Why Zero-Rated GST Matters to Exporters in Singapore

Singapore exported over S$650 billion worth of goods and services in 2023, but many businesses are losing money simply because they don’t manage GST well.

If you sell to overseas customers, you might be charging too much or missing out on refunds. Sometimes both.

Here’s a common mistake:

A manufacturer in Singapore exports electronics to Australia but still charges at 9% GST. On top of that, they don’t claim GST on materials, shipping, or services used to make those exports. That’s thousands of dollars lost every quarter.

This isn’t rare. Many companies see GST as just another tax, not a tool. They charge the full rate, claim little input tax, and pay whatever bill comes. But the truth is, using zero-rated GST correctly can boost your cash flow and keep you on the right side of IRAS rules.

So What’s Zero-Rated GST?

It means you charge 0% GST to overseas customers, but still claim GST back on your business expenses. If exports are a big part of your business, this could mean getting refunds instead of bills every quarter.

But there’s a catch. To use zero-rated GST, you need to understand:

1. When the 0% rate applies
2. What documents to keep
3. The differences between goods and services
4. IRAS compliance requirements

If you get it wrong, like missing paperwork or misclassifying sales, you could face penalties and lose out on refunds.

And with GST now at 9% since 2024, the cost of mistakes is even higher. A business that used to lose S$10,000 a year could now be losing S$13,000 or more.

Why It Matters To Your Business

You can turn GST into a cash flow advantage. Let’s say your company exports S$500,000 worth of goods every quarter.

That’s a whopping S$45,000 swing in your favour, just from handling GST correctly. Over a year, that adds up to S$180,000 in improved cash flow.

Gain an Edge Over Your Competitors

Zero-rated GST also helps with your pricing. By removing the 9% GST from your export prices, you can offer lower prices to international buyers or keep the prices the same and enjoy better profit margins. Your choice.

In competitive industries, this 9% edge can be the key to winning big contracts.

Input Tax Recovery Adds Up

You can reclaim GST on everything tied to your exports like:

• Raw materials
• Shipping and logistics
• Office rent
• Professional services

Thanks to the GST hike in 2024, this is now more valuable. Spend S$100,000 on export-related costs? You could now claim S$9,000 in GST refunds.

Zero-Rated vs. Other GST Treatments

Many businesses confuse zero-rated, standard-rated, and out-of-scope GST. Let’s differentiate them so you know their significance and whether they’re relevant to your export business.

Zero-Rated vs. Standard-Rated

Let’s say two companies bid for an overseas deal.

• Company A (standard-rated): Adds 9% to the price
• Company (zero-rated): Charges 0% GST

Company B either beats the price or keeps better margins. Also, Company A must pay IRAS the GST it collects. Company B keeps its input tax refund. Over time, that’s a huge difference in cash flow.

Zero-Rated vs. Exempt

Both don’t charge GST to customers, but the input tax rules are very different.

Example:

Two business units each spend S$50,000 a year on office costs.

• Unit A (zero-rated): Claims back S$4,500 GST
• Unit B (exempt): Can’t claim any GST

That’s a S$4,500 difference just from the GST classification.

Zero-Rated vs. Out-of-Scope

Out-of-scope supplies are outside the GST system altogether. Think of it like this:

Getting this wrong can cause problems. For instance, some international services might qualify as zero-rated, but if you misclassify them as out-of-scope, you might miss refunds or face compliance risks.

How to Qualify For 0% GST on Exported Goods

Do not immediately assume that you can automatically charge 0% just because you’re exporting goods and your buyer is overseas. The Inland Revenue Authority of Singapore has specific rules, and whether you control the export process or not matters a lot.

Direct vs. Indirect Exports

Direct exports mean you handle the export. Indirect exports mean your customer handles the export.

You qualify for 0% GST if you manage the export yourself.

• Using your freight forwarder to ship goods overseas
• Consolidating several orders for export
• Sending goods by post or courier
• Letting a local customer collect goods that you’ve arranged to export

You can zero-rate these if you keep the right documents within 60 days from when you invoice or get paid.

Indirect exports are riskier. If your customer handles the shipping:

• They use their freight forwarder to pick up from you
• You send goods to their appointed forwarder
• You ask a local supplier to deliver to their shipping agent

In these cases, you must charge 9% GST by default. You can only apply 0% GST if:

1. You’re certain the goods will be exported
2. You collect the required documents within 60 days

The Crucial 60-Day Rule

You have 60 days from the time of invoicing or receiving payment to ensure that the goods leave Singapore and gather all export documents. If you miss this deadline, you must charge 9% GST and you will need to issue a new invoice and report the GST in your return.

Best Practices in One List

1. Include export conditions in contract
2. Use reliable freight partners
3. Track export timelines
4. Set up backups in case of delays
5. Consider asking customers for export guarantees or deposits

IRAS may grant deadline extensions in rare cases (like natural disasters or government delays) but only with strong proof.

What Documents Do You Need?

Transaction Documents

• Sales invoices showing 0% GST and export info
• Delivery notes, packing lists, or collection receipts from freight providers
  • The following must be shown:
    • Name, address and GST number of the forwarder
    • Date of collection
    • Statement like: “Goods delivered are for export.”

For indirect exports, also keep customer instructions (email or contract) showing export intent.
Transport Documents

• Sea: Bill of lading or cargo manifest
• Air: Air waybill
• Land: Export permits or agent certificates (especially to Malaysia)
• Post/Courier: Receipts or tracking info

Record-Keeping Tips

• Create a file per export transaction
• Store documents digitally but make them easy to find
• Track missing documents and collect them on time
• Get backup proof (like interim certificates) if final papers are delayed

Charging 0% on International Services

Charging 0% GST on services to overseas clients is more complicated than for goods. You must prove that your service benefits someone outside Singapore, and that it fits into one of 13 specific categories under the GST law.

If your service doesn’t meet the conditions, even if the client is overseas, you must charge 9% GST.

Common Services That Qualify for 0% GST

1. If you and your team go abroad to do the work, you can usually charge 0% GST.
2. Packaging, logistics, or quality checks for goods that are exported? These can qualify, if the goods actually leave Singapore.
3. Consulting on buildings, land, or equipment located outside Singapore also qualifies.
4. Some professional services qualify, but only if the benefit stays outside Singapore. If it helps someone in Singapore, 9% GST still applies.

The Following Usually Don’t Qualify

• Advising overseas about Singapore regulations
• Helping them expand into Singapore
• Any service that helps someone in Singapore, even if paid by a foreign customer

Does Your Customer “Belong” Outside Singapore?

For services, you must know where your customer belongs.

For individuals, they must live overseas and have a stable reason for being there, like work or family.

For businesses, they must be registered and operating overseas. Be wary of the following:

1. Foreign companies with branches in Singapore
2. Joint ventures involving Singapore entities
3. Singapore companies with overseas customers

Check their business registration documents, payment origin, who signs the contract, and where the benefit of the service goes.

Conclusion

As Singapore continues to grow as a global trading hub, those who understand and apply the zero-rating rules will be in a stronger position, both financially and in terms of compliance.

In short, be proactive and turn this tax rule into a smart business strategy. Doing so helps you grow, save money, and stay on the right side of the law.

In need of an accounting services provider to whom you can entrust your business? Contact us at Corporate Services Singapore to discuss your concerns.

If you export goods from Singapore, it’s essential to understand zero-rated GST and its implications. Working with a credible provider ensures compliance and efficiency.

Corporate Services Singapore is BusinessFirms-Verified — your trusted partner for GST, tax, and export-compliance advice.