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Bunker fuel delivered directly on board foreign bound vessel

You can zero-rate the supply of bunker fuel delivered in Singapore if you deliver or arrange for your supplier to deliver the fuel directly on board a vessel for its use and the vessel is bound for a destination outside Singapore i.e. foreign going vessel.

To support the zero-rating of the supply to your customer, you are required to maintain the following documents:

  • Purchase order from your customer. The purchase order should indicate the name of the vessel, date of departure and next destination from Singapore;
  • Written instructions from your customer to deliver the bunker fuel to the vessel (this may be included in the purchase order);
  • Sales invoice to your customer;
  • Bunker delivery note endorsed by the Master/Chief Engineer of the vessel; and
  • Evidence of payment from your customer.

Bunker fuel delivered to local customer

You may receive an order from your customer who takes delivery of the bunker fuel from you in Singapore to supply to another person(s). Your customer delivers the bunker fuel directly to the foreign going vessels.

In this instance, you cannot zero-rate the supply of bunker fuel to your customer as you no longer have custody of the bunker fuel after the bunker fuel has been delivered to your customer and you have no control over the subsequent delivery of the bunker fuel to the foreign going vessel(s). Hence you cannot be certain that the bunker fuel will be exported.

Lease of bunker tanker

The lease of a bunker tanker without captain, pilot or crew, where the customer takes possesion and has exclusive use of the vessel, is treated as a lease of a bunker tanker. This supply can be zero-rated under section 21(3)(o) of the GST Act. However, the following components performed substantially in Singapore will be standard-rated if included in the supply:

  1. Transport of passengers
  2. Accommodation
  3. Entertainment
  4. Catering of food or beverage
  5. Education services

Conversely, if the lease of a bunker tanker is supplied together with a captain, pilot or crew, it is treated as a lease of a bunker tanker only if there is a written contractual agreement explicitly stating so. This applies even if the customer has authority over the operation and movement of the tanker, including the supplied crew. Without such an agreement, the supply is regarded as a provision of services by the vessel's owner/operator and can be zero-rated if they fall within the services described under the section on 'Transport of fuel/removal of marine waste' below.

Transport of Fuel/Removal of Marine Waste

The following services can be zero-rated:

  1. The transport of fuel caried in a qualifying ship, where the transportation is -
    1. from a local oil terminal to a ship anchored to a local anchorage or to another local oil terminal;
    2. from a bunker tanker to a ship anchored at a local anchorage;
    3. from a local oil terminal to a ship anchored outside Singapore; or
    4. from an oil terminal located outside Singapore to a ship anchored outside Singapore.
  2. The removal of marine waste from a qualifying ship where the removal is -
     v.  from a ship to an offshore island

(a)(i), (a)(ii) and (b)(v) qualify for zero-rating under section 21(3)(l) of the GST Act.

(a)(iii) and (a)(iv) can be zero-rated under section 21(3)(a)(ii) of the GST Act.

"Qualifying ship" is defined under section 21(4)(a) of the GST Act as any ship, including an oil rig, with the following exceptions:

  • Any ship licensed as a passenger harbour craft or pleasure craft
  • A ship granted a vessel permit by the Public Utilities Board
  • Any ship designed or adapted for use for recreation or pleasure, and used within Singapore

Loan of fuel

Bunker suppliers and barge owners may engage in mutual arrangements involving the temporary use of fuel. Under such arrangements, the lender allows the borrower to borrow fuel with or without consideration for the use of the fuel. The borrower returns the same type of fuel to the lender within a short time. Fuel on loan is still recognised by the lender as assets of the lender.

For GST purposes, the lender need not account output tax for the loan of fuel if no consideration is received. However, should circumstances change (e.g. termination of lending arrangement) and the lender treats the fuel on loan as sold to the borrower, GST is chargeable on the sale of fuel. The borrower is allowed to claim input tax on the purchase of fuel that is returned to the lender.