In Singapore, businesses that frequently import goods for re-export often face substantial cash flow burdens due to upfront GST payments on imports. The Major Exporter Scheme (MES) was introduced by IRAS (Inland Revenue Authority of Singapore) to address this challenge. But what exactly is MES, and how does it impact your GST obligations?
At Declarators Pte Ltd, we’ve guided many clients through MES applications and compliance. Here’s a breakdown to help you understand how MES could benefit your import-export operations.
What Is the Major Exporter Scheme (MES)?
The Major Exporter Scheme (MES) is a GST suspension scheme designed by IRAS to support businesses that import goods for re-export. Under MES, qualifying companies are exempted from paying GST at the point of importation. Instead, they account for GST on their GST return, improving cash flow and reducing financing costs.
Who Qualifies for MES?
To qualify for MES, a business must meet certain conditions, including:
- Being GST-registered.
- Making significant exports (typically, more than 50% of total supplies are zero-rated).
- Regularly importing goods for business use.
- Maintaining proper accounting and inventory records.
- Demonstrating good compliance with GST and tax regulations.
How Does MES Impact Your GST Reporting?
Under MES, businesses:
- Do not pay GST at Singapore Customs when importing goods.
- Must account for deemed input and output tax in their GST F5 return, resulting in a net tax effect of zero for imports used in taxable activities.
- Need to maintain documentation and comply with GST record-keeping requirements to retain MES status.
Proper documentation includes shipping records, supplier invoices, export permits, and proof of zero-rated supplies.
Why MES Compliance Matters
Non-compliance with MES permit requirements can result in:
- Revocation of MES status by IRAS.
- Additional GST liabilities or penalties.
- Disruption to import/export operations.
By ensuring your permits are correctly submitted and compliant, we help you avoid unnecessary risks and maintain operational continuity.
The Major Exporter Scheme can bring significant GST relief for qualifying import-export businesses—but only if managed properly. While the MES application is handled directly with IRAS, ongoing compliance, especially in terms of permit submission and customs reporting, is crucial.
At Declarators Pte Ltd, we’re here to simplify the permit process and keep your trade operations compliant with all regulatory requirements. Get in touch at group@declarators.com.sg and let our experienced team handle your customs and permit requirements accurately, efficiently, and on time.
