Conserving Your Cash Via The Major Exporter Scheme (MES)
Another tip to help you conserve your Cash …
If your business is GST registered, & that you find yourself tying up too much cash at the point of importing goods only for re-exporting later, go apply for Major Exporter Scheme (MES) if you qualify for it.
* Under MES, GST on non-dutiable goods is suspended at the point of import & also when the goods are removed from Zero GST warehouses.
* MES is designed to ease the cash flow of businesses that import & export goods substantially.
* Under normal rules, the businesses have to pay GST upfront on imports & subsequently obtain a refund from IRAS after submission of their GST returns. This can create cash flow problems for businesses that export goods substantially as no GST is collected from the zero-rated supplies to set-off their initial cash outflow on imports.
* Businesses granted the MES are able to import non-dutiable goods with GST suspended. Effective from 1 Jul 2006, such businesses also enjoy GST suspension on goods removed from a Zero GST warehouse.
Qualifying Conditions
1. Your zero-rated supplies must account for > 50% of the total supplies, or the value of your zero-rated supplies is > S$10 million for the past 12 months;
2. You are required to maintain good internal controls and proper accounting records; &
3. You are required to maintain good compliance records with IRAS and Singapore Customs.
Do take note …
* Your MES status can only be used when you:
1. Import your own goods in the course or furtherance of your business;
2. Import goods belonging to your overseas principal for sale in Singapore or re-export on behalf of the overseas principal, in the course or furtherance of the business
3. Import goods belonging to your overseas principal which will later be re-exported (e.g. back to your overseas principal) or
4. (From 1 Jan 2015) Re-import goods which you previously sent abroad for value-added activities, belonging to your local customer or GST-registered overseas customer
For (2) and (3) above, you must ensure that:
1. Your overseas principal is not registered for GST;
2. You keep separate records for goods belonging to your overseas principal;
3. You have control over the custody and possession of the goods owned by your overseas principals at all times; &
4. You treat any subsequent supply of goods as being made by you:
* When you sell the goods locally, you should standard-rate the supply; &
* When you export the goods & maintain the required export evidence, you may zero-rate the supply.
Good Luck to your Cash Control !
If you need help, feel free to contact us at :
(O) +65 63851011
(M) +65 90880669
