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Definition of ship
Zero-rating of supplies relating to ships
Supplies of goods to ships 
Budget 2011 Changes 

Definition of ship

Prior to 1 Jul 2010, a ship for the purposes of applying Sections 21(3)(l), (m), (n), (o) and (p) of the GST Act was defined as one which is:

• not designed or adapted for use for recreation or pleasure; and
• excludes any ship licensed under the Maritime and Port Authority of Singapore (MPA) Act as a passenger harbour craft or pleasure craft.

Consequently, prescribed services performed on internationally bound ships that are excluded from the definition of 'ship' will not enjoy zero rating.

With effect from 1 Jul 2010, this definition of ‘ship’ has been expanded to include ships used or adapted for recreation or pleasure provided that they are wholly internationally bound. However, ships that are licensed by MPA as passenger harbour craft and pleasure craft will continue to be excluded.

With effect from 1 Jan 2011, the definition of ship will also exclude ships that are granted vessel permits by the Public Utilities Board.

For details, please refer to the e-Tax guide, GST Guide for the Marine Industry - 2010 Budget Changes (489KB).   

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Zero-rating of supplies relating to ships

You need to charge GST on services that you provide. Where the supplies qualify as international services under Section 21(3) of the GST Act, you may zero-rate your supply of service (i.e. charge GST at 0%).

The following is a list of international services performed in connection with a ship:

Type of services	Qualifying criteria to zero-rate	GST Act
Certain services in connection with: (a) the handling of ship, or (b) the handling or storage of goods carried in the ship.	The services are prescribed in the Third Schedule of GST (International Services) Order. Please refer to paragraph (l) in the extract of Section 21 of the GST Act  (207KB).  They include such handling services provided within any Free Trade Zone or designated area of a port (e.g. Jurong Marine Base, Loyang Offshore Supply Base) or terminal.	S21(3)(l)
Pilotage, salvage or towage services		S21(3)(m)
Services comprising the surveying or classification of any ship for the purposes of any register		S21(3)(n)
Supply (including the letting and hire) of any ship	The ship is not leased for the purpose of providing such services performed substantially in Singapore: transportation, accommodation, entertainment, catering of food or beverages, or education services	S21(3)(o)
Certain services comprising the repair, maintenance, broking or management of any ship.	The services are prescribed in the Sixth Schedule of GST (International Services) Order. Please refer to paragraph (p) in the extract of Section 21 of the GST Act (207KB).	S21(3)(p)

 
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Services comprising the management of ship

Section 21(3)(p) of the GST Act provides that you may zero-rate the supply of services comprising the management of ship. The following are common types of ship management services and ship agency services that qualify for zero-rating.

Ship management services

• Provision of technical services (e.g. the arrangement and supervision of dry-docking and repair of vessels)
  
• Engagement and replacement of crew
  
• Arrangement of salvage and towage of vessels
  
• Arrangement and supervision of the operations of vessels
  
• Arrangement for the employment of vessels
  
• Construction supervision services (e.g. to ensure that the vessel is constructed according to specifications)

Ship agency services

• Ship husbandry services
  
• Liaisons with parties involved in the import/export of cargo, and other ancillary activities to ensure the smooth movement of cargo

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Supplies of goods to ships

Prior to 1 Jul 2010, you could zero-rate the supply of stores, bunker fuel and merchandise (for sale by retail to persons on the ship) if the voyage was to or from a destination outside Singapore. Required export evidence had to be maintained. For more information, you may refer to GST: A Guide on Exports (186KB).

Consequently, zero-rating does not extend to other goods which do not fall within the definition of stores, bunker fuel and merchandise (for sale by retail). Further, there are instances where goods are used on ships that do not have a next port of call (e.g. oil rigs, FPSO platforms and cruise ships which embark on "cruise-to-nowhere"). Such supplies have to be standard-rated.

With effect from 1 Jul 2010, you may zero-rate a supply relating to goods (whether by sale or lease) where the Comptroller is satisfied that the goods are for:

(a) use as stores or fuel on a ship;

(b) installation on a ship or a ship under construction;

(c) use in the maintenance or operation of a ship; or

(d) sale by retail as merchandise to persons carried on a ship.

For the purposes of applying zero-rating, ‘ship’ refers to one which falls within the meaning of ship as explained here.

This means that zero-rating is no longer restricted to only stores and merchandise for sale by retail. The ship also does not need to be on a voyage to or from a destination outside Singapore in order for you to zero-rate your supply of goods.  For lease of goods, it no longer needs to be supplied to an overseas person.

For more information on the change, please refer to the e-Tax guide, GST Guide for the Marine Industry - 2010 Budget Changes (489KB).

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Budget 2011 - GST changes to marine related supplies

The following changes take effect from 1 Oct 2011:

1. New Approved Marine Customer Scheme to zero-rate supplies relating to goods to “approved marine customers”
2. Expansion of the scope of zero-rating of repair and maintenance services relating to ship parts or components
   
   

New Approved Marine Customer Scheme to zero-rate supplies relating to goods to "approved marine customers"

Prior to 1 Oct 2011, in order to zero-rate supplies relating to goods for use or installation on a ship as provided for under Section 21(6A) of the GST Act, suppliers must maintain documentary evidence spelt out in our e-Tax guide, GST Guide for the Marine Industry - 2010 Budget Changes (489KB).

Under the new Approved Marine Customer Scheme (AMCS), which takes effect from 1 Oct 2011, suppliers can zero-rate supplies relating to goods to businesses approved under the scheme that are for: 

• use as stores or fuel on;
• installation on; or
• use in the maintenance or operation of

a commercial ship that is wholly for international travel, without the supplier having to maintain the previously listed documentary proof.

For details, please refer to the e-Tax guide, GST Guide for the Marine Industry - 2011 Budget Changes (492KB).

Expansion of the scope of zero-rating of repair and maintenance services of ship parts or components

Prior to 1 Oct 2011, under Section 21(3)(p) of the GST Act, the supply of repair and maintenance services of ship and ship parts or components is zero-rated only if:

(a)  the repair or maintenance is carried out on board the ship;

(b)  any part or component of the ship is removed for repair and reinstalled on the ship;

(c)  any part or component of the ship is removed for repair and returned to the ship as a spare; or

(d)  any part or component of the ship is removed and replaced by an identical part or component.


With effect from 1 Oct 2011, the scope of zero-rating of repair and maintenance services will be extended. Consequently, the supply of repair and maintenance services of ship and ship parts or components is zero-rated if:

(a)  repair or maintenance is carried out on board the ship;

(b)  any part or component of the ship is removed for repair and -

       (i)  reinstalled on the ship, or returned onto the ship as spare; or

       (ii) delivered to -
             (A) a shipyard situated in Singapore; or
             (B) an approved marine customer; or

(c)  any part or component of the ship is removed and repaired by way of an exchange with an identical part or component, wtih the identical part or component being -

       (i)  installed on the ship, or brought onto the ship as a spare; or

       (ii)  delivered to -
             (A) a shipyard situated in Singapore; or
             (B) an approved marine customer.

For details, please refer to the e-Tax guide, GST Guide for the Marine Industry - 2011 Budget Changes (492KB).

Budget 2011 changes introduced by Singapore Customs

1. Removing documentary requirements (for GST relief) for a ship engaged in pleasure, recreation, sports or other similar events which is in Singapore only for a temporary period of time (and intend to leave Singapore as soon as possible).
2. Granting import GST relief (and waive documentary requirement) on goods shipped and remaining on board a ship which is in Singapore only for a temporary period of time (and intend to leave Singapore as soon as possible).

For details, please refer to Singapore Customs' circular "GST Relief and Documentary Waiver for Ships Temporarily in Singapore" (Circular 19/2011) available at www.customs.gov.sg  or email them at customs_documentation@customs.gov.sg.  
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