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Introduction to Import GST Deferment Scheme (IGDS)

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

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

2 Content 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 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 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 Introduction GST Reporting NEW! NEW!
Import GST Deferred IGDS Section “Total Value of Goods Imported under IGDS” “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 NEW! NEW!

6 Introduction 30 Nov 2010 GST Reporting and Payment
Numerical Comparison: Start of GST Accounting Period 1 October 2010 Import goods with import GST amounting to $10,000 12 October 2010 Normal Rules Pay import GST of $10,000 upfront to SC IGDS Need not pay import GST of $10,000 to SC Sell goods with output tax amounting to $15,000 20 October 2010 End of GST Accounting Period 31 October 2010 Pay $5,000 to IRAS Pay $15,000 to IRAS 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 Pay $5,000 net GST before GST deferment New Box: Account $10,000 deferred import GST Pay $15,000 net GST

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

9 Qualifying Conditions
Good compliance records with IRAS 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 internal controls and proper accounting records Complete 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 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 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 Differences between IGDS and MES
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 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 This scheme is akin to the government granting credit terms on paying of import GST. As the payment of the import GST is now tied to the filing of GST return and it becomes even more important for businesses to file on time. Therefore, only businesses with good compliance records would be allowed into the scheme. Any late filing will constitute late payment of import GST that ought to be paid at the time of importation and would subject the business to late payment penalties.

14 Application Process To apply for IGDS status, you are required to submit the following documents: A duly completed and signed application form GST F22 Review Section 1 (GST Practices) and Section 2 (Pre-filing Checklist) of ASK 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 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 Application Process No Yes Applications made before 1 April 2011
Submitted Section 3 of ASK (i.e. Annual Review)? Interim 1-year IGDS status will be granted Submit ASK Declaration Form within 1 year of successful interim IGDS? IGDS status will be terminated IGDS status extended for another 2 years IGDS status will be valid for a period of 3 years No Yes

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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