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Zero-rating of supply of certain tools, machinery and prototypes

Goods and Services Tax (General) Regulations

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Proposed text

—(1) For the purpose of section 21A(1)(a) of the Act, the prescribed tool or prescribed machinery used in the manufacture of goods for a person who belongs in a country outside Singapore shall be any tool or machinery which —(a)is integral to the manufacture of the goods; and(b)is highly customised or specialised in nature for the sole purpose of the manufacture of the goods.(2) The conditions prescribed for the purpose of section 21A(1) of the Act are as follows:(a)the prescribed tool or prescribed machinery shall be used by —(i)the taxable person; or(ii)such other person as may be approved by the Comptroller,for the manufacture of the goods for the person who belongs in a country outside Singapore;(b)the prescribed tool or prescribed machinery shall not be used, consumed or made available in Singapore to any person other than —(i)the taxable person;(ii)the person who belongs in a country outside Singapore; or(iii)such other person as may be approved by the Comptroller;(c)the manufactured goods shall be substantially exported and the taxable person shall maintain records in relation to such export;(d)the supply of the prescribed tool, prescribed machinery or prototype of such tool or machinery and the supply of the manufactured goods shall be separate supplies made by the taxable person to the person who belongs in a country outside Singapore;(e)the prescribed tool or prescribed machinery shall be —(i)exported to any country outside Singapore; or(ii)destroyed,when it is no longer needed for the manufacture of the goods; and(f)where the prescribed tool, prescribed machinery or prototype of such tool or machinery is subsequently disposed of in Singapore —(i)according to the instructions of the person who belongs in a country outside Singapore; or(ii)due to spoilage,the taxable person shall maintain records in relation to the disposal.(3) For the purpose of paragraph (2)(c), the manufactured goods shall be substantially exported if more than 50% of the manufactured goods produced by using the prescribed tool or prescribed machinery are exported.(4) Where the taxable person making the supply under section 21A of the Act fails to comply with any condition prescribed under paragraph (2), he shall —(a)repay to the Comptroller without demand the amount of tax on the value of the supply to which the failure to comply relates; and(b)include the amount of tax referred to in sub-paragraph (a) as output tax in his return.(5) In this regulation, “tool” includes any mould, jig, pattern, template, die, punch or similar tool.

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