Major Exporter Scheme (MES)

Under MES, GST on non-dutiable goods is deferred both at the time of import and when the goods are withdrawn from Zero GST warehouses.

Purpose

The Major Exporter Scheme (MES) is designed to improve cash flow for businesses heavily involved in importing and exporting goods.

Under standard regulations, businesses must pay GST upfront on their imports and later claim a refund from IRAS through their GST returns. However, this process can lead to cash flow challenges, especially for businesses primarily exporting goods, as their zero-rated supplies do not generate GST to offset the initial outlay.

With MES, approved businesses can import non-dutiable goods without paying GST upfront. Since 1 July 2006, they also benefit from GST suspension on goods taken out of a Zero GST warehouse.

Using MES

The MES is granted for the importation of goods under the following circumstances:

1. Importing your own goods as part of your business activities.
2. Importing goods owned by your overseas principal for sale in Singapore or re-export on their behalf as part of your business operations (acting as a Section 33(2) agent).
3. Importing goods owned by your overseas principal that will later be re-exported (e.g., returned to your overseas principal), provided the requirements for a Section 33A agent outlined in the GST: Guide on Imports are met.
4. (Effective 1 Jan 2015) Re-importing goods previously sent overseas for value-added activities that belong to your local customer or GST-registered overseas customer, if the conditions under Section 33B in the GST: Claiming of GST on Re-import of Value-Added Goods are satisfied.

For scenarios (2) and (3), the following conditions must also be met:

– The overseas principal must not be GST-registered.

– Separate records must be maintained for goods belonging to the overseas principal.

– You must have control over the custody and possession of these goods at all times.

– Any subsequent supply of the goods must be treated as your supply:

• Local sales should be standard-rated.
• Exports may be zero-rated if you maintain the required export evidence.

Qualifying conditions

To qualify for the MES, your business must meet the following requirements:

1. GST Registration: Your business must be registered for GST.
2. Activity and Solvency: Your business must be active and financially stable.
3. Goods Importation: You must already be importing or plan to import goods for business purposes.
4. Zero-Rated Supplies Threshold:

• Zero-rated supplies must constitute more than 50% of your total supplies, or
• The value of your zero-rated supplies must exceed S$10 million over the past 12 months.

When calculating total supplies, exclude the following from standard-rated supplies:

• Relevant supplies from your supplier under customer accounting.
• Imported services and low-value goods subject to reverse charge.
• Remote services (digital or non-digital) and imported low-value goods provided through an electronic marketplace under the overseas vendor registration regime.

5. Internal Controls: You must have strong internal controls and accurate accounting records.
6. IRAS Compliance: Maintain a good compliance history with IRAS, including:

• Filing GST and income tax returns promptly.
• Paying GST, income tax, property tax, and withholding tax on time.

7. Customs Compliance: Maintain a good compliance record with Singapore Customs.
8. Additional Conditions: Comply with any other conditions imposed by the Comptroller of GST. 

Applying for MES

To apply for the MES, follow these steps:

1. Complete the Application Form

Submit Form GST F10: Application for Major Exporter Scheme.

2. Provide Supporting Documentation

Choose one of the following:

• Conduct a self-review using the Assisted Self-Help Kit (ASK) and submit the certified ASK declaration form, ASK: Declaration Form on Completing Annual Review & Voluntary Disclosure of Errors (Section 3 of ASK).
• Commit to or have already participated in the Assisted Compliance Assurance Programme (ACAP).
• Perform a Post ACAP Review (PAR) and submit the PAR Declaration form (GST F28) if your business holds valid ACAP status.

Note: New companies or businesses with a change in activity must undertake to complete the ASK review and provide the certified ASK within one year of MES approval.

Certified ASK or ACAP Requirements

• Conduct the ASK Annual Review by an individual accredited with the Singapore Chartered Tax Professionals Limited (SCTP) as an Accredited Tax Advisor (ATA GST) or Accredited Tax Practitioner (ATP GST).
• Alternatively, the GST-registered business may perform the review and have it certified by an accredited individual in accordance with the GST ASK Annual Review Guide.

For ACAP or PAR:

• Successful ACAP applicants are exempt from submitting the ASK declaration form while awaiting the ACAP review outcome and submission of the ACAP report.
• Businesses with valid ACAP status may perform a PAR and submit the PAR Declaration Form (GST F28) instead of the ASK declaration

Guarantee Requirement

A guarantee from a financial institution may be needed before MES approval.

• Digital guarantees (eGuarantees) are available through participating financial institutions.
• For details, refer to the Guarantee Application Process.

Validity and Renewal of MES

1. Approval and Validity

Upon approval, you will receive notification of the MES effective date and a validity period, typically three years. MES may be revoked if qualifying conditions are no longer met.

2. Renewal Process

• When due for review, IRAS will invite you to renew your MES via a letter.
• Submit Form R1 along with a certified ASK through the myTax Portal by the specified deadline.
• IRAS will notify you in writing of the outcome. Your MES remains valid pending review.

3. Letter of Guarantee

During renewal, the requirement for a guarantee will also be reviewed, and IRAS will notify you if a guarantee is needed.

4. Extended Validity Period

• For successful renewals since January 2013 with a certified ASK, the validity period may extend to five years.
• New MES applications will remain valid for three years, with the first renewal in the third year.

Authorising Declaring Agents

Approved MES holders can authorise up to 20 declaring agents (e.g., freight forwarders) to manage goods clearance.

• Be cautious when appointing agents, as you remain accountable for all permits declared on your behalf.
• Use the Apply for Declaring Agents e-Service on mytax.iras.gov.sg to add, change, or remove agents. Changes take effect within two working days.

Reporting in GST Returns

1. For Imported Goods

• When importing goods under MES (including goods belonging to non-GST-registered overseas principals), report the value of imports in:
• Box 5: Total value of taxable purchases
• Box 9: Total value of goods imported under MES/Approved 3rd Party Logistics Company Scheme or Other Approved Schemes
• Ensure all declarations are supported by valid ME permits, commercial invoices, and relevant shipping documents.

Zero-GST (ZG) Warehouses

When goods are imported (including those belonging to your overseas principal) into a Zero-GST (ZG) warehouse, you must report these imports in your GST return, even though GST is suspended.

If the goods are subsequently removed from the ZG warehouse into customs territory under the MES, the value of the removed goods must be reported in the following boxes of your GST return:

• Box 5: Total value of taxable purchases
• Box 9: Total value of goods imported under Major Exporter Scheme/Approved 3rd Party Logistics Company Scheme or Other Approved Schemes

These declarations must be supported by valid ME/MC/Customs permits and relevant documents, such as commercial invoices and shipping records.

Contact WLP Accounting today to find out more about the Major Exporter Scheme (MES) and how our capable tax team can help!