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Purchasing Digital Services from Overseas Service Providers

From 1 Jan 2020, GST will apply to digital services purchased by consumers in Singapore from GST-registered overseas service providers.
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GST on Digital Services

From 1 Jan 2020, if you are a consumer in Singapore, you will need to pay GST on digital services purchased from GST-registered overseas service providers.

Currently, only locally procured services are subject to GST, while services procured from overseas are not. The change, announced in Budget 2018, is intended achieve a level playing field in GST treatment for services, whether procured locally or overseas.

There is no change in GST treatment for online purchases of goods. You are still required to pay GST on goods imported into Singapore, at the point of importation, with the exception of goods valued $400 and below which are imported via air or post.

Digital Services Infographic

From 1 Jan 2020, GST-Registered Overseas Digital Services Providers must charge GST on their supplies of digital services to customers. There are no changes to: 1. GST-Registered Local Digital Services Providers, i.e. GST is chargeable on their supplies of digital services both before and after 1 Jan 2020. 2. Importing of goods, i.e. GST will continue to be imposed on goods purchased from overseas suppliers at the point of importation into Singapore unless the value of goods is SGD400 or less.

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When is GST payable

GST is payable when you purchase digital services from GST-registered overseas service providers.

Digital services are automated services supplied over the Internet with minimal or no human interaction. This includes:

Digital services include: 1. Downloadable digital content such as mobile apps, e-Books and movies. 2. Subscription-based media such as news, magazines, streaming of TV shows and music, and online gaming. 3. Software programs such as photoshop tools, anti-virus software and office suites. 4. Electronic data management such as website hosting and cloud storage services.

Only digital services provided by GST-registered service providers are subject to GST.

Overseas digital service providers with an annual global turnover of more than S$1 million that sell more than S$100,000 worth of digital services to customers in Singapore in a 12-month period, are required to register for GST and charge GST. Some overseas digital service providers may also be registered on a voluntary basis.

You can use the GST-registered Business Search to check whether an overseas digital service provider is registered for GST.

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Examples of digital service purchases

The following examples illustrate how the GST change may affect you as a consumer.

Example 1: Online Videos Watcher

Example 1: Online Videos Watcher

Grace currently pays a monthly subscription for video streaming services from an overseas Company A. Before 1 Jan 2020, no GST is payable on her subscription fees.

As Company A is registered for GST under the OVR regime with effect from 1 Jan 2020, Grace will have to pay monthly subscription fees inclusive of GST. Assuming that the monthly subscription fee is $10 (inclusive of GST), Company A will be required to pay the GST collected of $0.65 to IRAS.

Example 2: Mobile Gamer

Example 2: Mobile Gamer

John regularly purchases games from overseas Company B’s app market. He plays these games on his mobile phone every day. Sometimes, John also makes in-app purchases to unlock hidden levels.

Before 1 Jan 2020, no GST is payable on such purchases. However, since Company B is registered under the OVR regime, GST is payable on all paid apps and in-app purchases from Company B’s app market with effect from 1 Jan 2020.

Company B will be required to pay the GST collected to IRAS.

Example 3: PC/Console Gamer

Example 3: PC/Console Gamer

Stephen is a professional gamer. He goes online to buy the latest digital copy of games released by overseas Company C, which is registered under the OVR regime. Before 1 Jan 2020, Stephen does not have to pay GST on the digital games he buys from Company C. However, from 1 Jan 2020, Stephen will have to pay GST for his digital video game purchases.

Company C will be required to pay the GST collected to IRAS.

Example 4: Designer

Example 4: Designer

Gabriel works on-the-go and subscribes to overseas Company D’s cloud storage to store his latest design works. He renews his yearly subscription on 1 December 2019.

Company D is registered under the OVR regime. GST will not be applicable for the month of December since the OVR regime only comes into effect on 1 Jan 2020.

However, GST will be chargeable on his remaining 11 months’ worth of subscription fees from 1 Jan 2020 onwards. Company D will be required to pay the GST collected to IRAS.

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Price display

As most of the GST-registered overseas digital service providers operate in a global market, it may not be feasible for them to display prices inclusive of Singapore GST on their websites or online stores.

Some of these providers may only be able to determine whether Singapore GST is chargeable after verifying that you reside in Singapore. Once the GST-registered provider has ascertained that Singapore GST is chargeable, the price that they charge you will be inclusive of GST.

Only GST-registered providers are authorised to charge and collect GST from consumers in Singapore. You should email to IRAS if you encounter any wrongful collection of GST by unregistered overseas providers.

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Customer’s responsibility to provide correct information

Overseas digital service providers will determine if you reside in Singapore based on information you provide to them. This includes your payment and billing information.

You are responsible for providing complete and accurate information to GST-registered overseas service providers so that they can determine whether Singapore GST is applicable.

It is a serious offence to provide incorrect or false information to overseas providers to avoid paying GST on digital services (e.g. providing a false address to misrepresent yourself as residing outside Singapore or using a business’ GST registration number)

Upon conviction, offenders may face penalties of up to 3 times the amount of tax chargeable and a jail term of up to 7 years.

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  • Does the OVR regime affect goods purchased online such as those from Taobao and Qoo10?

    The OVR regime does not extend to such online purchases of goods. There is no change in the GST treatment for online purchases of goods that are imported into Singapore via air or post.

    You need not pay GST as long as the value of the goods imported into Singapore is S$400 or less. However, you will need to pay GST at the point of importation if the value of the goods exceeds S$400.

  • Does the OVR regime affect food delivery services in Singapore?

    Under the OVR regime, GST will only be chargeable on imported digital services. Digital services are defined as services that are supplied over the internet or an electronic network that require minimal or no human intervention, and are impossible without the use of information technology.

    Food delivery services in Singapore are not subject to the OVR regime as they are locally procured services and are not digital services (there is a human element involved in the delivery process).

    However, do note that domestic GST rules still apply to goods and services provided by local GST-registered companies. As such, if the delivery service provider or its partnering restaurants are already registered for GST under the current rules, GST will be charged on the delivery fees or purchased food items as they are locally procured goods and services.