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Goods and Services Tax Introduction to Import GST Deferment Scheme (IGDS)

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Presentation on theme: "Goods and Services Tax Introduction to Import GST Deferment Scheme (IGDS)"— Presentation transcript:

1 Goods and Services Tax Introduction to Import GST Deferment Scheme (IGDS)

2 Page 2 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?

3 Page 3 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

4 Page 4 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) Need not pay import GST upfront to SC End of GST period (31 Oct) Prepare GST return Submission of GST return (30 Nov) Pay deferred import GST to IRAS Make input tax claims for import GST Cash flow eased

5 Page 5 Introduction GST Reporting Import GST Deferred IGDS Section “Total Value of Goods Imported under IGDS” IGDS Section “Deferred Import GST Payable” Importation of Goods Eligible for Input Tax Claims Box 5 “Total Value of Taxable Purchases” Box 7 “Input tax and refunds claimed” Approval date on permit: 12 October 2010 Declared in GST return for period: 1 October to 31 October 2010

6 Page 6 Introduction 31 October 2010 End of GST Accounting Period Normal Rules Pay $5,000 to IRAS IGDS Pay $15,000 to IRAS 20 October 2010 Sell goods with output tax amounting to $15, 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 1 October 2010 Start of GST Accounting Period 30 Nov 2010 GST Reporting and Payment Normal Rules Box 6: Account $15,000 output tax Box 7: Claim $10,000 input tax Pay $5,000 net GST IGDS Box 6: Account $15,000 output tax Box 7: Claim $10,000 input tax Pay $5,000 net GST before GST deferment New Box: Account $10,000 deferred import GST Pay $15,000 net GST Numerical Comparison:

7 Page 7 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

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

9 Page 9 Qualifying Conditions 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 compliance records with IRASGood internal controls and proper accounting recordsComplete 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

10 Page 10 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

11 Page 11 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

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

13 Page 13 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

14 Page 14 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 > Quick Links > Tax forms > GST

15 Page 15 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

16 Page 16 Application Process No Yes No Yes

17 Page 17 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

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