Presentation on theme: "Introduction to Import GST Deferment Scheme (IGDS)"— Presentation transcript:
1 Introduction to Import GST Deferment Scheme (IGDS) Goods and Services TaxIntroduction to Import GST Deferment Scheme (IGDS)1
2 Content Import GST Deferment Scheme (IGDS) Introduction Qualifying ConditionsResponsibilities of IGDS BusinessDifferences between IGDS and MESMisuse of SchemeApplication ProcessWhere 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; orImporter 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 returnAt point of importation (1 Oct)Pay import GST to SCEnd of GST period (31 Oct)Prepare GST returnSubmission of GST return (30 Nov)Make input tax claims for import GSTTime 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 2010Approved businesses will be able to enjoy IGDS status for a period of 3 years till next reviewAt point of importation (1 Oct)Need not pay import GST upfront to SCEnd of GST period (31 Oct)Prepare GST returnSubmission of GST return (30 Nov)Pay deferred import GST to IRASMake input tax claims for import GSTCash flow eased
5 Introduction GST Reporting NEW! NEW! Import GST DeferredIGDS Section“Total Value of Goods Imported under IGDS”“Deferred Import GST Payable”Importation of Goods Eligible for Input Tax ClaimsBox 5“Total Value of Taxable Purchases”Box 7“Input tax and refunds claimed”Approval date on permit:12 October 2010Declared in GST return for period:1 October to 31 October 2010NEW!NEW!
6 Introduction 30 Nov 2010 GST Reporting and Payment Numerical Comparison:Start of GST Accounting Period1 October 2010Import goods with import GST amounting to $10,00012 October 2010Normal RulesPay import GST of $10,000 upfront to SCIGDSNeed not pay import GST of $10,000 to SCSell goods with output tax amounting to $15,00020 October 2010End of GST Accounting Period31 October 2010Pay $5,000 to IRASPay $15,000 to IRAS30 Nov 2010GST Reporting and PaymentNormal RulesBox 6: Account $15,000 output taxBox 7: Claim $10,000 input taxPay $5,000 net GSTIGDSPay $5,000 net GST before GST defermentNew Box: Account $10,000 deferred import GSTPay $15,000 net GST
7 Introduction Scope of IGDS To import goods in the course or furtherance of your businessTo 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 importsImports released from Zero-GST/Licensed warehouses into local marketNot applicable to customs or excise duties
8 Qualifying Conditions GST-registered for at least 3 yearsLetter of guarantee (GST-registered < 3 years)Business is active and solventNot under bankruptcy, liquidation, receivership or judicial managementHave been importing or will be importing goods for business purposesUnder monthly GST accounting periodActive GIRO account with IRAS for GST paymentDeduction will be made on the 15th day of the month after the due date for paymentGood compliance records with Singapore CustomsNo major violation of Singapore Customs’ regulations and requirements
9 Qualifying Conditions Good compliance records with IRASGood history of payment for GST and other taxesPrompt submission of GST returnsNo overdue GST and other taxesNo overdue GST returnsGood 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; orReject application
10 Responsibilities of IGDS Business Satisfy all qualifying conditions at all timesIGDS may be revoked at any time if any of the qualifying conditions is not metOnce revoked, business is to make immediate arrangements with Singapore Customs for the payment of import GST on subsequent importationsIf 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 returnValid permits and relevant supporting documents must be maintained for 5 yearsIGDS status is not transferable
11 Responsibilities of IGDS Business Operational ProceduresClear goods at importation with the relevant permitsTradeNet user and registered with Singapore CustomsAppoint authorised declaring agentOnline Declaration of Agents via myTax PortalMaximum of 20 authorised declaring agents
12 Differences between IGDS and MES Target GroupImportersHas been importing or will be importing goods with good compliance records with SC and IRASMajor exportersZero-rated supplies > 50% of total suppliesorValue of zero-rated supplies > S$10 million for past 12 monthsPayment of Import GSTDeferred until the submission of GST return, applies to dutiable goodsSuspended, does not apply to dutiable goodsMajor Requirements1. Monthly GST reporting2. GIRO payment3. Complete ASKSubmit Positive Assurance Report
13 Misuse of Scheme Late payment penalties Late submission of GST returnsLate payment in accounting for deferred import GSTImport goods that are not for the purpose of your business or under any other permissible situations constitute an offenceRe-pay the amount of GST that has been deferred in an unauthorised mannerIGDS status revokedPossible imposition of penalties and criminal prosecutionThis 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 ProcessTo apply for IGDS status, you are required to submit the following documents:A duly completed and signed application form GST F22Review Section 1 (GST Practices) and Section 2 (Pre-filing Checklist) of ASKA 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 writingIGDS status is valid for 3 yearsAny 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 grantedSubmit ASK Declaration Form within 1 year of successful interim IGDS?IGDS status will be terminatedIGDS status extended for another 2 yearsIGDS status will be valid for a period of 3 yearsNoYes
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