Singapore GST – Public Consultation on the Draft GST e-Tax Guide on Customer Accounting for Prescribed Goods


On 24 April 2017, IRAS has initiated a public consultation exercise to seek feedback from its Draft e-Tax Guide on GST-registered businesses dealing in prescribed goods on the implementation of customer accounting, so as to facilitate a smooth transition into customer accounting come 1 Jan 2018.

What is GST customer accounting?

IRAS is planning to implement GST customer accounting from 1 January 2018 to better address non-compliance relating to transactions of the prescribed goods – mobile phones, memory cards, and off-the-shelf software if the GST-exclusive value of the sale exceeds $5,000 in a single invoice.

If a GST-registered trader makes a taxable supply to a GST-registered customer, it is the GST-registered customer who will account for the output tax on the supply on behalf of the supplier.  At the same time, the GST-registered customer will be bale to claim input tax on this purchase if it is for his business use and the making of his taxable supply.

 

De Minimis Threshold – $5,000

The new Customer accounting requirement is applicable only if the sales of the prescribed goods to a GST-registered customer for his business use exceeds the de minimis threshold of $5,000 in GST-exclusive value..  This means that if the sales do not exceed this threshold, the new Customer accounting requirement will not apply.

The GST-registered supplier should instead standard-rate the supply, account for the GST output tax and issue a tax invoice to his customer as before.

Discounts given on your sales

If a GST-registered supplier offers an unconditional discount on the price of the prescribed goods sold to his GST-registered customer, he should use the discounted GST-exclusive sale value to determine whether his supply exceeds the de minimis threshold of $5,000.

Where there is a contingent discount or delayed reduction in price, the pre-discount GST-exclusive value of the prescribed goods shown on the tax invoice should be used to determine whether the supply exceeds the de minimis threshold of $5,000. 8.2.3 Your supply of prescribed goods to the GST-registered customer will be subject to customer accounting if the discounted sale value or the pre-discount value shown on the tax invoice exceeds $5,000.

A single purchase order with multiple deliveries

For a single purchase order with multiple deliveries, if the GST-registered supplier issues only one tax invoice for all the deliveries, he will use the total GST-exclusive value of the prescribed goods shown in the tax invoice to determine whether the supply exceeds the de minimis threshold of $5,000.

On the other hand, if his normal commercial practice is to issue one tax invoice for each delivery made, such that multiple tax invoices are issued in respect of a single large purchase order, he should determine if customer accounting applies based on the GST-exclusive value on each of the invoices.  However, if he would like to apply customer accounting to all the invoices even though some/all will not exceed $5,000 individually, he can do so provided the GST-exclusive value of the prescribed goods in the single purchase order exceeds $5,000; and both his GST-registered customer and he agree for customer accounting to apply in this manner.

Combined sales of prescribed and non-prescribed goods

When a GST-registered supplier makes a sale consisting of both prescribed and non-prescribed goods to a GST-registered customer, he needs to determine whether the total GST-exclusive sale value of all the prescribed goods sold (whether or not they are of the same type/nature) exceeds $5,000.  The sale value of non-prescribed goods should not be included in this computation.  Upon exceeding the threshold, the GST-registered supplier should apply customer accounting to the sale of the prescribed goods only and not to the non-prescribed goods.

Returned goods

If as a result of the returned goods, the GST-exclusive sale value of the prescribed goods is reduced to $5,000 or below, the GST-registered supplier should issue a credit note to cancel the original sale made under customer accounting and re-issue a tax invoice showing the revised sale value with GST charged (i.e., without applying customer accounting).  He should also collect from his customer the GST chargeable on the revised sale value.

If you have any questions, contact us at support@whm-consulting.com

Advertisements

Leave a Reply

Please log in using one of these methods to post your comment:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s