Starting from 1 January 2019, customer accounting for prescribed goods has been implemented in Singapore. The intention behind this GST update was to prevent fraud schemes where sellers mishandle the GST collected even though other businesses in the supply chain claim the input tax.
Prescribed goods include items such as off-the-shelf software, mobile phones, and memory cards – all of which are frequently used in fraud schemes.
It is mandatory that companies apply customer accounting on a supply of eligible prescribed goods delivered to a GST-registered customer. The following qualifies as a relevant supply of prescribed goods:
- A local sale of various prescribed goods with GST-exclusive sale value of $10,000 or more in one invoice,
- and the supply is not excepted
When practicing customer accounting, suppliers are responsible to report for output tax to the customers.
Not sure if your company is required to register for GST? Read our guides here:
- Should I register GST for my Sole-Proprietorship business in Singapore?
- Should I register GST for my Company in Singapore?
The Customer Accounting Process
The customer accounting process is as follows:
- A supplier sells certain prescribed goods totaling a bill over S$10,000 excluding GST and fails to charge GST to a GST-registered customer
- The customer will be accounted for the output tax as if he or she is the seller
- If the transaction was made for taxable activities, the customer is fully eligible to claim GST
- Outcome: Customer does not pay any GST-related amount to the supplier
What are the included Prescribed Goods?
The prescribed goods required for customer accounting can be broadly classified into the following categories:
- off-the-shelf software,
- mobile phones, and
- memory cards.
|Off-the-shelf Software||Software stored in storage mediums such as compact discs or accessed by using a license key or product key supplied in a boxed package||Downloadable software from the Internet that is not delivered in a physical package but is accessed by a license key or product key|
|Mobile Phones||All brands and types of mobile phones||Mobile phone bought along with a call service plan and mobile subscription|
|Memory cards||Flash memory storage devices used to store digital content||External hard disks and thumb drives|
What Qualifies as Excepted Supply?
An excepted supply includes prescribed goods supply that is excluded from customer accounting. This includes:
- A supply of products covered by the GST Gross Margin Scheme
- A supply of products made under the Approved Refiner and Consolidator Scheme or Approved Third Party Logistics Company Scheme to a specified or approved person, and
- A deemed taxable supply of products initiated from the disposal or transfer of products for no consideration.
Guide for GST-registered Suppliers on Customer Accounting
Suppliers impacted by customer accounting still need to issue tax invoices after every relevant product supply to customers. The following information should be included in the tax invoice:
- GST registration number of the customer; and
- a statement, for example “sale made using customer accounting”.
When a relevant supply of prescribed goods is made, the supplier must only collect the GST-exclusive price. Therefore, the tax invoice will show a total price payable, including GST payable for the relevant supply.
Companies that use accounting software for GST reporting are recommended to engage with the developer or software provider early. This will ensure that your software follows all the new requirements.
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