GST Guide for the Logistics Service Industry
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GST Guide for the Logistics Service Industry IRAS e-Tax Guide GST Guide for the Logistics Service Industry (Third Edition) GST Guide for the Logistics Service Industry Published by Inland Revenue Authority of Singapore Published on 27 Sep 2021 First edition on 20 Dec 2016 Second edition on 22 Oct 2019 Disclaimers: IRAS shall not be responsible or held accountable in any way for any damage, loss or expense whatsoever, arising directly or indirectly from any inaccuracy or incompleteness in the Contents of this e-Tax Guide, or errors or omissions in the transmission of the Contents. IRAS shall not be responsible or held accountable in any way for any decision made or action taken by you or any third party in reliance upon the Contents in this e-Tax Guide. This information aims to provide a better general understanding of taxpayers’ tax obligations and is not intended to comprehensively address all possible tax issues that may arise. While every effort has been made to ensure that this information is consistent with existing law and practice, should there be any changes, IRAS reserves the right to vary its position accordingly. © Inland Revenue Authority of Singapore All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means, including photocopying and recording without the written permission of the copyright holder, application for which should be addressed to the publisher. Such written permission must also be obtained before any part of this publication is stored in a retrieval system of any nature GST Guide for the Logistics Service Industry Table of Contents AIM .......................................................................................................... 1 BACKGROUND ............................................................................................. 1 AT A GLANCE ............................................................................................... 2 RECOVERY OF COSTS ............................................................................... 8 INTERNATIONAL TRANSPORTATION OF GOODS .................................. 10 LOCAL TRANSPORTATION WITHIN SINGAPORE, PROVIDED TOGETHER WITH INTERNATIONAL TRANSPORTATION OF GOODS ........................ 13 LOCAL TRANSPORTATION OF GOODS WITHIN SINGAPORE (BUT OUTSIDE FTZS OR DESIGNATED AREAS) ONLY ................................... 14 HANDLING SERVICES AND STORAGE SERVICES WITHIN FTZ OR DESIGNATED AREA ................................................................................... 19 HANDLING SERVICES WITHIN SINGAPORE BUT OUTSIDE FTZS OR DESIGNATED AREAS ................................................................................ 23 STORAGE SERVICES WITHIN SINGAPORE BUT OUTSIDE FTZS OR DESIGNATED AREAS ................................................................................ 31 ILLUSTRATION ON THE GST TREATMENT OF THE LOGISTICS SERVICES ................................................................................................... 36 IMPORTING GOODS ON BEHALF OF YOUR CUSTOMERS .................... 38 PROVIDING EXPORT DOCUMENTS TO YOUR CUSTOMERS ................ 40 FREQUENTLY ASKED QUESTIONS (FAQ) ............................................... 44 CONTACT INFORMATION.......................................................................... 44 UPDATES AND AMENDMENTS ................................................................. 45 GST Guide for the Logistics Service Industry ANNEX A – LIST OF FREE TRADE ZONES (FTZS) AND DESIGNATED AREAS OF A PORT, TERMINAL AND AIRPORT ....................................... 46 ANNEX B – CATEGORIES OF LOGISTICS SERVICES ................................. 48 ANNEX C – LIST OF INTERNATIONAL SERVICES FOR THE LOGISTICS SERVICE INDUSTRY ..................................................................... 50 ANNEX D – LIST OF HANDLING ACTIVITIES THAT MAY BE PERFORMED BY THE LOGISTICS SERVICE INDUSTRY ......................................... 53 ANNEX E – COMMON ERRORS MADE BY THE LOGISTICS SERVICE INDUSTRY ...................................................................................... 54 ANNEX F – SUGGESTED TEMPLATE OF A REGISTER OF SUBSIDIARY EXPORT CERTIFICATE AND NOTE OF SHIPMENT .................... 58 GST Guide for the Logistics Service Industry Aim This guide serves to: • Explain the GST principles relevant to the logistics service industry; and • Clarify the GST treatment of some of the more common services provided by businesses in the logistics service industry1. You should read this guide if you are GST-registered and are in the business of providing logistics services such as transportation, goods handling (e.g. labeling, re-packing, inventory control, etc) and storage of goods. Background Services provided by logistics businesses In the logistics service business, there are three main categories of services: • Transportation Services (including ancillary handling activities such as stuffing, loading and unloading) • Handling Services • Storage Services 2.2 The transportation, handling and storage services may be provided in any of the three main geographical regions: • Outside Singapore; • Within the Free Trade Zones (FTZs) or designated areas of a port, terminal and airport (hereafter referred as “designated areas”); or • Within Singapore (including Zero-GST/Licensed/Bonded warehouses) but outside the FTZs or designated areas. Annex A shows the list of FTZs and Designated Areas. Annex B lists some examples of the logistics services provided in each of these three geographical regions. 1 This e-Tax Guide replaces the IRAS’ e-Tax Guide “GST Guide for the Logistics Service Industry” published on 28 Aug 2012. 1 GST Guide for the Logistics Service Industry At a glance Generally, all supplies of services made in Singapore in the course or furtherance 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: GST Act Services that can be zero-rated Section 21(3)(a), International transportation (including local (b) and (c) 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)(g) Services provided to an overseas customer that are supplied directly in connection with goods for exports Section 21(3)(k) Handling, transportation, or storage services and Second provided within Singapore (but outside FTZs and Schedule of the designated areas) at the first leg of import supplied GST (International to and directly benefitting an overseas person in Services) Order business capacity. With effect from 1 Jan 2020, zero-rating is extended to such services supplied to an overseas person in business capacity and directly benefitting2 a GST-registered person who belongs in Singapore. 2 Please refer to IRAS e-Tax Guide on “GST: Clarification on “Directly in Connection With” and “Directly Benefit” for the interpretation and application of these two expressions. 2 GST Guide for the Logistics Service Industry Amendment to “Directly Benefit” condition in Section 21(3)(k) Prior to 1 Jan 2020, a supply of services must “directly benefit” a person belonging outside Singapore before it can be zero-rated under Section 21(3)(k). With the introduction of reverse charge effective from 1 Jan 20203, you may also zero-rate your services supplied to an overseas person wholly in his business capacity where the services “directly benefit” GST- registered persons belonging in Singapore. The GST-registered beneficiary will be required to apply reverse charge on services4 procured from the overseas person if it is not entitled to full input tax recovery. The list of zero-rating provisions for international services that are relevant to the logistics service industry can be found in Annex C. An overview of the applicable zero-rating conditions for Transportation, Handling and Storage Services provided in each of the three main geographical regions are shown in Tables 1, 2 and 3 respectively in the subsequent pages. The details of GST treatment of the various logistics services are elaborated in later parts of this guide. Errors commonly made by the logistics service industry are highlighted in Annex E. 3 For more information on reverse charge, please refer to the e-Tax Guide: “GST: Taxing Imported Services by way of Reverse Charge”. 4 Including recovery of costs charged to the local GST-registered beneficiary by the overseas person. 3 GST Guide for the Logistics Service Industry Table 1: Zero-Rating of Transportation Services Geographical Within FTZ To / From regions or outside Within Singapore but outside FTZs or designated areas designated Services Singapore area Always zero-rated5 to both Only international local and overseas transportation Not applicable customers. services [Refer to paragraph 5.] International and Zero-rated only if contractually provided by same supplier5 and 6. local transportation Can zero-rate to both local and overseas customers. services (when provided together [Refer to paragraph 6.] as one supply) 5 This is under Section 21(3)(a) and (c) of the GST Act. 6 This is