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How Singapore’s Jobs Support Scheme Alleviates Your Business’s Covid-19 Pressures

How Singapore’s Jobs Support Scheme Alleviates Your Business’s Covid-19 Pressures

Introduction

First introduced under the Stabilisation and Support Package of Singapore’s Budget 2020, the Jobs Support Scheme (JSS) has been extended up to Sep 2021 to cover the hardest-hit industries. Support measures have also been enhanced to greater support businesses during the Phase 2 (Heightened Alert) [P2(HA)] period.

The JSS was designed to improve assurance and support to workers and businesses most affected by the COVID-19 crisis in this time of economic uncertainty. The initiative will provide cash flow support to local businesses, incentivise companies to retain local workers, and encourage firms to share productivity gains with its employees.

Under the Scheme, the Government will subsidise a percentage of the first $4,600 of gross monthly wages paid to local employees. The JSS payouts are intended to compensate and protect employee wages. The wage support scheme has three tiers as follows:

**Firms in the built environment such as construction companies will receive 75% wage support for wages paid from June to September 2020 only. Thereafter, they will receive up to 50% (Tier 2) wage support instead.

Below shows the computation of JSS payout for employees from three tiers and three different wage rates:

Jobs Support Scheme (JSS) FAQs

Who are qualified for JSS?

All employers (not in the Employer Exclusion List^) who made CPF contributions for local (Singaporean and PR) employees will qualify for the payout. Local shareholders and directors earning wages with mandatory CPF contributions are also qualified for the payout. However, business owners (sole proprietors or partners in partnership businesses) earning wages or trading in their personal capacity are not eligible for the payout.

Firms and businesses that cannot resume operations on June 2, 2020 are also eligible for the payout. To help the business, the government will provide 75% wage support until August 2020 or when they are allowed to operate, whichever comes first. Businesses under this category include gyms, cinemas, retail outlets, and recreational centres.

UPDATED: Under the P2(HA) enhanced JSS measures, businesses required to suspend many, if not all of their operations, will also receive JSS support of 50% for the period from 16 May 2021 to 13 June 2021. This applies to affected gyms, fitness studios, performing arts organisations, and arts education centres.

Certain sectors not required to suspend operations but are considerably affected by the tightened measures, like retail, cinemas and family entertainment centres, will also enjoy enhanced JSS support of 30% from 16 May 2021 to 13 June 2021.

Other businesses significantly affected by the tightened measures in P2(HA) may also appeal for enhanced JSS support at go.gov.sg/jss.

^ Employer Exclusion List

  1. Local government agencies including ministries and departments, organs of state, and statutory boards
  2. PA services and grassroot units
  3. Government and government-aided schools
  4. High commissions, trade offices, embassies, consulate
  5. Foreign military units
  6. Unregistered local/foreign entities
  7. Representative offices of foreign companies, foreign trade associations, foreign non-profit organisations, foreign chambers, foreign government agencies, and foreign law practices
  8. Bank representative offices, insurance representative offices and other financial representative offices registered with MAS (Monetary Authority of Singapore)
  9. News bureaus
  10. International organisations
  11. Entities paying CPF but are not registered in Singapore

How to apply for JSS payout?

Employers do not need to apply for the JSS payout. All employers (not in the Employer Exclusion List) who made CPF contributions for local employees will automatically qualify and will be notified of the support tier they qualify for and the amount they will receive. Businesses with CorpPass access can check their notification emails through the IRAS’s myTax Portal.

How will employers receive the payout?

JSS payouts will be credited through the following modes in order of priority:

  1. Credited to the employers’ GIRO bank account used for Income Tax or GST;
  2. For those without GIRO accounts, the JSS payout will be credited to their registered PayNow Corporate bank account
  3. Otherwise, the JSS payout will be made by cheque.

Employers who are still not using GIRO or PayNow Corporate are encouraged to sign up for these modes to receive their JSS payouts faster.

When are the scheduled payouts?

Employers would have received the JSS payouts in April, July, and October 2020. A special payout was released in May 2020 to support businesses during the circuit breaker by providing support in advance. Eligible sectors will also receive subsequent payouts in March, June, September and December 2021.

 

A Guide to Start Digital for Singapore SMEs

A Guide to Start Digital for Singapore SMEs

Introduction

The SMEs Go Digital programme was developed to help SMEs embrace digital transformation and maximise growth with the help of digital technologies. As part of this programme, support such as enhanced government grants, the Digital Resilience Bonus, SME Digital Tech Hub, Start Digital Packs and more have been introduced.

Spearheaded by the Infocomm Media Development Authority (IMDA), the Start Digital programme was launched in January 2019 and encourages SMEs to adopt digital business processes with comprehensive and low-cost digital solutions. The Start Digital Packs have since gained traction and support from banks, regulators, and SMEs in Singapore.

What is the Start Digital Pack?

A Start Digital Pack is an affordable and fully customisable digital business solutions package created under the government’s SMEs Go Digital programme. Recognised by most corporate service providers in Singapore, the easy-to-adopt and easy-to-deploy programmes and tools included in the package are designed specifically to address the needs of small and medium enterprises that are just starting up or transitioning to the digital scheme. An organisation can pick up the tools or systems they need to get a head start in digitalisation, building a stronger foundation for sustainable business growth.

What are the Benefits of the Start Digital Pack for SMEs?

Aside from the benefits of digitalisation, the Start Digital Pack provides SMEs with the following advantages:

Low Price – The Start Digital Pack includes standard business solutions available in the market but are offered at a much lower price. SMEs can take advantage of rebates and/or free months of access when they sign up. **Freebies will depend on the contract and will differ amongst different partners and providers.

Comprehensive Business Solutions – The Start Digital Pack offers a complete set of business solutions for all business needs. The pack includes programmes and tools on business Accounting and Bookkeeping, HR and Payroll, Digital Marketing, Digital Transactions, Sales and Inventory, Cybersecurity, and others.

Customisable Package – SMEs can pick and choose the programmes they need and leave out those that aren’t relevant to their business. Having the right solutions working for their organisation will help entrepreneurs streamline their processes, and focus more on satisfying their customers and growing the business.

Easy Transition to the Digital World – SMEs adopting the Start Digital Packs will also enjoy professional help and guidance that will ease their entry to digitalisation. Corporate service providers in Singapore can provide an array of relevant tech solutions and training to help businesses digitalise their operations.

Who can apply for a Start Digital Pack?

To qualify for the programme, the business must meet the following criteria:

  • Singapore registered and incorporated
  • At least 30% ownership is held by a Singapore citizen or permanent resident
  • Not more than $100 million in annual sales turnover, or not more than 200 employees

How can I apply for a Start Digital Pack for my business?

Qualified businesses can apply for a Start Digital Pack with any Start Digital Partner. Some of the already approved partners and vendors of the SMEs Go Digital Programme include DBS, OCBC, Maybank, UOB, Singtel, and M1. To apply, simply choose the partner (some partners may require the applicant to have an active account with them), customise your package, and then submit the registration form. When choosing the most suitable partner for your business, it is best to learn more about what the partner is offering and the details of the pack – the rates, the apps available and any help they are willing to extend to their clients.

Start Digital Pack Partners

OCBC and DBS banks are two of the first partners who join the Start Digital programme with great business solutions to offer:

OCBC – The OCBC Start Digital Pack has many digital business applications including accounting, marketing, HR, sales and procurement solutions. Its fully customisable solutions dashboard features are also integrated with e-commerce applications like Google Analytics, Mailchimp and Shopify. The dashboard is free to SMEs with OCBC accounts when they apply for a Start Digital Pack and subscribe to at least two solutions. The package also comes with a choice of two free apps upon sign up: Xero, Quickbooks, Mailchimp, or Shopify, for the first 12 months. Cash rebates are also offered in certain applications. To apply, simply send your account declaration and verification to your bank, choose the apps to purchase and start enjoying the benefits of digitalisation. 

DBS – An application for a DBS Start Digital Pack can be made online, with no need for qualified SMEs to physically go to the bank. Application is easily completed within 5 minutes and approval can be expected within 3 business days, when the client’s portal is ready for use. Open to new and existing customers, DBS offers web-based business tools that are designed to streamline processes, increase profitability and enhance business growth. DBS offers up to 18 months of free subscription to their featured solutions upon signing up with their Start Digital Packs.

Solutions under the Start Digital Pack

Start Digital offers a wide range of business solutions for users to choose from. Xero and Financio are two of the most popular business solutions amongst accounting firms in Singapore and Malaysia.

Xero – Xero is a top cloud-based accounting software with business tools integrations that include invoicing, time-tracking, reporting, payments, banking, HR and payroll, inventory, CRM, and bill/expenses management. The user-friendly accounting platform is popular for its groundbreaking and user-focused innovations. Our team at Mighty Glory Corporate Solutions, a certified Xero Advisor, can help you set up your Xero account for your corporate needs, walk you through implementation, and manage your account for you.

Financio – Financio is an all-round business solutions platform specially designed for small and medium businesses. Amongst its key integrations are business apps in invoicing, banking, HR and payroll, collaboration and reporting. Financio also features Lazada, one of the leading eCommerce platforms. The headache of manual stock counts is removed through the seamless synchronizing of price rates and inventory of your eCommerce business with Financio. As one of the pioneer Financio Advisors, we can help you set up your Financio account according to your business needs, implement its use, and manage it so that you can focus on other business priorities.

Conclusion

Connect with us today to know more about the Start Digital Pack! Our team can assist you to choose your partner, help you build your solutions package, and implement the solutions for your business needs. We look forward to helping you achieve your business goals with efficient and holistic solutions.

How To Improve The Company’s Cash Flow?

How To Improve The Company’s Cash Flow?

Introduction

Cash flow is the amount of money coming in and out of the business. It is a great indication of an entity’s liquidity or its ability to short term obligations. Positive cash flow in the form of cash sales and collections means that the incoming cash is higher than what is going out like purchases and payments. A shorter cash flow cycle or the amount of time needed for a business to convert assets to profits indicates robust profitability. Accounting services in Singapore include cash flow audit and design to improve liquidity and profitability.

The goal is to sustain a positive cash flow at a shorter cash flow cycle. However, the cycle is also dependent on one’s business model and operations. The time between spending cash in making the purchases of raw materials to collections on sales is not totally controllable. But, there are ways we can liven up sustained positive cash flow.

1. Improve collection processes

A significant amount of your cash inflow could be stuck in cash receivables. These liquid assets can easily turn bad and hold up your access to cash. Take a closer look at your Accounts Receivables (commonly known as Trade Debtors). How long is the average collection? Do you see a lot of overdue accounts? Give incentives to good clients and early payors and apply more aggressive collection efforts to delinquent accounts. You may also have to cancel the bad accounts.

2. Keep a closer eye on expenditures

Review your expenses. Check on the items that take a chuck of your expenditures. You might want to find more affordable alternatives or shift to better suppliers. Also, take a look into the smaller items, many of these are avoidable like the interest expenses and penalties.

3. Improve sales campaigns

Call on your sales team to boost their marketing efforts. Are your marketing campaigns still relevant and effective? Is your packaging outdated? Discounted sales and promotions are great at driving up sales, but could negatively affect profitability. Review your customers’ buying patterns and behavior. Do you have more repeat customers or complaints?

4. Open new markets

Widening your customer range will bring in more buyers and improved sales. There are plenty of ways to open new markets – branch out to a new market segment with different products, develop new products relevant to your existing ones, open stores in new locations, or open an online store to capture the online market.

5. Manage inventory

Inventory is ready-to-sell items that are kept in the warehouse. They are liquid assets stuck in storage. Furthermore, keeping your inventory safe costs money, which adds your expenses. Good forecasting and inventory management will ensure enough goods at hand while keeping the warehousing expenses at a minimum.

What Affect Company’s Cash Flow

A business, economic, or environmental crisis can throw off even the most careful and intensive business planning. Natural disasters and unforeseen events are unpredictable and immeasurable. Although we can set aside funds and prepare procedures in preparation for it happening, we cannot fully assess its effects on the business.

In any business crisis, there are several ways we can quickly implement in order to sustain positive cash flow and save the business.

1. Injecting fresh capital

Find new investors who can bring in new capital to the company. Owners can also add in new financing to ensure liquidity and continued business operations.

2. Emergency loans

You can secure term loans to carry the business over the rough patch. Your business bank can offer quick business loans at reasonable interest rates.

3. Discounted Sales

Converting liquid assets to cash through discounted sales is a good way of bringing in badly needed cash. It will also eliminate old stocks and slow-moving items.

4. Government Aids

Governments often provide a helping hand during economic disasters and business crises. In Budget 2020, Singapore Government has announced relief measures to help businesses tide over the trying times. Any business entity can claim for government help, provided that they fulfill the key eligibility criteria. Here are the few statutory bodies and organizations in Singapore that help companies to cope with the company cashflow during this coronavirus crisis:

a. “Helping Our Promising Enterprises” (HOPE) Fund

S$5-million was launched through the partnership between Singapore Business Federation Young Business Leaders Network (SBF-YBLN) and Goldbell Evolution Network (GEN) to provide an accessible short-term working capital loans for local SMEs. Each company can take a fixed quantum of S$50,000 with a tenure of 12 months, at a minimal administrative fee. The affordable interest rates range from 0.5% to 0.75% per month. Funding is secured over the personal guarantee of the company’s directors or shareholders. The allowance to defer the first loan repayment to start from the third month onwards is the HOPE Fund’s attractive feature.

b. Enterprise Financing Scheme – SME Working Capital Loan (EFS-WCL) by Enterprise Singapore

The loan quantum capping is increased to S$600,000 from the previous S$300,000 and the life-span’s extension to March 2021 enhance the previous scheme to help in financing a company’s daily operational cashflow needs for the unexpected COVID-19 challenge. Despite that the risk-share is also increased, the standard loan recovery procedure remains. If the company has an on-going overseas project, the management may also consider the Project Loan scheme.

c. Singapore Budget 2020

Generous provisions in the Budget 2020 were set to provide for the different needs of households, workers, and businesses affected by the pandemic COVID-19. The obligations to pay are reduced through these useful schemes such as the popular Corporate Income Tax Rebate, Property Tax Rebate (up to 30% of the property tax payable) and one-time offset for 3 months of staff wages under Jobs Support Scheme. The enhanced Wage Credit Scheme gives 20% of co-funding for salary increments in 2019, which is higher than the rate for 2020. This is a valuable benefit as a result of a past event. Additional support is also available to help the industries affected by the coronavirus – tourism, aviation, food and beverage, retail, and point-to-point transport services.

d. Temporary Bridging Loan Programme (TBLP) for Tourism Sector

TBLP, an additional cashflow support for local SMEs in the tourism industry, is a newly-introduced measure. Eligible enterprises can obtain loans, from participating financial institutions, of up to $1-million, with the interest rate capped at 5% per annum. It is open for application till March 2021 and the maximum loan tenure is 5 years.

e. DBS Relief Measures and Support

DBS Bank Limited understands that managing the cash flow needs is the top priority of every company. Besides being one of the participating financial institutions under TBLP, the other short-term liquidity relief measures and initiatives offered by DBS include but not limited to:

• DBS customers with existing secured property loans would only need to service the loan interest for the next 6 months, upon effect.
• The due dates for import facilities will be extended up to 60 days.
• Rebates are offered for certain bank services.
• Small business loans (up to S$50,000) can be obtained within 1 working day upon loan acceptance, without the need to submit any financial report.

Singapore Finance Minister will deliver the supplementary Budget on the coming Thursday, March 26. The supplementary measures are additional support to assist households, workers and businesses in surviving through the coronavirus outbreak. We will share the business-related measures in our Facebook and LinkedIn pages. Stay tune!

Do you have other questions or want to know more on how to improve your company’s cash flow? Get the right advice coming from the experts on accounting and corporate secretarial solutions.

Contact Mighty Glory Corporate Solutions today and let us discuss your business needs.

COVID-19: What Can A Company Do To Ensure Sustainability?

COVID-19: What Can A Company Do To Ensure Sustainability?

covid-19

Introduction

From late January 2020 onwards, the world has been plagued with news on the coronavirus disease (COVID-19, previously known as 2019 novel coronavirus). A pneumonia of unknown cause was originated from Wuhan City in Hubei Province of China. Singapore’s strategic location makes it vulnerable to contracting the virus. As of March 16, 2020 (1200 SGT), the accumulated number of cases in Singapore is 243. 109 patients were discharged while the other 134 remain in the hospitals. On March 11, WHO (the World Health Organization) has officially announced COVID-19 outbreak as a global pandemic. The number of cases globally increases daily and different governments impose different strategies and restrictions.

Source: https://experience.arcgis.com

Despite the measures implemented by Singapore Government regarding the containment and prevention of the virus spread, Singapore businesses also play a large part in keeping the community safe, especially those within the company. The Singapore Standard for Business Continuity Management Systems outlined measures to guide Singapore businesses to ensure the safety of their employees and other stakeholders, minimize the disruption in business operations, and help the country in preventing the spread of the virus.

What is COVID-19 (aka Coronavirus Disease 2019)?

The novel coronavirus is a strain of the coronavirus family that also includes Middle East Respiratory Syndrome (MERS-CoV) and Severe Acute Respiratory Syndrome (SARS). The symptoms of COVID-19 are similar to those of the common flu – fever, runny nose, shortness of breath, cough and respiratory symptoms. The virus is spread between people vis close person-to-person contact and respiratory droplets from coughing.

The prevention and containment of the virus are relatively easy but need the diligence, vigilance and socially responsible behavior of everyone in the community. At the community level, measures to follow include personal hygiene, awareness, appropriate social distancing and proactive seclusion when you are unwell. People are encouraged to avoid crowded places like malls, hawker centers, religious venues, theaters and other large public indoor sites. As much as possible, minimize the social contact even if there is no fever or respiratory symptoms and seek early medical consultation once any symptom approaches. On a personal level, wearing protective masks is advised when you are feeling unwell, frequently hand-wash with soap and having healthy diets to fortify one’s immune system are encouraged.

Wear a mask if you are unwell or having a poor immune system.

How to protect your business from COVID-19?

According to a recent guide published by Enterprise Singapore, companies are encouraged to prepare business continuity plans (BCP) to counter the effects of threats and uncertainties. Here are the four areas to be considered in BCP so as to handle the challenges from the virus outbreak:

Human Resource Management

  1. Assign a crisis contact person (Business Continuity Manager). Set up a group chat or open line for employees seeking advice and information, reporting incidents, or seeking help.
  2. Plan for the continuity of leadership in case of any absences of key executives and decision-makers.
  3. Consider alternative working arrangements such as work-from-home and rotating work schedules to reduce the human traffic in the office premise.
  4. Review relevant employee management policies like sick leave, stay-home notices, company-imposed leave of absence and relevant staff insurance plans. Serious communication and monitoring to ensure that the employees comply with the evolving regulations imposed by Ministry of Manpower (MOM) to reduce the spread or importation of COVID-19.
  5. Defer business travels and events. Make use of the convenient technologies, like video-conferencing or teleconferencing instead of overseas travels.
  6. Observe travel bans and other related news. Obtain the required health and travel declarations from employees who have recently traveled to China and other restricted countries (e.g. South Korea, Northern Italy and Iran), as specified by Singapore Government.
  7. Monitor the health conditions of the employees. Temperature checks, 14-day quarantine with annual leaves and seeking medical check-ups are required for those who insist on proceeding with non-essential and personal travels outside Singapore. Allow alternative working arrangements like work-from-home, video-conferencing and teleconferencing for the period of absence.

Process and Business Functions

  1. Identify essential business activities and employees. Cross-train workers to cover other positions in case of absences. Set up alternate teams and physically segregate the teams to reduce the risk of virus spread.
  2. Educate employees on the preventive measures, infection control and good personal hygiene.
  3. Develop plans and procedures to manage and track the human traffic movement within the office area.
  4. Be updated with the latest news, trends and government’s immediate implementations related to the COVID-19 and disseminate the information to the employees.
  5. Closely monitor the health of the working employees.
  6. Maintain an adequate supply of medical and Personal Protection Equipment (PPE) like thermometers, surgical masks, disposable gloves and disinfectants.
  7. Clean and disinfect the frequently-accessed or commonly-exposed company premises and areas, where suspected or confirmed cases have been reported.

Supplier and Customer Management

  1. Communicate with your critical suppliers and service providers on the business continuity plans of both parties and make necessary adjustments to allow seamless transactions without compromising the welfare of employees on both sides.
  2. Announce the measures to your regular customers which your company is implementing to protect them and your employees from the disease, without affecting the customer company’s requirements and operation.
  3. Develop a policy for alternative suppliers and service providers. Also determine a specific situation or timing to opt for the alternative delivery options to your customers.

Communications

  1. Appoint a communication coordinator to broadcast on behalf of your company about your company status and business continuity plans (BCP).
  2. Educate your employees to ensure that they clearly know their respective roles and responsibilities in the BCP. Discussion can be done in small groups to test on their understanding about their portion of the plan. A communication channel could be established for them to report their environment, seek for additional information and be well-informed on the impact of the BCP procedures, policies and progress that the company is taking to ensure their safety and non-disrupted business operations during the virus outbreak.
  3. Inform all the relevant stakeholders of the company – suppliers, customers and service providers about the contingency measures that your company has in place for the virus outbreak.

Please follow us at Facebook and LinkedIn for the constant updates in relation to the business management and operation during the current virus battle.

Overview of GST Reverse Charge

Overview of GST Reverse Charge

In Budget 2018, two regimes to levy GST on imported services, are announced to be implemented from 1 January 2020 onwards, namely Reverse Charge regime for Business-to-Business (“B2B”) supplies and Overseas Vendor Registration regime for Business-to-Consumer (“B2C”) supplies.

Reverse Charge Regime subjects the B2B procurement of imported services to input tax or GST. The current GST rule only requires input taxes to be applied on services procured from local GST-registered persons. The Reverse Charge (RC) regime stipulates the transfer of GST obligation to the buyers of imported services intended for business use.

The advent of technological advancements initiated the influx of virtual business solutions. This offered an option for Singapore businesses to procure service from outside of the country. The goal of the changes is to level the GST treatment for services procured locally and those obtained overseas.

Example

Company A obtains payroll services in Singapore from Payroll Company who is based in Singapore, and marketing services from an online marketing solutions provider.

In the current GST rule, Payroll Company has to report the GST on the payroll services in its GST return, while no GST is chargeable for the marketing services.

With the RC regime, Payroll Company will shoulder the GST for the payroll services, while Company A will be accountable for the GST on the marketing services.

Who are subjected to RC?

The following are covered by the changes in the RC regime;

  • A GST-registered entity who is
    1. A business not entitled to claim input tax in full;
    2. An organization who carries out non-business activities (such as charities or welfare groups who offer free or subsidised services, and investment holding companies which derive dividend income) and receives non-business receipts, is not entitled to claim input tax in full; or
    3. A fully taxable person who chooses to apply RC.
  • A Non-GST registered business
    1. Whose total value of imported services, procured within a 12-month period, exceeds the S$1 million threshold; and
    2. Who is not entitled to claim input tax in full even if it was GST-registered.

Exceptions to the Rule

By announcing these changes in the announcement in Budget 2018, this move gave the affected businesses about 22 months, providing ample time to prepare. Once the law takes into effect, no extension will be granted to anyone who might attempt to request for leniency. However, there are exceptions to the rule:

  1. Businesses that create and provide non-taxable goods and services may qualify for partial GST claims. Products and services include but not limited to:
    • Tax-exempt supplies under the 4th Schedule of the GST Act.
    • Zero-rating supplies under Section 21(3) of the GST Act.
    • Non-taxable government services under the Non-Taxable Government Supplies Order of the GST Act.
  2. Businesses that provide free or subsidized products and services.
  3. Regulations 28 of the GST General Regulations or the De Minimis Rule is not satisfied.
  4. RC is not applicable to supplies that have been previously taxed in Singapore.

Example

Singapore Corporation engages Foreign Services to conduct a market research for $20,000. Foreign Services will outsource the job to Local Research Firm for $15,000. After the completion of the project, GST computation is as follows;

Local Research Firm will bill Foreign Services $15,000 plus the 7% GST of $1,050 to get a total of $16,050.

Foreign Services will bill Singapore Corporation $20,000. Singapore Corporation will account for 7% GST on $5,000 as the $15,000 has already been taxed. GST charged to Singapore Corporation for this transaction is $350.

Which transactions are affected?

Although the law was announced as early as 2018, the blanket implementation of the rule is on 1 January 2020. RC will apply to all transactions of the affected services paid or delivered, whichever is earlier, on or after the implementation date.

  1. General Rule – The earlier of when the invoice in respect of the supply is issued and when the payment is made.
  2. Consistent Application – Businesses may also account for RC at the earlier of when the invoice in respect of the supply is posted and when the payment is made, if all GST returns are prepared on the same basis.
  3. RC Business Applying RC At The End of Longer Periods – The day immediately after the last day of the longer period. If the accounting period end on 30th June, the time of supply is 1st July.
  4. Special Rules
    • Intra-GST group and interbranch transactions – The earliest of when the invoice in respect of the supply is issued, when the payment is made, and 12 months after the basic tax point. This rule done not apply to continuous supply of services.
    • Transactions straddling the registration – Services performed before registration can be (a) excluded from RC or (b) the time of supply set to the service date or when the service was rendered.
    • Transactions straddling the de-registration – Services performed before de-registration are subject to RC, with the time of supply set to the day immediately before the de-registration takes effect.
    • As an administrative concession, GST-registered businesses who are unable to accurately determine if they will be partially exempted from year to year, they may elect to apply RC only at the end of the longer period.

Mighty Glory Corporate Solutions provides accounting and tax services, bookkeeping, payroll services, and more corporate solutions in SingaporeConnect with us today to know more about the Reverse Charge Regime and how it may affect your business. We look forward to helping you identify your business needs and provide customized, efficient and holistic solutions.

GST Implication From Customer Accounting

GST Implication From Customer Accounting

Starting from 1 January 2019, customer accounting for prescribed goods is mandatory required under the GST regulations. This is applicable to the supplies of certain prescribed goods acquired by a GST-registered customer intended for business use, provided that it is (a) a local sale of prescribed goods with a GST-exclusive value of over S$10,000 and (b) not an excepted supply.

Customer accounting transfers the responsibility of GST accounting from the seller (or supplier) to the buyer (or customer). The changes are aimed to counter non-reporting and other fraud schemes where the supplier or seller absconds with the collected GST.

Under the Customer Accounting (CA) scheme, the sellers are not allowed to charge and collect GST from their customers. They are, however, required to issue a customer tax invoice that reflects the customer’s GST registration number and a statement to inform the customer of his/her GST accountability, and the application of CA in that purchase. The seller will also have to report the transaction in his GST returns.

What are the Prescribed Goods?

The application of CA is limited to the prescribed goods, which include but are not limited to the following:

  • Mobile Phones – Examples include smartphones, Blackberry, or tablets that can transmit and receive calls and messages over a cellular network. The purchase of a mobile phone is, however, excluded from customer accounting if it comes with a post-paid mobile subscription plan by a local telecommunication service provider. Satellite phones, walkie-talkies, smartwatches, mobile landlines, phones over 17.5 cm in screen size, and smartphone accessories such as chargers, screen protectors, and batteries are not included in the CA scheme.
  • Memory Cards – This category includes memory sticks, Secure Digital (SD) cards and CompactFlash. The exclusions are solid state drive (SSD), thumb drive, dual in-line memory module (DIMM), random access memory (RAM), portable external hard disk, hard disk drive (HDD), and other smart cards with embedded chips such as ATMs, SIM cards, and credit cards.
  • Off-the-Shelf Software – The software included in this category are those that are not specifically customized for the customer. Such software is stored in a CD or similar storage device; or the product can be accessed through a product or license key, activating or other similar code which is provided as part of the purchase. Prescribed goods for CA include software sold in physical boxed packaging like anti-virus, accounting, gaming, design tools, etc. Pre-installed software is not prescribed for CA. Software back-ups stored in CD or similar storage device, Xbox Live, software downloadable from the internet (whose key or code for access is provided via email), and PlayStation Plus are examples of software not qualified for CA.

‘Excepted Goods’ which are not subject to CA, are the supplies of goods made under:

  • Gross Margin Scheme – The computation of GST is based on the gross margin, not the full value, of the goods supplied. This scheme is applicable if (1) the primary business activity is dealing with used goods and (2) the second-handed goods are purchased free of GST.
  • Approved Third Party Logistics (3PL) Company Scheme – Under certain conditions, no import duty or GST is applicable on the supplies of goods from the overseas customers of these approved logistics companies.
  • Approved Refiner and Consolidator Scheme – Either the approved refiner or consolidator can enjoy the certain GST benefits, which are specially designed to ease cash flow and relieve indirect taxability on refining activities for investment precious metals (IPM).
  • A deemed taxability arising from the transfer or disposal of goods at no cost.

When to Apply Customer Accounting

To apply CA, the following conditions must be met;

  • The customer must be a GST-registered person;
  • The purchase of prescribed goods is conducted in the ordinary course of a business; and
  • The value of the prescribed goods exceeds S$10,000.

Connect with us today to learn more about customer accounting and how this may affect and/or apply to your business. We look forward to helping you identify your business and personal needs, and providing you with efficient and holistic solutions.