Tag Archives: GST for imported goods

GST on imported goods

The overseas supplier, who are not GST registered trader, will not have the GST charges on the invoice. The Customs (or the forwarder may pay on your half) will impose the GST on the imported goods when goods arrived in Singapore.

The exchange rate used in the supplier invoice could be different from the Customs’ exchange rate. You may have received the supplier invoice before receiving goods and could have entered using your in-house exchange rate. Whereas you paid the GST based on the Customs’ exchange rate, convert upon goods arrived in Singapore.

Assuming you paid $700 GST to the Customs based on $10,000 worth of goods. The payments entry in MoneyWorks:

First detail line:
Account: Cost of Goods Sold
Net: 10,000
GST Code: IM (import GST code)
GST amount: 700
Second detail line:
Account: Cost of Goods Sold
Net: (10,000)
GST Code: OP (or *)
GST amount: 0.00

(**Check with your accountant on the GST code use).

GST on imported goods

The Cost of Goods Sold used in the Payment transaction is a dummy account to facilitate the tax calculation. The taxable amount reversed on the second detail line to give a net (tax amount) of 700, which will then capture in the GST report.

The journal for the payment will be:
DR. Cost of Goods Sold
DR. GST Input
CR. Cost of Goods Sold
CR. Bank

MoneyWorks is a hybrid accounting system. You can purchase MoneyWorks Data centre and install the software on to your in-house or cloud server, or subscribe to MoneyWorks Now and host the data on MoneyWorks’ cloud server. Contact us to find out more.

GST on imported goods

Software: MoneyWorks accounting software

Oversea suppliers are not supposed to charge GST if they are not a GST registered trader. The GST is paid to the Custom or a forwarder (if they paid the GST on your behalf) when goods arrived.

You can use the cost of goods sold or an expense account as a dummy account in the account tab of a payment transaction to record the GST paid. For example, you paid $700 GST on goods purchased; the entry will be:

Detail line 1:
Account: Cost of Goods Sold
Taxable amount: 10,000
Tax Code: IM
GST: 700

Detail line 2:
Account: Cost of Goods Sold
Taxable amount: -10,000 (negative)
Tax Code: OP (or *)
GST: 0

Imported GST

The Cost of Goods Sold contra off with each other and left the GST paid.

Due to differences between the internal exchange rate and the rate used by the Custom, the taxable amount could be different from the purchase value in Singapore dollar.

Note: You are supposed to record the import permit number in either Transaction user field 1, 2, or 3 on both purchase invoice and the GST payment, which will use in the IAF (Iras Audit File) report later if required. The Transaction User field label can be renamed to ‘Permit No’ from the Document Preferences to ease the data entry.

Sign up a demo to find out how to use MoneyWorks efficiently to manage your business finance.

Purchases and imports in foreign currency

The below information is from IRAS web site: http://iras.gov.sg/irasHome/page04.aspx?id=676

For such purchases with GST, your supplier has to indicate the GST payable on the tax invoice in Singapore dollars at the approved rate of exchange determined by him. You should claim input tax on such purchases based on the Singapore dollar amounts shown in the tax invoices. This requirement applies even if you have recorded the purchases at different exchange rate in your books.

For your imports, you should claim input tax based on the Singapore dollar amounts shown in the import permits issued by Singapore Customs.

The above information from IRAS web site is very helpful for those who are importing goods into Singapore in foreign currency.