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GST on Imported Services

 
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Overview

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. Prior to 1 Jan 2020, 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 following regimes were implemented from 1 Jan 2020 to tax imported services:

  1. Reverse charge regime for Business-to-Business (“B2B”) supplies* of imported services; and
  2. 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.

NEW!
Budget 2021 – GST on imports of low-value goods and B2C imported non-digital services

With effect from 1 Jan 2023, Minister For Finance announced in Budget 2021 that GST will be extended to:

(a) Goods imported via air or post that are valued up to (and including) the current GST import relief threshold of S$400; and
(b) B2C imported non-digital services.

The change will ensure a level playing field for our local business to compete effectively. The change also ensures that our GST system remains fair and resilient as the digital economy grows.

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Taxing B2B imported services by way of Reverse Charge (RC)

If you are a GST-registered business

From 1 Jan 2020, if you are either:

  1. a GST-registered partially exempt business that is not entitled to full input tax credit; or
  2. a GST-registered charity or voluntary welfare organization that receives non-business receipts,

you are 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 are also 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 (PDF, 1202KB).

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NEW!

Reverse Charge (RC) for B2B import of low-value goods

If you are a GST-registered business

From 1 Jan 2023, a GST-registered business who is subject to reverse charge (“RC business”) should perform reverse charge on low-value goods. The requirement to perform reverse charge applies to all low-value goods and includes low-value goods purchased from local and overseas suppliers, electronic marketplace operators and redeliverers, regardless of whether they are GST-registered or not. 

You will be entitled to claim the corresponding GST as your input tax, subject to the normal input tax recovery rules.

Low-value goods are goods which at the point of sale: 

  1. are not dutiable goods, or are dutiable goods, but payment of the customs duty or excise duty chargeable on the goods is waived under section 11 of the Customs Act;
  2. are not exempt from GST;
  3. are located outside Singapore and are to be delivered to Singapore via air or post; and
  4. have a value not exceeding the GST import relief threshold of S$400.

In the above definition, ‘point of sale’ refers to the time at which an order confirmation is issued by the OVR Vendor or such other time as agreed with the Comptroller, whilst ‘Singapore’ refers to customs territory.

If you are a non-GST registered business 

From 1 Jan 2023, if the total value of your imported services and low-value goods 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 your taxable supplies, your imported services and low-value goods which are subject to reverse charge. 

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Taxing B2C digital services by way of an Overseas Vendor Registration (OVR) regime

From 1 Jan 2020, if you belong outside Singapore, you are required to register for GST in Singapore if you:

  1. have an annual global turnover exceeding $1 million; and
  2. 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

From 1 Jan 2020, 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 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 (PDF, 903KB).

 

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GST-Registered Businesses purchasing digital services from GST-Registered Overseas Vendors

Under the OVR regime, supplies of digital services to consumers (i.e. individuals and non-GST registered businesses) are subject to GST. A GST-registered overseas service provider will thus have to determine if a customer is GST-registered to charge GST correctly.

 

If you are a GST-registered business purchasing digital services from a GST-registered overseas service provider under the OVR regime, you need to provide your GST registration number to the provider so that GST will not be charged on business purchases of digital services. If you are a Reverse Charge business, you are required to account for GST on the imported digital services by way of reverse charge instead. 

To check whether your overseas digital service provider is registered for GST, you can use the GST-registered Business Search.

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NEW!

Overseas Vendor Registration (OVR) for B2C imported non-digital services 

From 1 Jan 2023, GST will be extended to B2C imported non-digital services, through the Overseas Vendor Registration regime.

 

Digital services which are currently subject to GST will remain taxable under the extended overseas vendor registration regime. 

Consequently, from 1 Jan 2023, all B2C supplies of imported remote services, whether digital or non-digital, will be taxed by way of the extended overseas vendor registration regime.

Remote services refer to any services where, at the time of the performance of the service, there is no necessary connection between the physical location of the recipient and the place of physical performance.

If you are a supplier of remote services1 who belong outside Singapore, you will be required to register for GST in Singapore if you: 

  1. have an annual global turnover exceeding $1 million; and 
  2. make B2C supplies of remote 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 remote services made to customers in Singapore.

If you are an electronic marketplace operator

If you are regarded as the supplier of the remote services1 made by the overseas suppliers through your marketplace, you are required to include the value of these remote 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 remote services made through your marketplace to customers in Singapore on behalf of the overseas suppliers, in addition to remote services made by you directly to customers in Singapore.

For more information, please refer to the e-Tax Guide GST: Taxing imported remote services by way of the overseas vendor registration regime (First Edition) (PDF, 420KB)

1 If you also supply low-value goods whether directly or on behalf of suppliers via your electronic marketplace, you will be required to aggregate the value of the B2C supplies of remote services and low-value goods to determine your GST registration liability. Once you are liable for GST registration or are already GST registered, you are required to charge and account for GST on both B2C supplies of remote services and low-value goods to Singapore.

 

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FAQs

  • Mechanics of Overseas Vendor Registration

    • How does overseas vendor registration work?

      The Overseas Vendor Registration Regime brings to tax business-to-consumer (B2C) supplies of digital services. With effect from 1 Jan 2023, the regime will be extended to tax B2C supplies of non-digital services. In other words, all remote services (i.e. digital services and non-digital services) will be taxed under the extended regime with effect from 1 Jan 2023.
       
      Under the regime, suppliers belonging outside Singapore are required to register, charge and account for GST on supplies of digital services (and non-digital services with effect from 1 Jan 2023) made to non-GST registered customers in Singapore. Under certain conditions, local and overseas operators of electronic marketplaces may also be regarded as the supplier of the digital services (and non-digital services with effect from 1 Jan 2023) made by the overseas suppliers through these marketplaces. In such cases, the operators are required to register, charge and account for GST on these supplies, instead of the overseas suppliers.

       

    • What is the scope of services that would be subject to GST under the overseas vendor registration?

      Under the regime, GST will apply on all digital services. These include supplies of:

       

      -downloadable digital content (e.g. mobile applications, e-books and movies),

       

      -subscription-based media (e.g. news, magazines, streaming of TV shows and music),

       

      -software programs (e.g. software, drivers and website filters),

       

      -electronic data management services (e.g. website hosting and cloud storage),

       

      -support services performed via electronic means to arrange or facilitate transactions, which may not be digital in nature (e.g. service or booking fee charged to the suppliers or customers).

       

        From 1 Jan 2023, GST will apply on all remote services (i.e. digital services and non-digital services) which can be supplied and received remotely. Remote services refer to any services where, at the time of the performance of the service, there is no necessary connection between the physical location of the recipient and the place of physical performance. This includes supplies of:

         

        -downloadable digital content (e.g. mobile applications, e-books and movies),

         

        -subscription-based media (e.g. news, magazines, streaming of TV shows and music),

         

        -software programs (e.g. software, drivers and website filters),

         

        -electronic data management services (e.g. website hosting and cloud storage),

         

        -support services performed via electronic means to arrange or facilitate transactions, which may not be digital in nature (e.g. service or booking fee charged to the suppliers or customers),

          

        -professional services (e.g. investment advisory, brokerage services, legal, tax and accounting services),

         

        -educational, professional membership and examination services (e.g. distance learning classes, online examinations to obtain professional certification, membership subscription to professional associations),

         

        -personal services (e.g. online counselling, matchmaking and telemedicine services), and

         

        -supply of consultancy and advisory services (e.g. advertising and digital marketing consultancy services, data analysis and research services).

      • How do overseas suppliers and electronic marketplace operators know whether the customer they are supplying services to, is in Singapore?

        For consistency with current GST rules, the existing belonging status guidelines will continue to apply. That is, for an individual, the customer is treated as belonging in Singapore if his usual place of residence is in Singapore.
         
        Given that digital services are transacted over the internet with limited information available in some instances, overseas suppliers may determine the belonging status of the customer by maintaining two pieces of non-conflicting evidence, based on appropriate proxies, such as billing address, IP address and credit card information. For non-digital services, overseas suppliers may also rely on the same proxies for determining the belonging status of the customer.

         

      • How do overseas suppliers and electronic marketplace operators know whether the supply of services they make is a B2C supply?

        You will be regarded as making a B2C supply of digital services (and non-digital services with effect from 1 Jan 2023) if the customer is non-GST registered. By default, you will treat the services as being supplied to a non-GST registered customer, and charge and account for GST, unless the customer provides his GST registration number.

      • How do overseas suppliers and electronic marketplace operators report and account for GST under overseas vendor registration?

        Overseas suppliers and overseas electronic marketplace operators will register under a simplified registration regime, with reduced registration and reporting requirements. GST reporting will be done via electronic-filing.

         

      • If overseas suppliers and electronic marketplace operators incur GST on any expenses in Singapore, can they claim the GST under overseas vendor registration?

        Input tax claims are not a feature of the simplified registration regime.

         

    • Overseas Vendor Registration for Businesses

      • How does the change affect e-Commerce businesses?

        Under the overseas vendor registration regime, overseas suppliers and electronic marketplace operators making substantial digital services (and non-digital services with effect from 1 Jan 2023) to customers in Singapore may be required to register, charge and account for GST on these supplies. This will ensure a level playing field between our local e-Commerce businesses which are GST-registered, and foreign-based ones which are not.

         

      • I am an overseas online merchant providing services to customers in Singapore. Will I need to register for GST under overseas vendor registration?

        In general, overseas suppliers, with a global annual turnover of at least $1 million, making B2C supplies of digital services (and non-digital services with effect from 1 Jan 2023) to non-GST registered customers in Singapore exceeding $100,000 are required to register, charge and account for GST on these supplies.

         

      • I am a local business providing platform services to local and overseas vendors. Am I impacted by overseas vendor registration?

        Under certain conditions, local and overseas operators of electronic marketplaces, may also be regarded as the supplier of the digital services (and non-digital services with effect from 1 Jan 2023) made by the overseas suppliers through these marketplaces.
         
        If you fulfil the conditions to be regarded as the supplier of digital services (and non-digital services with effect from 1 Jan 2023) made to customers in Singapore by overseas suppliers through your marketplace, you are required to sum up the value of such supplies, in addition to the value of taxable supplies you are currently making 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 taxable supplies made directly by you, as well as on digital services (and non-digital services with effect from 1 Jan 2023) made by overseas suppliers through your marketplace to customers in Singapore.
         
        [Note: As you belong in Singapore, the domestic registration threshold will apply to you. i.e. taxable turnover of $1 million]

         

      • What changes do I need to make to my accounting system?

        If you are liable for GST registration under the regime, you are required to charge and account for GST on B2C digital services (and non-digital services with effect from 1 Jan 2023) made to customers in Singapore. As such, your accounting systems should be modified to account for GST on such services, once you have determined that it is a B2C transaction, and that the customer belongs in Singapore.

         

      • Will IRAS give us sufficient time to prepare for the changes to the Overseas Vendor Registration regime?

        Yes, as the implementation date of the extended Overseas Vendor Registration regime is 1 Jan 2023, you will have approximately 22 months to prepare for the implementation of the extended Overseas Vendor Registration regime from the date of announcement.


        If you have further queries about the regime, you may contact us.

         

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