Approved Third Party Logistics (3PL) Company Scheme
As per this scheme, an approved logistics company which renders management services with respect to logistics to an overseas client need not make an import GST payment. Also, it doesn’t need to levy GST charges in relation to supplies of its foreign clients’ commodities depending on certain scenarios.
The Approved 3PL Company Scheme aims at enhancing the competitive spirit amongst logistics firms which help foreign clients (an overseas client who utilises Singapore like a logistics hub) with their logistics-related management services.
What Are the Benefits a Logistics Company Will Get Via This Scheme?
In general, logistics companies import as well as supply commodities which belong to their overseas customers (principals) in the position of Section 33(2) agent.
Your logistics company will enjoy the following benefits:
- You don’t have to pay GST for importing commodities that belong to you/your foreign principals who have not registered for GST.
- You’re not liable to pay GST for removing imported commodities which belong either to you or your principals’ overseas who have not registered for GST from the ZG (Zero-GST) warehouse.
- You need not levy GST charges when you remove & provide imported commodities locally to an individual who is approved under any of the GST schemes listed below:
- Approved Import GST Suspension Scheme (AISS)
- Approved Major Exporter Scheme (MES) businesses
- Approved Third Party Logistics Company Scheme
- Approved Contract Manufacturer and Trader (ACMT) Scheme
Key Pointers to Consider When You’re Reporting a GST Return
When you import commodities:
In the event of importing goods that belong to you or goods that belong to your non GST-registered foreign principals by utilising your Approved Third Party Logistics Company Scheme grade, you must declare the worth of imports in:
- Box 5 (entire value of purchases which are taxable).
- Box 9 (complete value of commodities which are imported under Approved 3PL Company Scheme or MES or any other Approved Scheme).
Also, the boxes have to be backed by ME permits which are valid in addition to supporting documents such as relevant shipping documents, commercial invoices, and more.
Note: Since GST charges have been suspended on imports, you’re not liable to make an input tax claim.
ZG (Zero-GST) warehouses:
When you intend to either import commodities you own or commodities which belong to your non GST-registered principals overseas into a ZG warehouse, you should mandatorily make a declaration about the imports you’ve initiated in your GST return, irrespective of the GST suspension. The declaration in relation to the worth of the imports made should be made in Box 5 (full value of purchases which come under the taxable category) despite the GST suspension.
When the commodities that were imported are taken out subsequently from the Zero-GST warehouse into a customs territory by you as an Approved 3PL Company Scheme member, you need to report the worth of commodities which were removed via:
- Box 5 (overall worth in relation to taxable purchases).
- Box 9 (complete worth of commodities imported under Major Exporter Scheme/Approved 3PL Company Scheme/some other Approved Scheme).
These boxes should be backed by a valid MC/ME/customs permit plus other required documents like commercial invoices, shipping documents, etc.
Note: As GST has been suspended with respect to imports, you cannot make any input tax claim.
When you supply imported commodities locally to a person who is approved under AISS/MES/Approved 3PL Company Scheme/ACMT Scheme:
- You cannot levy GST charges on such kind of supplies.
- You will still need to add such kind of supplies to Box 1 (entire value in relation to supplies which are standard-rated) in your GST return.
- Since GST payment is not applicable to such kind of supplies, you need not make an output tax declaration in Box 6 (Output tax dues).
- Your tax invoice which is dispensed for such a kind of supply doesn’t have to mention the GST amount & should have the following description:
- “Payment of GST is not required under the Approved Third Party Logistics Company Scheme”.
- A recipient of your commodities must report any purchase he or she has initiated in relation to imported commodities from you in his/her GST return via:
- Box 5 (overall worth of purchases which are taxable).
- Box 9 (complete value of commodities imported under the Approved 3PL Company Scheme/MES/or any other Approved scheme).
What Is the Eligibility Criteria for This Scheme?
You need to comply with all of the conditions that are listed below:
- Your company should be GST-registered in Singapore. Your company’s main business activity should be to render services with respect to logistics like warehousing, transportation, and freight forwarding.
- You will be taking/you’ve already taken the place of a foreigner to import & consequently render commodities locally/for export purposes. You should meet the conditions that are mentioned in Appendix 2 to undertake steps as a section 33(2) agent in relation to your foreign principals.
- You should be employed by the foreign principals to execute one/more of the management services (specific to logistics) that are listed below in relation to commodities which are imported:
- Inventory control & management
- Packing and re-packing
- Procurement & sourcing
- "Pick and pack" or kitting
- Consolidation and de-consolidation
- Order processing
- Assembling/software loading/configuring
- QC checks & testing
In general, a logistics management service rendered by you must not change the condition of the actual commodities.
- You should take up complete ownership & be accountable for GST with respect to the foreign principals (as in taking the position of section 33A agent/section 33(2) agent as required). You should also render the LOU (Letter of Undertaking) as per the required format.
- The activities related to your business are significantly with a specified person(s)*. As in, your local supply of commodities to a specified person(s) & zero-rated supplies in relation to you need to account for over and above 50% of the complete supplies from your end for the previous 12-month term. The 12-month term will be the latest past FY (financial year)/any 12 calendar months which are continuous and falls within the previous 18 months.
In case you’ve not initiated your business-related activities with the specified individuals, you’ll be expected to provide a projected value with respect to your local supply of commodities which you intend to make to the specified individuals for the following 12 months. You will also have to mention on what basis your projection was made via GST F15 application form.
Note: Here, *specified persons refers to any person who is approved based on the AISS, MES, Approved 3PL Company Scheme, or ACMT Scheme.
- You should be making use of a computerised WMS (Warehouse Management System) to maintain your commodities which are warehoused. The computerised system should be capable of reporting the quantity, identity, or description of the commodities exactly, worth (in case it is available) & location of all commodities at any given point of time. The system should be capable of reporting the following numbers accurately:
- The number of commodities received.
- The number of commodities exported and/or re-exported.
- The number of commodities which are locally delivered.
- Work-in-progress numbers (in case there is an extra value-added task which needs to be rendered by you & the task doesn’t change the nature of the commodities).
- Commodities which are remaining in the warehouse.
- Your internal controls need to be good plus your accounting records need to be accurate.
- Your compliance records in relation to Singapore customs needs to be good. There should not be any key violation from your end with respect to the regulations & requirements of Singapore customs.
- Your compliance history with IRAS in relation to income tax/GST/property tax needs to be good. You should have maintained consistency in filing your tax returns on time.
- You should be capable of complying with any other condition which the GST Comptroller might impose on a timely basis. The GST Comptroller might levy a security via the LOG (Letter of Guarantee) before approving the scheme.
- You should either carry out the ASK (Assisted Self-Help Kit) Annual Review or take part in the ACAP (Assisted Compliance Assurance Programme).
How do You Apply for This Scheme?
In order to apply, you need to submit the following documents:
- GST F15: Approved 3PL Company Scheme application
- A comprehensive write-up which includes a pictorial representation indicating a business arrangement you’ve made or intend to make with your foreign principal(s) and their respective clients in relation to the transport of commodities. Also, both the concerned overseas principals as well as their respective clients need to be approved under any of the following schemes:
- AISS Scheme
- MES Scheme
- ACMT Scheme
- Approved Third Party Logistics Company Scheme
- A contractual agreement photocopy which outlines the scope of responsibilities and services according to the 3PL arrangement (if applicable). This contractual agreement should be made between you and your overseas principal(s) and/or your foreign principals’ local clients.
- A photocopy of your most updated financial statements which are audited.
- Your LOU (Letter of Undertaking) and calculation of the 50% eligible threshold.
In addition to the documents mentioned earlier, you will need to perform a self-evaluation or participate in the ACAP (Assisted Compliance Assurance Programme).
Your self-evaluation can be done via ASK (Assisted Self-Help Kit). You’ll need to submit an ASK declaration form which is certified. The certification can be done by an in-house tax professional or an external tax advisor. The tax professional you opt for needs to be accredited either as an Accredited Tax Advisor or Accredited Tax Practitioner for GST with SIATP (Singapore Institute of Accredited Tax Professionals).
If you’re an active ACAP applicant, you don’t have to submit an ASK declaration form when you’re still waiting for the ACAP review results and the ACAP report submission.
Other Schemes Available