Print this page
Thursday, 15 June 2017 00:15

Are You Reporting Import Purchases and Import GST Correctly?

When you import goods, the supplier, being an overseas supplier, does not charge and collect GST on behalf of IRAS. 
 
Instead, the customs department collects GST when clearing the import goods and issues a document called an import permit. 
 
How then do you account for the import GST in QuickBooks?
 
According to IRAS, the timing and value of GST (both input tax and purchase amounts) should be based on the import permit as follows:
 
Imports - What to declare in your GST return
Source: www.iras.gov.sg (as at Jun-2017)
 
Note that the import value calculated by the customs on the import permit generally differs from the supplier invoice because the customs adds extra charges, e.g., insurance and freight, and uses its own published exchange rate to convert to Singapore dollars. 
 
Let's use a simplified illustration below:
 
Document Supplier Invoice Import Permit
Date 20-Mar 5-Apr
Amount US$580 @1.55 = S$899
Add: -  
Insurance - + 18
Freight - + 83
Import value - S$1,000
     
GST @ 7% - S$70
 
Accounting for the import GST in QuickBooks desktop is a matter of keying in the import GST in a special manner.
 

Accounting for Import GST in QuickBooks

 
First of all, you need a contra account to take in the import purchase amount as calculated by the customs.
 
Accounting for import GST- Create an import purchase (contra) account
Note: This is a one-time setup.
 
Next, record the payment of the import GST in the following manner:
 
Accounting for import GST in QuickBooks desktop
Note: The same applies for Enter Bills.
 
In this way, the Tax Agency Detail Report in QuickBooks desktop shows a taxable purchase amount of S$1,000 and a corresponding tax on purchase of $70 dated on the import permit date accordingly for your GST submission.
 
Note that QuickBooks desktop does not have a import purchase/GST module. As such, the above approach is only a workaround solution.