The IRAS made the following updates on their e-tax guides “GST: Guide on Hand-Carried Export Scheme” and “Guide on Exports” on 18 February 2021-

• Companies who are exempted from or applying for exemption from HCES need to maintain an extract of the carrier’s passport with personal details and photograph as part of the documents to support zero-rating. The IRAS may now verify the details shown on the extract of the carrier’s passport against the Immigration and Checkpoints Authority’s (ICA) departing records.
• Companies under the exemption from HCES should expect more questions from the IRAS if there are discrepancies between what is provided and what is recorded in ICA’s record.
• More checks should be conducted on the carrier’s commercial authenticity before zero-rating the sales. You can never be too careful when it comes to high-value goods and you would not want to be caught in the web of missing trader fraud unknowingly.

*Please have a read if you are interested to find out more about the hand-carried export scheme!  

In general, goods exported out of Singapore are required to be reported as zero-rated supplies in the GST return. This includes goods that are hand-carried out of Singapore.

Did You Know? –
Hand-carried goods that are exported out of Singapore (via Changi International Airport) can qualify for zero-rating, but ONLY if the GST-registered supplier complies with the requirements of the Hand-Carried Exports Scheme (HCES).
Hence, it is important to know the documentary requirements and GST reporting requirements that have been summarised in this article!

Documents to maintain under the HCES

The GST-registered supplier is required to maintain the following documents (for min. 5 years) in order for the hand-carried goods to qualify for zero-rating:

• Copies of invoices/tax invoices issued to overseas customers for goods sold;
• Export permit(s) with digital clearance (for suppliers subscribed to HCES digital service) or physical endorsement by Singapore Customs (for suppliers not subscribed to HCES digital service);
• Evidence of payment received from the overseas customers; and
• Evidence of payment made to the customer for the refund of GST (i.e. where the supplier has previously standard-rated the supply and subsequently made a refund of GST to the customer upon receiving the export permit endorsed by Singapore Customs), where applicable.

GST reporting requirements

The GST-registered supplier can report the sale of goods hand-carried out of Singapore as a zero-rated supply if the supplier is able to maintain the above-mentioned documents.

Otherwise, the supplier is required to standard-rate the sale of goods and charge GST to its overseas customer at the prevailing rate.

If the supplier does not have all the required documents at the time of filing the GST return, the supplier can still report the sale of goods as a zero-rated supply and has up to 60 days (from the date of supply) to obtain all the documents.

However, if the supplier fails to obtain the required documents within 60 days, the supplier will have to make adjustments in its GST return (either by filing GTS F7 or in its next GST return) and standard-rate the sale of goods.

Exemption from HCES

The IRAS does allow exemptions from HCES. This means that the supplier can still zero-rate its sale of goods that are hand-carried out of Singapore without fulfilling the many conditions set out under HCES.

To be able to do so, the supplier has to apply to the IRAS to be exempted from HCES by submitting an application form to the Comptroller of GST. However, there are certain criteria to be met and documentation to be maintained.

To qualify for the exemption, the supplier must:

(a) Satisfy the Comptroller of GST that there are valid commercial reasons (e.g. risk of being robbed for high-value goods like diamonds) for not being able to present the goods for inspection at the airport.

(b) Have good compliance records for GST and Income Tax (e.g. good filling and payment records) and must continue to have good compliance records.

(c) Maintain the following documents within 60 days from the date of supply of goods:

• Invoices/Tax invoices issued to the overseas customer for goods sold;
• Written declaration by the carrier¹ that the goods are for export;
• An extract of the carrier’s passport with his personal details and photographs. NEW! IRAS may verify the details shown on the above documents against ICA departing records;
• Copy of transport documents (e.g. confirmed air ticket, boarding pass bearing the carrier’s name as the passenger, airline excess baggage receipt (if applicable);
• Confirmation of receipt of goods from the overseas customer;
• Export permit showing the GST-registered supplier as exporter (and vehicle number if exported via land);
• Evidence of payment received from overseas customer.

Note: The documents to be maintained in (c) also apply to local suppliers who supply goods that are hand-carried out of Singapore via Seletar Airport, Sea or Land (i.e. not via Changi International Airport). In such circumstances, the local supplier will be able to zero-rate the supply of goods to the overseas customer. If the supplier successfully obtains written approval from the Comptroller of GST on the application for exemption from HCES, the carrier will not be required to present the hand-carried goods and export permits to the Singapore Customs for inspection and endorsement at the airport.

carrier¹ – the person whom hand carries the goods out of Singapore

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.

We also work with audit and accounting firms to advise on their clients complex GST matters and in-house training.  Share This Page