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The Inland Revenue Authority of Singapore (IRAS) has issued a revised e-Tax Guide on the country's goods and services (GST) for the marine industry, which reflects the international character of supplies relating to ships and facilitates the industry's tax compliance.
The changes involve, with effect from January 1, 2011, expanding the scope of the zero-rating of international transport of passengers and goods by sea; the definition of "ship" for the purposes of zero-rating international services supplied to ships; and the scope of zero-rating of supplies of goods for use or installation on a ship.
Marine services (not being ancillary transport activities such as loading, unloading and handling) comprising the international transport of passengers or goods can be zero-rated. The zero-rating relief will apply where the transporting vessel is bound for or returning from a fixed port of call outside Singapore, or where the transporting vessel sails to or from international waters and the course of transportation occurs "substantially outside of Singapore" (if the travel in Singapore waters is only necessary for the purposes of departing to or returning from international waters).
Zero-rating is also extended to the supplies of domestic transport of goods (from a place in Singapore to another place in Singapore), when the domestic transport is provided as part of the international transportation of goods by sea and provided that the domestic transport is supplied by the same supplier. Zero-rating does not extend to domestic transport of passengers.
Supplies of services relating to ships can also qualify for zero-rating if the services are prescribed as "international services." Examples of prescribed services are ship repair and maintenance, ship management and ship handling. The definition of a "ship" has been altered to mean "any ship (including an oil rig) but does not include (for example) any ship that is licensed as a passenger harbor craft or pleasure craft... or that is designed or adapted for use for recreation or pleasure and is so used within Singapore."
Finally, it is accepted that most goods supplied to ships located in Singapore are generally international in character. Therefore to ease compliance for the industry, new provisions will provide for the zero-rating of a supply relating to goods (supply by sale or lease) where IRAS is satisfied that the goods are for use as stores or fuel on a ship; installation on a ship or a ship under construction; use in the maintenance or operation of a ship; or sale by retail as merchandise to persons carried on a ship.
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