Import raw materials, process, and then full export

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emsigma
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Import raw materials, process, and then full export

Post by emsigma » Sat, 27 Jun 2020 12:57 pm

Hi,

We want to import dried vegetables in powder format from China to Singapore, process them and then export again.

I've been checking and it seems the raw materials have 0% tariff, but we have to pay 7% GST. Since the final product will be exported again, is there any way to waive the GST?

I appreciate any hint on this topic.

Thanks!

tt1973
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Re: Import raw materials, process, and then full export

Post by tt1973 » Sat, 27 Jun 2020 8:57 pm

Any import exceeding certain value will have to be subjected to GST.

The only way to offset the GST will be your purchases from local GST registered companies. There is no other way around it legally.

Myasis Dragon
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Re: Import raw materials, process, and then full export

Post by Myasis Dragon » Sat, 27 Jun 2020 10:11 pm

emsigma wrote:
Sat, 27 Jun 2020 12:57 pm
Hi,

We want to import dried vegetables in powder format from China to Singapore, process them and then export again.

I've been checking and it seems the raw materials have 0% tariff, but we have to pay 7% GST. Since the final product will be exported again, is there any way to waive the GST?

I appreciate any hint on this topic.

Thanks!
tt1973's answer to you is not correct. Singapore operates a "Zero GST Warehouse Scheme" for exactly the kind of business that you are describing. Goods imported into a ZG warehouse are not subject to duty or GST, and goods that are again exported from that ZG warehouse are not subject to GST.

You will have to have customs accounts and jump through some hoops but lots of Singapore companies do this.

More information:

https://www.iras.gov.sg/irashome/GST/GS ... -Supplies/

https://www.iras.gov.sg/IRASHome/GST/GS ... se-Scheme/

https://www.customs.gov.sg/businesses/c ... use-scheme

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sundaymorningstaple
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Re: Import raw materials, process, and then full export

Post by sundaymorningstaple » Sun, 28 Jun 2020 12:10 pm

Would that also be applicable for goods removed from the ZG warehouse to be processed before reexporting as in emsigma's original post?
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emsigma
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Re: Import raw materials, process, and then full export

Post by emsigma » Sun, 28 Jun 2020 4:33 pm

Thank you for your messages.

I've been checking this document: https://www.iras.gov.sg/irashome/upload ... -12-31.pdf

In the page 35 says:
Important Note
If X’s goods delivered to Z are processed such that there is a change in the nature and form (for example, from plastic made into toys, fabric tailored into dresses, or electronics chips mounted on circuit boards) before the finished goods are exported, X is not allowed to zero-rate this supply.

This is because X’s goods are not being exported in their original form. The goods have undergone processing, and X’s original goods have lost their identity. Instead, different goods with value-added are exported.
The Comptroller considers a change of Harmonised System Code (HS Code) as a change in nature and form.
Perhaps the only solution would be finding a factory within the FTZ?

Thanks again!

Myasis Dragon
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Re: Import raw materials, process, and then full export

Post by Myasis Dragon » Sun, 28 Jun 2020 11:37 pm

emsigma wrote:
Sun, 28 Jun 2020 4:33 pm
Thank you for your messages.

I've been checking this document: https://www.iras.gov.sg/irashome/upload ... -12-31.pdf

In the page 35 says:
Important Note
If X’s goods delivered to Z are processed such that there is a change in the nature and form (for example, from plastic made into toys, fabric tailored into dresses, or electronics chips mounted on circuit boards) before the finished goods are exported, X is not allowed to zero-rate this supply.

This is because X’s goods are not being exported in their original form. The goods have undergone processing, and X’s original goods have lost their identity. Instead, different goods with value-added are exported.
The Comptroller considers a change of Harmonised System Code (HS Code) as a change in nature and form.
Perhaps the only solution would be finding a factory within the FTZ?

Thanks again!
Very interesting. I think you need to contact the customs folks and see what they say.

See... here's the deal... literally hundreds of companies in Singapore bring in materials and parts for manufacturing and assembly, then export the finished goods elsewhere. For example, pharmaceutical equipment is manufactured in Singapore.

So... one of two things must be true: The government collects GST on finished goods for export, which means the goods are 7 percent more expensive in the world market, or it does not collect GST on such goods.

I have always understood that Singapore manufacturers who import parts and export finished goods were not subject to duty or GST... that duty and GST are applicable to goods imported into the country for domestic use. And, you didn't have to be a FTZ to do it... these seem to be more tuned to transshipment activities.

The quote you posted seems to state otherwise. Don't fiddle around here. Contact the appropriate office and see what they say. And then let us know.

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