GST is a tax on local consumption, i.e. it is levied on
all services consumed in Singapore whether they are procured from local or
overseas suppliers. Based on current GST rules, services (other than an exempt
supply) supplied by a supplier who belongs in Singapore is subject to GST while
the same services supplied by a supplier who belongs outside Singapore is not.
To level the GST treatment for all services consumed
in Singapore, the Minister for Finance announced in Budget 2018 that
the following regimes will be implemented from 1 Jan 2020 to tax imported services:
- Reverse
charge regime for Business-to-Business (“B2B”) supplies* of imported services;
and
- Overseas
vendor registration regime for Business-to-Consumer (“B2C”) supplies* of
imported digital services.
* Business-to-business (“B2B”) supplies refer to
supplies made to GST-registered persons, including companies, partnerships and
sole-proprietors. On the other hand, Business-to-Consumer (“B2C”) supplies
refer to supplies made to non-GST registered persons, which include individuals
and businesses that are not registered for GST.
Taxing B2B imported services by way of reverse charge
If you are a GST-registered business
From 1 Jan 2020,
if you are either:
-
a GST-registered partially
exempt business that is not entitled to full input tax credit; or
- a GST-registered charity
or voluntary welfare organization that receives non-business receipts,
you will be required to account for GST on all services
that you procure
from overseas suppliers (“imported services”) as if you are the supplier, except for certain services which are
specifically excluded from the scope of reverse charge.
You will be entitled to claim the corresponding GST as your input tax, subject to the normal input tax recovery rules.
If you are a non-GST registered business
From 1 Jan 2020,
if the total value of your imported services for a 12-month period
exceeds S$1 million and you would not be entitled to full input tax credit even if you were GST-registered, you may become liable for GST-registration under the new
GST registration rules.
Once registered for GST, you will be required to account
for GST on both your taxable supplies and your imported services which are
subject to reverse charge.
For
more information, please refer to the e-Tax Guide GST: Taxing imported
services by way of reverse charge (1202KB).
Taxing B2C digital services by way of an overseas vendor registration regime
If you belong outside Singapore, you are required to register for GST in Singapore if you:
- have an annual global turnover exceeding $1 million; and
- make B2C supplies of digital services to customers in Singapore exceeding $100,000.
Once registered for GST, you are required to charge and account for GST on B2C supplies of digital services made to customers in Singapore.
If you are an electronic marketplace operator
Under certain conditions, whether you are a local or an overseas operator of an electronic marketplace, you may be regarded as the supplier of the digital services made by the overseas suppliers through your marketplace.
In such cases, you are required to include the value of these services to determine your GST registration liability. If you are liable for GST registration or are already GST-registered, you are required to charge and account for GST on B2C supplies of digital services made through your
marketplace to customers in Singapore on behalf of the overseas suppliers, in addition to digital services made by you directly to customers in Singapore.
To ease extra-territorial compliance burden, if you are an overseas operator, you will be registered under a simplified regime, with reduced registration and reporting requirements.
For more information, please refer to the e-Tax Guide GST:
Taxing imported services by way of an overseas vendor registration regime (Second Edition) (903KB).