Supply of goods vs. supply of services
For GST purposes you are making a supply of goods when you:
- manufacture your own goods for sale; or
- process and treat your customers' original goods such that new or different goods are produced as a result (i.e. there is a change in the character or nature of the original goods).
When there is no change in the character or nature of the original goods after the process and treatment, then you are making a supply of services for GST purposes.
Example 1: Manufacture your own goods for sale
You manufacture and sell chocolates to your customer. You are making a supply of goods (chocolates) to your customer.
Example 2a: Processing or treating original goods with change in nature
You are engaged by your customer to provide assembly services. Your customer delivers his semi-finished components to you to assemble into finished products according to his specifications.
Even though you only provide assembly services, you are regarded as making a supply of goods for GST purposes as there is a change in the nature of the original goods such that new goods in the form of finished products are produced.
Example 2b: Processing or treating original goods without change in nature
You perform repair services on second-hand washing machines sent to you by your customer. The repair service performed by you do not change the nature or form of the original goods (washing machine). Rather, the repair services merely restore the washing machines to their original condition. Hence, you are making a supply of services to your customer.
GST for supply of goods
For goods supplied locally, you are required to charge GST.
For goods that are exported, you may zero-rate (i.e. charge GST at 0%) the supply if you maintain the required documents stated in GST: Guide on Exports (PDF, 717KB) or GST: Guide on Hand-Carried Exports Scheme (PDF, 332KB).
Example 3: Sale of goods to local customer
You sold goods to a local customer and were instructed to deliver the goods to the customer's freight forwarder for export. At the time of supply, you are certain that all the goods will be exported. To zero-rate the supply to the local customer, you need to maintain the following transport document within 60 days from the time of supply to substantiate your exports:
For export via air or sea
Air waybill / bill of lading showing details of your goods exported and bearing your name as the exporter. Alternatively, the freight forwarder can issue a subsidiary export certificate or note of shipment to you.
For export via land
Export permit showing your name as the exporter and the vehicle number.
The transport document is in addition to other necessary transaction documents that you should maintain, such as purchase order, customer's written instruction to deliver the goods to his freight forwarder, payment evidence etc.
For goods that are delivered directly from a place outside Singapore to another place outside Singapore, the supply is outside the scope of GST (i.e out-of-scope supply).
No GST needs to be charged for such supplies and you do not need to declare them in your GST return.
However, you are required to maintain supporting documents (e.g. bill of lading, air waybill) to demonstrate that the supply is an out-of-scope supply.
GST for supply of services
You need to charge GST on the services you provide to your customer unless it can qualify as an international service under section 21(3) of the GST Act.
For the list on international services, please refer to Providing International Services.
Example 4: Supply of repair services
You deal in the manufacture and repair of electrical equipment and provide repair services to your customers. An overseas customer sends a faulty equipment to you for repair and has requested for the equipment to be delivered to a local customer thereafter.
Under section 21(3)(g) of the GST Act, services supplied directly in connection with goods can only be zero-rated if supplied to an overseas person and if the goods are for export at the time the services are performed. As the equipment is delivered locally in Singapore, the repair services performed by you do not qualify for zero-rating as an international service. Hence, you must charge GST on the supply.
Supply of tools/machines used in manufacturing
Besides the supply of manufactured goods, you may also supply tools or machines that are used in the manufacturing process separately from the finished goods.
Where you supply tools or machines to your customer that you retain to subsequently manufacture finished goods in Singapore, you are making a local supply of the tool or machine and hence must charge GST accordingly.
Example 5: Supply of tools/machines used in manufacturing
You are engaged by a local company to supply wafers. To protect their intellectual property, the company has separately engaged you to first supply the mask that you will be using to manufacture the wafers.
As the mask will be retained by you in Singapore to produce the wafers, you must charge GST on the supply of the mask.
However if you supply certain tools or machines to an overseas person, you may zero-rate the supply provided you satisfy the prescribed conditions. The overseas person must not be GST-registered or if he is GST-registered, the registration is as a pay-only person under the Overseas Vendor Registration (OVR) regime.
For more information, please refer to GST : Zero-Rating Of Tools Or Machine Used In Manufacturing Of Goods For Export To Overseas Customer (PDF, 448KB).
Importing goods belonging to overseas or local persons
Claiming GST as a section 33(2) or section 33A agent
You may claim import GST (or alternatively, use your import GST suspension/deferment scheme privileges such as MES) incurred on goods belonging to an overseas person if you import the goods in the capacity of a section 33(2) or section 33A GST agent for that overseas person. The overseas principal must not be GST-registered or if he is GST-registered, the registration is as a pay-only person under the OVR regime.
Claiming GST as a section 33B agent
You may claim the full GST incurred (or use your import GST suspension/deferment privileges) on the re-importation of goods which you previously sent abroad for value-added activities, belonging to your local customers or GST-registered overseas customers (excluding a person who is registered under the OVR regime as a pay-only person) if the requirements under section 33B are satisfied.
You should not under any circumstance, claim import GST or use your import GST suspension privileges to import goods belonging to local persons unless it is permitted under a GST scheme granted to you or a specific GST provision (such as section 33B as explained above).
For more information on claiming import GST under section 33(2) and 33A, please refer to GST: Guide on Imports (PDF, 423KB).
For more information on claiming import GST under section 33B, please refer to Claiming of GST on re-import of value-added goods (PDF, 565KB).
Payments for lost, stolen or damaged goods
You may have to pay your customer for any goods that are lost, stolen or damaged while the goods are in your custody, for instance when your customer consigns his goods to you for the purposes of performing value-added activities.
When the payment is punitive in nature and not for something which the customer has done in return, there is no supply and no GST should be charged.
However, if your customer supplies goods or services in return for the payment you have made, the payment will be subject to GST.
For more information, please refer to Compensation to/from customer.
Example 6: Payment is not for a supply
You misplaced goods belonging to a customer which were consigned to you for testing.
Based on the agreement between you and the customer, you are required to compensate the customer based on the cost of the goods lost.
For GST purposes, there is no supply made by the customer to you in return for the compensation received.
Example 7: Payment is for a supply
You damaged goods belonging to a customer which were consigned to you for testing.
Based on the agreement between you and the customer, you are required to repair the goods.
However, as you lack the expertise to perform the repair, the customer undertakes the repair and charges you for his services.
For GST purposes, there is a supply of repair services made by the customer to you.
Termination of contract/agreement
You have a contract with your customer to supply a pre-determined number of component parts during the next five years.
Three years into the contract, your customer decides that it no longer wants to purchase the parts from you. In settlement, your customer has to pay you $50,000.
When the early termination of the contract is made under the terms of the existing contract, the payment is outside the scope of GST.
However, where there is no termination clause in the original contract and separate agreements have to be entered into to terminate the original contract, the termination payment is treated as payment for a supply of services. Hence GST is chargeable on the payment you receive.
When you receive research grants to conduct certain research and development projects, and you do not give anything in return to the donor, you are not making a supply to the donor. Such gratuitous grants given are not subject to GST.
For example, if you only provide the donor with access to research information for the sole purpose of monitoring the research progress and the primary purpose of the grant is to give funding incentive, the grant will not be treated as consideration for a supply and consequently GST is not chargeable.
However, you are treated as making a supply on grants that you receive if you provide benefits to the donor, for instance the donor receives rights over the fruits of the project (e.g. intellectual property rights from any invention).
For details, please refer to Receiving Grant.
As part of the warranty service which you provide to your customer, you may perform repair works or provide replacement parts without extra charges.
You do not need to account for GST on the repair work or the replacement parts if the price of your original supply of the goods has already included the charge for the warranty service.
The warranty repairs may also be performed by your distributor or your authorised agent.
For more information, please refer to Warranty Repairs (PDF, 32KB).
Import of goods into Singapore
Do I have to pay GST on the importation of trade samples?
If you are under the Major Exporter Scheme, you need not pay GST on your imports of goods.
Alternatively, you may apply for Import Relief with Singapore Customs if the total value does not exceed $400. GST will be temporarily suspended at the point of importation, subject to conditions.
For more information, please visit Singapore Customs' website or contact Singapore Customs on (+65) 6355 2000.
I have sold some goods to Malaysia. As part of my after-sales service, I temporarily import the goods into Singapore for repair. Subsequently, these goods will be re-exported back to Malaysia. Do I have to pay GST on the importation of these goods?
You may apply for Import Relief with the Singapore Customs. GST will be temporarily suspended at the point of importation, subject to conditions.
For more information, please visit Singapore Customs' website or contact Singapore Customs on (+65) 6355 2000.
I leased a machine from an overseas company for 3 years, after which I will return (export) the machine to the overseas company. If I import the machine into Singapore, can I claim the import GST?
You can claim the import GST on the machine if you are using the machine to make taxable supplies.
In order to support the claim for input tax, you must hold a GST payment permit for the importation of the machine showing yourself as the importer of the machine, in addition to the commercial invoice and shipping documents.
I import raw-materials which will be used for manufacturing goods in Singapore. The semi-finished goods are then sent to my overseas sub-contractor in Malaysia for further processing. The finished goods are imported into Singapore again before I sell them to my local or overseas customers. What are the tax implications?
GST is payable when you import the raw materials into Singapore.
When you send the semi-finished goods to Malaysia for further processing, the movement of these goods is treated as your export and should be reported as your zero-rated supplies.
When the finished goods are subsequently brought into Singapore, GST is payable on the import value of the finished goods because they are treated as new imports.
The GST you paid on the importation of raw materials and finished goods can be claimed as your input tax, subject to the conditions for claiming input tax .
If you are under the Major Exporter Scheme, the import GST payable is suspended.
Subsequently, when the goods are sold locally, you should charge GST on the supply of goods.
For goods that are exported, you may zero-rate the supply if you maintain the required documents stated in GST: Guide on Exports (PDF, 717KB) or GST: Guide on Hand-Carried Exports Scheme (PDF, 332KB).
I export my defective goods from Singapore to Batam for repair and then re-import the repaired goods into Singapore. Since there is no sale or purchase of goods, do I need to report the export and re-import in my GST
Although the export is not as a result of your sale, you need to report the movement of your goods. Therefore, you should report the value of the exports of defective goods in Box 2 (Total value of zero-rated supplies) of your GST return.
When you re-import the repaired goods, you can claim the import GST if the goods are for the making of taxable supplies.
For goods re-imported within three months, you can apply for Import Relief with Singapore Customs. For more information, please visit Singapore Customs' website or contact Singapore Customs on (+65) 6355 2000.
You need to report the value of import in Box 5 (Total value of taxable purchases) of your GST return. If applicable, the import GST should be reported in Box 7 (Input tax and refund claimed).
Can I use my Major Exporter Scheme (MES) status to import goods belonging to other companies?
No. You can only use your MES status to suspend GST on your own imports or on imports made as an agent on behalf of your overseas principal (where you act as a Section 33(2) agent, Section 33A agent or Section 33B agent).
It is an offence to use your MES status to import goods for other companies. Penalties will be imposed and your MES status may be revoked.
Export of goods from Singapore
I sell goods to my customers in Thailand and instruct my overseas supplier in Indonesia to ship the goods directly to Thailand. Do I have to charge GST?
As the goods are delivered from a place outside Singapore (Indonesia) to another place outside Singapore (Thailand), it is treated as an out-of-scope supply. You do not need to charge GST.
My local customer instructs me to deliver the goods to his customer in Thailand. Therefore, I instruct my overseas supplier in Indonesia to ship the goods directly to Thailand. Do I have to charge GST to my local customer?
As the goods are delivered from a place outside Singapore (Indonesia) to another place outside Singapore (Thailand), it is treated as an out-of-scope supply. You do not need to charge GST to your local customer.
Local gift or disposal of goods
Do I have to charge GST when I give samples to my customers?
Industrial samples and commercial samples will not be subject to GST if they are in a form which is not ordinarily available for sale to the public and are given to your actual or potential customers.
These samples must be easily distinguished from the actual products that are available for sale in the market. They should be marked with words such as "Not for sale" or "Sample only".
I disposed of a motor vehicle (e.g. lorry) which was purchased for use in my business. Do I have to charge GST on the disposal of the vehicle?
Yes, you are required to charge GST on the sale of your company vehicle. You should use the Discounted Sale Price Scheme and charge GST on 50% of the selling price of the used vehicle.
For more information, please refer to Purchase and Sale of Motor Vehicles.
I bought goods produced from an overseas manufacturer which are under warranty. The goods became defective during the warranty period and replacements were delivered to me. The defective goods were thereafter sent to a local agent of the overseas manufacturer as scrap or destroyed. Do I need to charge GST when I pass the defective goods to the local agent?
As the exchange of a replacement good for a faulty one is part of the original contract for the sale of goods, there is no supply when the defective goods are returned to the local agent of the overseas manufacturer.
Therefore, you do not need to charge GST when you pass the defective goods to the local office.