If you are certain that at point of supply that the goods will be exported or have already been exported AND you have the required documents to support zero-rating. Generally, if you are the Direct Exporter and have custody of the goods to be exported or you have control over the export arrangement, then you will be fine to 0 rate if the required documents to support 0 rating are maintained within 60 days.
In the case of indirect exports, where you are not certain of when the goods will be exported, or have no direct control over the export arrangements, or supply to a local customer who is then expected to export the goods, then you should be treating the sale as a local sale and charge the standard GST rate.
If the supply is made to the local customer or if the customer collects the goods himself, and you did not deliver the goods to the customer’s freight forwarder, then you must Standard Rate the supply. There is an exception for Indirect Exports where you are allowed to 0 rate the supply of goods if you are certain at the time of supply that all the goods will be exported and have the required supporting documented in place within 60 days.
For the purpose of 0 rating, the time of supply occurs at the EARLIER of when an invoice is issued or when payment is received. You can issue a tax invoice or a commercial invoice for 0 rated supplies. If you choose to issue a tax invoice then you need to indicate a 0% GST rate on the tax invoice, else a commercial invoice without GST is also acceptable.
There are some other methods to 0 rate supply of goods included Hand Carried Exports Scheme (by air leaving Changi Airport Only) while an export permit is required if you use Sea or Land channels to hand carry goods out of Singapore
For the Marine industry there are some rules to 0 rate supplies or provisions. However we must first understand the definition of a ship.
A ship for the purposes of applying Sections 21(3)(l), (m), (n), (o) and (p) of the GST Act is defined as any ship (including an oil rig) but does not include any ship which is:
- Licensed under the Maritime and Port Authority of Singapore (MPA) Act as a passenger harbour craft or pleasure craft;
- Granted a vessel permit by the Public Utilities Board; and
- Designed or adapted for use for recreation or pleasure and is used within Singapore.
In other words, as long as the Ship is an overseas registered vessel, and generally operates outsides of Singapore it qualifies as a ship to which the following 0 rating conditions apply.
You may zero-rate a supply relating to goods (whether by sale or lease) where the Comptroller is satisfied that the goods are for:
- Use as stores or fuel on a ship;
- Installation on a ship or a ship under construction;
- Use in the maintenance or operation of a ship; or
- Sale by retail as merchandise to persons carried on a ship.
However proper documentation must be maintained, including endorsement by the vessel/ship owner or captain receiving the supplies on the invoice or delivery order to be able to 0 rate the GST.
Besides the above, there are numerous other exceptions with IRAS permits relating to 0 % GST rating all of which are too extensive to be included in this blog post. Do visit our site frequently for updates to Singapore GST rules.