A consultant is an experienced individual in a given field who provides expert advice for a fee. Consultants typically work as independent contractors and are hired on a short-term basis. A consultant may also be an employee at a consulting firm. A consultant will usually not be responsible for the end result.
Consultancy and professional charges are subject to GST unless they qualify as international services. If you have received full-time or part-time income from trade, business, vocation or profession, you are considered a self-employed person.
International services are zero rated. Depending on the nature of the business, it also needs to be determined whether your customer is a local person or an overseas person.
Common Zero-Rating Scenarios- GST CONSULTANTS
Certain Prescribed Services
- Under a contract with a person belonging to an overseas country in his business capacity; and
- Which directly benefit a person belonging to an overseas country in his business capacity.
Services that are within the list of prescribed services:
- Engineers, Lawyers and Accountanta and similar other services.
- Data processing and provision of information wherein data must not relate to any land or goods situated in Singapore.
- Exhibition or convention centres
- Training for an employment
- Handling or storage of goods or their transport to and from where they are exported or imported.
Services In Connection With Land Or Buildings Outside Singapore
- Services made in the course of construction, repair, and maintenance of any building; and
- Services provided by estate agents, auctioneers, architects, and engineers.
Services In Connection With Goods Outside Singapore
Services performed directly in connection with goods located outside Singapore at the time the services are performed.
Types of International Services- GST CONSULTANTS
Advertising Services– services are provided contractually to and directly benefitting overseas person. Place of circulation of the advertisement is outside Singapore.
Co-location Services-Co-location service in Singapore of computer server equipment under a contract with an overseas person; and which directly benefits an overseas person
People transported from Singapore to a place outside Singapore, from a place outside Singapore to Singapore or a place outside Singapore to another place outside Singapore.
Lease or Hire of Transport
Lease or hire of any type of transport for use outside Singapore throughout the period of lease.
Services Performed Completely Overseas
Services must be performed completely outside Singapore.
Services Related to Goods for Export and Goods Moving Outside Singapore
Services must be directly in connection with goods for export and supplied to an overseas customer, at the time the services are performed.
Services Related to Land/Buildings/Goods Located Overseas
Services must be directly in connection with goods located outside Singapore at the time the services are performed.
Services Supplied to overseas person
The services must be supplied to a overseas person under a contract or benefit an overseas person directly.
Supplies related to Ships or Aircrafts
GST Act defines an aircraft as one which is:
- Wholly used or intended to be wholly used for international travel; or
- A military aircraft.
International travel is defined as being:
- From a place outside Singapore to another place outside Singapore
- From a place in Singapore to a place outside Singapore
- From a place outside Singapore to a place in Singapore
GST Act defines a ship as any ship, including an oil rig. There are three exceptions:
- Any ship licensed as a passenger harbour craft or pleasure craft
- A ship granted a vessel permit by the Public Utilities Board
- Any ship designed or adapted for use for recreation or pleasure, and used within Singapore
Services Related to Electronic System
You provide an electronic system through which the application of import/ export permits can be made. You may zero-rate the processing fee charged to customers who use your permit application system.
Services Performed on Goods Stored in a Warehouse
It includes services performed on the goods during the period in which the goods are removed from the warehouse under the Temporary Removal for Repair and Maintenance or for Auctions and Exhibitions, and returned to any warehouse under SWS after the event.
Supplies Related to Air and Sea Containers
- are used or to be used for international transportation of goods; and
- comply with the prescribed requirements in the Eight Schedule of GST (International Services) Order.
Services must comprise telecommunications transmitted:
- into and out of Singapore; or
- outside Singapore
Trust services in relation to a foreign trust, a trust company to a trustee of the foreign trust
Belonging Status of Customers- GST CONSULTANTS
Under certain zero-rating provisions, you need to determine the belonging status of your customer, that is, whether your customer belongs to a country outside Singapore, before you can zero-rate your services. Your customer can be either an individual or a business.
Customer is an Individual
Your customer will be treated as belonging in Singapore if his usual place of residence is in Singapore during the period of service. For GST, there should be only one place of residence.
Usual place of residence means;
- The individual stays in the country voluntarily to pursue studies or for employment
- Apart from temporary absence, the stay of the individual is continuous
The Comptroller of GST may regard the residential address of an individual as his “usual place of residence”. If your customer has a Singapore residential address, he will, for GST purposes, be regarded as belonging in Singapore
These are cases where an individual stays overseas to study or work and he has more than one residential address. the Comptroller of GST may regard the individual as belonging overseas when all of the following conditions are satisfied:
- He is absent from Singapore for a continuous period of at least one year
- He stays at a fixed place in the overseas country
- Where he is working overseas, his overseas assignment must not be related to his employment in Singapore. For example, an individual sent to work overseas by his local employer will not satisfy this condition and he will be treated as belonging in Singapore.
Customer is a Business
Your customer will be treated as belonging in Singapore;
- It has a business establishment or some fixed establishment in Singapore and nowhere else.
- It is legally constituted in Singapore (e.g. company incorporated in Singapore) and has no business or fixed establishment in any other country.
- It has establishments both in Singapore and outside of Singapore but services are most directly used or to be used at the establishment in Singapore.
Your customer will be treated as having a business establishment in Singapore if:
- his main seat of economic activity is in Singapore;
- he carries on his business through a branch in Singapore; or
- he carries on his business through an agency in Singapore
A fixed establishment is an establishment, other than the business establishment, that has both the technical and human resources necessary to provide or receive services on a permanent basis.
Recovering Expenses from Clients
You may pay for expenses on behalf of your client. Subsequently, you re-bill to recover the expenses from your client. The GST treatment for the recovery of expenses from another party such as your employees, customers, related corporations or suppliers, depends on whether the expenses are incurred by you as a principal or as an agent.
the term “reimbursement” refers to the recovery of an expense that you incur as a principal from another party. A reimbursement may be subject to GST if it is consideration for a supply of goods or services. the recovery of a payment made on behalf of another party by you as an agent is termed as a “disbursement”. A disbursement does not constitute a supply and hence, is not subject to GST.
In the case of a reimbursement, you are entitled to claim input tax incurred on goods or services procured by you if the subsequent recovery of such expenses constitutes a taxable supply.
In the case of disbursement, the recovery of expenses does not constitute a supply and will not be subject to GST. You are not entitled to any input tax claim since the goods or services are not supplied to you but to your principal.
GST Treatment of Recovery of Expenses – GST CONSULTANTS
The recovery of expense was previously considered a separate supply if it did not meet the following conditions;
- The other party is responsible for paying the supplier;
- The other party knows that the goods or services will be provided by that supplier;
- The other party has authorized you to make the payment on his behalf;
- The other party is the recipient of the goods or services;
- The payment is separately itemized when you invoice the other party;
- You recover only the exact amount paid to the supplier; and
- The goods or services paid for are clearly additional to the supplies you make to the other party.
GST provides Lesser tax burden for small business. The online process for GST is very simple which is a huge advantage.it helps in regulating the unorganized sectors.
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