Like all services in Singapore, container haulage services are also subject to Goods & Services Tax. However, did you know that certain items in your invoices are zero-rated?
Also known as Value Added Tax (VAT) in many other countries, Goods and Services Tax (GST) is a consumption tax that is levied on the supply of goods and services in Singapore and the import of goods into Singapore. GST is an indirect tax, expressed as a percentage (currently 7%) applied to the selling price of goods and services provided by GST registered business entities in Singapore.
GST tax is charged to the end consumer therefore GST normally does not become a cost to the company. Businesses merely act as collecting agents on behalf of Singapore tax department.
GST is charged on taxable supplies. A taxable supply, is a supply of goods or services made in Singapore, other than an exempt supply. A taxable supply can either be a standard-rated (currently 7%) or zero-rated supply.
Most local sales of goods and provision of local services in Singapore are standard-rated supplies.
* A 2% rate hike from 7% to 9% is planned to be introduced sometime between 2021 and 2025, depending on Singapore’s economy, government spending and revenue from other taxes. As of 1 January 2023, GST rate is 8%.
GST is only charged by GST-registered businesses. A business must register for GST if its annual turnover exceeds S$1 million.
If you are a GST-registered company, you are required to collect GST from your customers for the goods and services rendered by you and then pay the tax collected to tax authorities.
For example, if you charged S$100 for your services to a customer in Singapore, you must invoice your customer S$100 for your service plus the prevailing GST rates. This invoiced GST amount collected on behalf of the tax authorities from the customer must subsequently be paid to the Singapore tax department on a quarterly basis via GST tax filing.
For small businesses that do meet the requirements, GST registration is optional. Unregistered businesses neither have to collect GST nor remit it to the government.
Likewise, non–GST registered businesses are not allowed to charge GST. It is an offence to charge and collect GST if you are not a GST registered businesses.
Not all items in a haulage services invoice are applicable for GST. A typical invoice for container haulage services usually includes two types of charges:
Understanding the different items in your invoice and whether they are standard or zero-rated supplies will help to ensure that you are making payments for services appropriately.
Recognising that the use of sea and air containers is an essential part of the international transportation of goods, the following supplies made in relation to containers can be zero-rated:
Below charges are commonly seen in a typical invoice in Singapore. As they would fall under point 2, these charges are thus zero-rated (i.e. GST is charged at 0%):
1. Depot Handling Charge (DHC)
Depot Handling Charge, or DHC for short, is charged by the depot for the handling of containers. Examples of such services provided by depots include:
2. Lift-on/Lift-off (LOLO) Charge
3. Additional Charges incurred to Maintain Containers
Generally, services rendered below are applicable for GST at prevailing rates:
To summarize, check your invoices carefully and ensure that you are paying for GST appropriately!
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