that of a second-hand motor vehicle. For the sale of a new vehicle, GST is chargeable on the selling price of the motor vehicle excluding regulatory charges such as COE. For the sale of a second-hand motor vehicle, the computation of the GST chargeable depends on whether the sale is made under the Gross Margin Scheme or the Discounted Sale Price Scheme.

In this second edtion, a new paragraph 7.7 was inserted. The paragraph illustrates sale of new vehicles replacement vehicles under the Early Turnover Scheme (ETS) where the value of COE of the new replacement vehicle is the sum of the discounted prevailing quota premium (PQP) payable and the COE rebate (if any) of the existing vehicle

The first edition was published on 1 April 2015.

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

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