GST on Imported Services

Reverse charge brings to tax Business-to-Business (B2B) supplies of imported services.

The reverse charge mechanism requires the GST-registered recipient of the imported services to account for GST on the services as if he were the supplier. At the same time, the GST-registered recipient would be entitled to claim the GST as his input tax subject to the normal input tax recovery rules.

Reverse charge does not apply to all imported services. 

The following services are excluded from the scope of reverse charge:

1. Services that fall within the description of exempt supplies under the Fourth Schedule to the GST Act;

2. Services that would qualify for zero-rating under section 21(3) of the GST Act had the services been made by a taxable person belonging in Singapore;

3. Services that are directly attributable to taxable supplies (note: this does not apply to partially exempt persons who are granted a fixed input tax recovery rate or a special input tax recovery formula); and

4. Services provided by the government of a jurisdiction outside Singapore, if the services fall within the description of non-taxable government supplies under the Schedule to the GST (Non-Taxable Government Supplies) Order of the GST Act.

You will be subject to reverse charge from 1 Jan 2020 if you are not entitled to full input tax credit (i.e. you are a partially exempt business or a charity/ voluntary welfare organization that receives non-business receipts).

If you are subject to reverse charge, you will be required to account for GST on your imported services, unless the services do not fall within the scope of reverse charge. At the same time, you will be entitled to claim the corresponding GST as your input tax, subject to the normal input tax recovery rules.

If you are not GST-registered but you import services exceeding $1 million in a year, and you would not be entitled to full input tax credit if you were GST-registered, you will be required to register for GST.

On the other hand, if you would be entitled to full input tax credit if you were GST-registered, the volume of your imported services will not trigger your GST registration liability.

Yes, you will be entitled to claim the GST accounted for on your imported services as your input tax subject to the normal input tax recovery rules.

Currently, you are not required to track your imported services for GST purposes.

If you will be subject to reverse charge, you could modify your accounting system to keep track of your imported services from 1 Jan 2020. Modifying your accounting system to track your imported services will ease your compliance. Imported services which are within the scope of reverse charge should be assigned a different tax code from the imported services which are outside the scope of reverse charge. Where possible, the accounting of output tax and corresponding input tax could be automated too.

By announcing the change in Budget 2018, businesses are given approximately 22 months to prepare for the implementation of reverse charge. Once reverse charge is implemented on 1 Jan 2020, it will apply to all businesses who will be subject to reverse charge. IRAS will not grant an extension of time to any business or sector.

IRAS has published an e-Tax Guide (1066KB) to aid businesses in understanding the features of the reverse charge mechanism and the related registration and compliance rules. The guide will also cover the transitional rules for transactions spanning the implementation date of 1 Jan 2020. Examples will be provided in the guide to illustrate the application of the reverse charge rules.

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

The Overseas Vendor Registration Regime brings to tax business-to-consumer (B2C) supplies of digital services.

Under the regime, suppliers belonging outside Singapore are required to register, charge and account for GST on supplies of digital services 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 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.

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), as well as 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).

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.

You will be regarded as making a B2C supply of digital services 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.

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.

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