GST treatment of transportation, handling and storage services; related reimbursements/disbursements; and imports on behalf of customers.

Services by Logistics Businesses

In the logistics service business, there are three main categories of services:

  1. Transportation Services (including ancillary handling activities such as stuffing, loading and unloading);
  2. Handling Services; and
  3. Storage Services.

The transportation, handling and storage services may be provided in any of the three main geographical regions:

  1. Outside Singapore;
  2. Within the Free Trade Zones (FTZs) or designated areas of a port, terminal and airport ("designated areas"); or
  3. Within Singapore (including Zero-GST/ Licensed / Bonded warehouses) but outside the FTZs or designated areas.

Zero-Rating of Services

Generally, all supplies of services made in Singapore in the course of your business are subject to GST at the prevailing rate.

You can zero-rate (i.e. charge GST at 0%) your supply of services to your customers only if your supply fulfils specific conditions to qualify as an international service under Section 21(3) of the GST Act.

In addition, you must support with documentary evidence or records that the conditions for zero-rating are satisfied.

The relevant zero-rating provisions in the GST Act applicable to the logistics service industry are:

Section 21(3)(a)1

Section 21(3)(b)1

Section 21(3)(c)1

International transportation (including local transportation and handling services ancillary to international transportation).

Section 21(3)(l)

Handling or storage services provided within FTZs and designated areas on imported goods or goods for export.

Section 21(3)(k)

Handling, transportation, or storage services provided within Singapore (but outside FTZs and designated areas) at the first leg of import supplied to and directly benefitting an overseas person in business capacity.

With the introduction of reverse charge from 1 Jan 2020, zero-rating is extended to such services supplied to an overseas person in his business capacity and directly benefitting a GST-registered person who belongs in Singapore.

Section 21(3)(g)

Services provided to an overseas customer that are supplied directly in connection with goods for exports.

1With the extension of the Overseas Vendor Registration (OVR) regime to imported low-value goods (LVG) from 1 Jan 2023, the zero-rating provisions for international transportation of goods and insurance of goods under Section 21(3)(a), (b) and (c) will not apply to redeliverers who are regarded as suppliers of LVG and provide these services in relation to their supplies of LVG. The redeliverers will be required to charge GST on any services (including freight, insurance, and administrative fees) supplied in relation to their supplies of LVG. 

Zero-Rating International Transportation Services

To/From Outside Singapore

Zero-rated to both local and overseas customers.

Within FTZ or Designated Area


Not applicable.

Within Singapore But Outside FTZs or Designated Areas

Zero-Rating International and Local Transportation Services (When both international and local transportation services are provided together as one supply)

To/From Outside Singapore

Zero-rated only if contractually provided by same supplier.


Can zero-rate to both local and overseas customers.

Within FTZ or Designated Area
Within Singapore But Outside FTZs or Designated Areas

Zero-Rating Local Transportation Services

To/From Outside Singapore

Not applicable.

Within FTZ or Designated Area

Zero-rated only if on imported goods or goods for export.

(Regarded as part and parcel of handling services within FTZ or designated area.)

Within Singapore but Outside FTZs or Designated Areas

Zero-rated only under these scenarios:

Scenario 1

Local transportation services are supplied to and directly benefitting an overseas person in business capacity for the first leg of import. First leg of import means from the entry point in Singapore (i.e. FTZ or designated area) to the first destination in Singapore.

With effect from 1 Jan 2020, zero-rating is extended to such services supplied to an overseas person in business capacity and directly benefitting a GST-registered person in Singapore.

Scenario 2

Local transportation services are supplied to an overseas customer (in business or personal capacity) on goods for export.

Zero-Rating Handling Services

To/From Outside Singapore

Not applicable.

Within FTZ or Designated Area

Zero-rated only if on imported goods or goods for export.

Within Singapore but Outside FTZs or Designated Areas

Zero-rated only under these scenarios:

Scenario 1

Handling services are supplied to an overseas customer (in business or personal capacity) on goods for export.

Scenario 2

Handling services are supplied to and directly benefitting an overseas person in business capacity for the first leg of import (i.e. from FTZ or designated area to first destination in Singapore).

With effect from 1 Jan 2020, zero-rating is extended to such services supplied to an overseas person in business capacity and directly benefitting a GST-registered person in Singapore.

Scenario 3

Ancillary handling services provided together with both international and local transportation services are contractually provided by same supplier to a customer (i.e. local or overseas).

Zero-Rating Storage Services

To/From Outside Singapore

Not applicable.

Within FTZ or Designated Area

Zero-rated only if on imported goods or goods for export.

Within Singapore but Outside FTZs or Designated Areas

Zero-rated only under these scenarios:

Scenario 1

Storage services provided at the first leg of import (i.e. from FTZ or designated area to first destination in Singapore) are supplied to and directly benefitting an overseas person in business capacity, where the supplier must also provide transportation services for the first leg.

With effect from 1 Jan 2020, zero-rating is extended to such services to an overseas person in business capacity and directly benefitting a GST-registered person in Singapore.

Scenario 2

Storage services are supplied to an overseas customer (in business or personal capacity) on goods for export.

In addition to Scenario 1 and 2, storage services performed on qualifying goods stored in Approved Specialised Warehouses can be zero-rated to overseas persons under the Specialised Warehouse Scheme.

For more information, please refer to GST: Specialised Warehouse Scheme and Zero-rating of Supplies (PDF, 409KB).

Recovery of Costs

Recovering Reimbursements

In the course of providing logistics services to your customer, you may incur costs in your own capacity (i.e. as a principal) and recover these costs from your customer.

For GST purpose, the recovery of costs incurred by you as a principal is termed as reimbursement and will form part of the supply of services to your customer.

The GST treatment of the reimbursement follows that of your supply (e.g. transportation, handling and storage services).

Recovering Disbursements

Where the costs recovered from your customers are not incurred by you as a principal, but you are merely making payment on behalf of your customer, such cost recovery is termed as disbursement.

Disbursements are not subject to GST.

For the costs paid on behalf of your customer, you cannot claim the GST incurred as the supply is made to your customer.

Examples of disbursement are:

  • Recovery of import GST paid by you on behalf of your customer who is the actual importer responsible for paying GST on the imports to the Singapore Customs; and
  • Recovery of freight or insurance charges paid by you when the freight or insurance services are separately contracted by your customer with the supplier.

Importing Goods on Behalf of Customers

Importing Goods for Local Customers

When you act for an importer and pay the import GST as a forwarding agent for your local customer, you cannot claim the GST paid as your input tax as the goods do not belong to you.

The payment of import GST is merely a commercial arrangement between you and the importer.

 

Importing Goods for Overseas Customers

As Declaring Agent

When you are merely providing freight forwarding services and import goods as a declaring agent for overseas persons, you are not allowed to claim the import GST paid on your customer's behalf.

The import GST may be claimed by the overseas customer, if your customer is GST-registered.

 

As Section 33(2) Agent

You may import and supply goods on behalf of an overseas person who is not GST-registered or if it is GST-registered, the GST registration is as a pay-only person under the Overseas Vendor Registration (OVR) regime.

For GST purposes:

  1. The goods are imported by you. You are entitled to claim the GST paid (subject to the conditions for claiming input tax); and
  2. Any subsequent supply of the goods is made by you as if you are the principal.
    1. If you sell the goods locally, you must standard-rate the supply and account for the output tax in your GST return.
    2. If you export the goods and maintain the required export evidence, you may zero-rate the supply and include it in the zero-rated supplies reported in your GST return. For the types of export evidence to maintain under each type of export scenario, refer to:

For more information on section 33(2), please refer to the GST: Guide on Imports (PDF, 423KB).

 

As Section 33A Agent

When you import goods belonging to an overseas person and subsequently export the goods (without a subsequent supply of the goods), you may claim the GST paid at importation on behalf of the overseas person (i.e. as an agent) under section 33A if certain requirements are satisfied. The overseas person must not be GST-registered or if it is GST-registered, the GST registration is as a pay-only person under the OVR regime.

For more information on section 33A, please refer to the GST: Guide on Imports (PDF, 423KB).

 

If you are a Transporter or Declaring Agent for Low-value Goods imported into Singapore

If you are a transporter assisting your client to import low-value goods (LVG) into Singapore or a declaring agent assisting your client to take up permits for such LVG, you will need to take note of the revised import procedures and permit requirements from 1 Jan 2023.  For more details, please refer to the slide and the FAQ for transporters.

 

Major Exporter Scheme

When you are acting as a section 33(2)/33A agent and you are under the Major Exporter Scheme (MES), you can use your MES status to import non-dutiable goods belonging to your overseas principals for subsequent sale in Singapore or re-export on behalf of the overseas principals.

You are required to provide sufficient audit trail for the import and supply of goods made on behalf of the overseas principal. You must keep separate records for goods belonging to the overseas principal and comply with the record keeping requirements for GST.

GST Schemes

There are GST schemes introduced to help logistics companies and freight forwarders to better manage their GST cash flow. For more information, please refer to:

  • Approved Third Party Logistics (3PL) Company Scheme
  • Major Exporter Scheme
  • Zero-GST (ZG) Warehouse Scheme

FAQs

Transportation Services

I only provide transportation services for goods transported from Changi Airport (point of import) to the warehouse (first destination in Singapore). Can I zero-rate my supply of transport services?

You must charge GST for the transportation services to your local customer. If the transportation services are supplied to an overseas customer, you may zero-rate your supply under Section 21(3)(k).

Major Exporter Scheme (MES)

I am under the Major Exporter Scheme (MES). Can I import goods for my local customer using my MES status to enjoy GST suspension on importation?

No. You can only use your MES status for goods that are owned by you or your overseas principal. Please refer to GST: Major Exporter Scheme (PDF, 587KB).

It is an offence for an MES company to import goods on behalf of another local person. Penalties will be imposed and your MES status may be revoked.

Free Trade Zone (FTZ)

My goods arrived in Singapore and are stored in Free Trade Zone (FTZ). Subsequently, these goods are removed from FTZ for export (i.e. transshipment). Do I have to report the transshipment sale in my GST returns?

As the goods did not enter Customs Territory, you do not need to pay GST to Singapore Customs and do not need to charge GST.

A transshipment sale is outside the scope of the GST Act (out-of-scope supply) and need not be reported in your GST return. However, you have to maintain supporting documents (e.g. bill of lading, airway bill, and transshipment permit) on such movement of goods.

What is the GST treatment for goods that arrived directly from overseas into the Free Trade Zone (FTZ) in Singapore?

GST is suspended until the goods are cleared through the Customs Territory (i.e. the checkpoint).

Input Tax