The Inland Revenue Authority of Singapore (“IRAS”) has recently updated their GST e-tax guide on “Record Keeping Guide for GST-Registered Business – Sixth edition” on 12 October 2020.
The key update to this guide is the inclusion of the conditions that businesses must adhere to when invoicing details are entered into the customer’s platform (also known as customer’s electronic system (“CES”)) in lieu of receiving tax invoices generated by the supplier for the purpose of input tax claim.
With the introduction of the conditions under this arrangement in the GST e-tax guide, one could draw comfort that the IRAS has accepted the new way of issuing invoices electronically for the purpose of input tax claim by the customer (i.e. you don’t necessarily need a tax invoice “issued” by the supplier).
It is also a welcome move by the IRAS to state the following in one of the conditions:
a) Both you and your customer must agree in writing that the invoicing details captured in the CES will serve as the invoice details to be used for both party’s GST reporting purposes and no separate tax invoices will be issued to your customer. This means that:
i) the issuance date of the tax invoice will be the invoice date provided as part of the invoice details in the CES; and
ii) the value of supplies and output tax to be accounted by the supplier and the value of taxable purchases and input tax to be claimed by the customer under this arrangement should be consistently based on the SGD equivalent of the amounts in the CES.
With this specific condition (amongst other conditions), the IRAS has removed the ambiguity of whose exchange rate should be used when accounting for output tax or claiming of input tax under this arrangement. The difference in exchange rate used by the seller and buyer is one of the key GST risks that we have highlighted in our previous article on self-billing arrangement.
Although entering the invoicing details into the CES by the supplier is not exactly a self-billing arrangement (because the ‘invoice’ is still triggered by an action from the supplier), one would find many similarities between the two arrangements. Hence, the conditions imposed when entering the invoicing details into the CES are similar to the conditions imposed for self-billing arrangement.
We should expect the conditions for self-billing arrangement to be expanded and take into consideration the above-mentioned condition since both arrangements is a cut from the same cloth.
Eddie is the co-founder and Tax Director of Jed Tax Consulting Pte Ltd. Jed Tax Consulting is an independent GST consulting firm in Singapore, provides support to clients with all aspects of GST matters (e.g. MES renewal, ASK and ACAP review, IRAS audit queries, tax codes review and set-up, GST advisory, GST return filing and in-house training etc). Jed Tax Consulting is supported by a team of accredited tax practitioners and advisors with vast experience in IRAS and Big 4 accounting firms.
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