Overview of services
In general, the following services performed in connection to ships and aircrafts are international services:
- Handling services
- Handling of goods carried by them
- Pilotage, salvage and towage
- Surveying and classification for purposes of any register
- Sale (including building to supply) and hiring
- Repairs, maintenance and broking services in arranging for sale or hire (including space in any ship or aircraft), irrespective of whether they are provided to owner, operator or agent
- Management services provided to the owner, operator or agent
International services are zero-rated GST supplies, i.e. they are charged GST at 0%. GST incurred on such purchases, if any, can be deducted subject to conditions of input tax claim.
For more information on aircraft and aircraft related supplies, including the Approve Import GST Suspension Scheme (AISS), please refer to GST Guide for the Aerospace Industry (269KB).
Supply of goods as stores, merchandise for sales and bunker fuel
Stores are goods used on the ship voyages or aircraft flights and they can be zero-rated. They include the following:
- Goods to be used in repairs or maintenance work
- Goods for general use on board
In addition, the supply of merchandise for sale on the voyage/flights, and the supply of bunker fuel can also be zero-rated.
For more information on stores, please refer to GST: A Guide on Exports (425KB).
Budget 2010 Changes
The following changes will take effect
from 1 Jul 2010:
GST treatment of Ship and Ship related supplies
The key driver for the legislative changes is to reflect the international character of supplies relating to ships. The changes are business friendly measures aimed at simplifying GST compliance without compromising revenue.
The specific GST changes are as follows:
- Expanding the definition of "ship" in Section 21(4)(a);
- Expanding the scope of zero-rating relief to include any goods to be used/installed on board any qualifying ship; and
- Expanding the scope of zero-rating relief on international transport of passengers/goods.
Expanding the definition of "ship" in Section 21(4)(a)
The current definition of 'qualifying ship' under section 21(4)(a) of the GST Act excludes ships used or adapted for recreation or pleasure. Consequently, prescribed services performed on internationally bound ships that are excluded from the definition of 'qualifying ship' will not enjoy zero rating under section 21(3). To recognize the 'export' nature of supplies made to non-commercial ships which are wholly internationally bound, the definition of "ship" in Section 21(4)(a) will be expanded to include ships used or adapted for recreation or pleasure provided that they are wholly internationally bound.
Expanding the scope of zero-rating relief to include any goods to be used/installed on board any qualifying ship
Section 21(6)(b) currently provides for zero-rating of the supply of stores and merchandise for resale on board a ship provided that they are to be used on a voyage to or from a "destination outside Singapore".
Zero-rating does not extend to other goods which do not fall within the definition of stores and merchandise for resale. Further, there are instances where goods are used on a ship that do not have a next port of call (e.g. oil rigs, FPSO platforms and cruise ships which embark on "cruise-to-nowhere"), and hence, such supplies have to be standard-rated.
Accordingly, the scope of zero rating will be expanded to include the supply of any goods to be used/installed on board any ship falling within the revised definition of 'qualifying ship'.
Zero-rating will apply to both the sale and rental/lease of such goods and is regardless of the belonging status of the customer.
Expanding the scope of zero-rating relief on international transport of passengers/goods
Currently, Section 21(3)(a) allows for the zero rating of services comprising the transport of passengers or goods:
(¡) from a place outside Singapore to another place outside Singapore;
(ii) from a place in Singapore to a "place outside Singapore", or
(iii) from a place outside Singapore to a place in Singapore.
A 'place outside Singapore' is taken to mean that the ship must call at a port outside Singapore. In recognition that not all international voyages result in a ship calling at a port outside Singapore, the scope of zero rating will similarly be expanded to encompass all international transport of passengers/goods and without the requirement for the ship to call at a port outside Singapore.
Details of the changes are provided in the e-Tax guide GST Guide for the Marine Industry-2010 Budget Changes (227KB).
GST treatment of Aircraft related supplies
Section 21(6)(b) currently provides for zero-rating of the supply of stores and merchandise for resale on board an aircraft but provided that they are to be used on a voyage to or from a "destination outside Singapore".
In line with the spirit of the GST changes in Budget 2010, the scope of zero-rating will be expanded to include the supply of stores and merchandise for resale on board any aircraft falling within the definition of 'qualifying aircraft' under section 21(4)(a).
Details of the changes are provided in the e-Tax guide GST Guide for the Marine Industry-2010 Budget Changes (227KB).