Goods and Services Tax (GST) applies to almost all goods that enter and/or leave Singapore’s borders. However, your business may be experiencing cash flow constraints due to the import of goods through the customs because businesses have to pay input tax at the point of importation.
Singapore is a global trade hub and we are reliant on exports for our international trade. IRAS has a scheme “Major Exporter Scheme” that allows input tax payment to be suspended when importing non-dutiable products. However, any GST-registered business who are interested in applying for MES or those who are looking to renew their MES status will have to undergo a GST Assisted Self-Help Kit (ASK) self-assessment of their eligibility to qualify and it has to be certified by an Accredited Tax Advisor (GST).
Read on to understand the Major Exporter Scheme and how it helps your business.
What is MES?
Major Exporter Scheme (MES) is a scheme designed to help businesses that re-export imported goods by suspending GST input taxes. Without MES, when companies first import goods, they have to make payment for GST input tax first, and IRAS will process the relevant refunds after submission of the businesses’ GST quarterly returns.
Exported goods have a GST charge of 0%. Companies that successfully apply for MES do not have to pay GST input tax when importing goods. It alleviates their tight cash flow position.
What qualifies a business for MES?
According to IRAS, a business has to fulfil the following conditions to be eligible for MES:
1. The business must be GST registered.
2. The business must be financially solvent and active. Financial solvency is described as a business’s ability to sustain growth and operations in the long run.
3. More than 50% of the overall supplies must be zero-rated, or the total value has to be more than S$10 million for 12 consecutive months.
4. The business maintains proper accounting records and good internal controls.
5. Good compliance records are maintained with both IRAS and Singapore customs.
How can a business apply for MES?
A business first has to fully complete and sign the F10 form (Application for Major Exporter Scheme) when applying for MES. For renewal cases, IRAS will send them an invitation to renew before expiry date. The process starts with the businesses completing the relevant ASK templates/checklists, performing sample testing of selected transactions from the past GST returns and review for errors etc. All this work will need to be reviewed by an Accredited Tax Advisor (GST).
Upon satisfactory completion, the businesses will complete, sign off F10 and submit the relevant Declaration Form including report any errors findings by submitting a Voluntary Disclosure of Errors form. Penalties are waived for any errors uncovered if it is voluntarily disclosed.
IRAS requires that the ASK Annual Review must be attested by either an Accredited Tax Practitioner (GST) or Accredited Tax Advisor (GST) from the Singapore Chartered Tax Professionals (SCTP). The ATA or ATP can either be an in-house or external consultant.
If you are looking for a reliable tax professional to help you apply/renew your MES or any tax scheme, our Accredited Tax Advisor (GST) who has many years of GST experience will be more than happy to assist you.
What is the Assisted Self-Help Kit (ASK)?
The GST ASK comprises three components:
1. GST Practices: Ensures GST compliance by maintaining and improving internal processes.
2. Pre-Filing Checklist: Ensures quality of GST returns before the business files them for submission.
3. ASK Annual Review: Helps companies prevent GST errors on two levels; the transactional level and GST reporting level.
The GST ASK helps businesses avoid any common administrative errors that may result in costly penalties due to non-compliance with GST laws. In addition, the GST ASK review is also applicable to the following schemes, depending on which is most relevant to your business:
AMCS: Based on AMCS, GST-registered businesses can gain from the 0% GST cost on any buy or leasing of goods and repairs or maintenance on ship components or parts, in accordance with the qualifying requirements.
ACRS: In compliance with ARCS, both Approved Refiners and Consolidators reap the benefits of certain perks consisting of GST suspension made during the verification of the acceptability of imports and added input tax benefits.
ACMT: According to ACMT, both contract manufacturers and trader do not have to be accountable for GST on enhanced activities provided to non-GST registered overseas customers or individuals abroad who have been registered officially under the Overseas Vendor Registration (OVR) system as a pay-only person.
A3PLCS: Based on A3PLCS, approved logistics ventures that offers logistics management services to customers abroad need not charge the GST cost or submit payment for the import GST for the supplies of goods for clients abroad under circumstances.
AISS: In accordance with AISS, GST-registered traders from the aerospace sector can gain from import GST suspension perks for certifying aircraft components.
SWS: Subject to SWS, qualifying services carried out on meeting the requirements of goods in Approved Specialised Warehouses and the license/ tenancy/ lease of existing storage space in these types of warehouses can charge 0% GST to overseas individuals.
AMFT: According to AMFT, approved ventures need not submit payment for GST when they approach any GST-registered supplier to buy approved marine fuel oil locally.
For any assistance with applying for these schemes, Max Lewis Consultants come into the picture to offer help and guidance. With the suitable scheme applied to your business, you can enjoy its tax advantage greatly.
Conclusion
The MES is essential for any qualifying business and helps them relieve their cash flows. To experience the true benefits of the MES as soon as possible, come to us. The other tax scheme mentioned also has its tax benefits but businesses have to undergo ASK review exercise in order to apply or renew here at Max Lewis Consultants, because we are Accredited Tax Advisor (GST) with the Singapore Chartered Tax Professionals Limited – we are able to assist your company to endorse the GST ASK Certification necessary for application or renewal of tax schemes like MES/IGDS/A3PLCS/AMCT, etc.
We have a long track record of helping many companies with their GST ASK certification successfully. Our other services also include business, asset valuation and transfer pricing advisory in Singapore. Contact us to receive specialised, personalised solutions to support the growth of your business today.