GST on Imported Services

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.

With the implementation of the overseas vendor registration regime, overseas suppliers and electronic marketplace operators making substantial digital services 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.

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

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.

If you fulfil the conditions to be regarded as the supplier of digital services 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 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]

If you are liable for GST registration under the regime, you are required to charge and account for GST on B2C digital supplies made to customers in Singapore. As such, your accounting systems should be modified to account for GST on supplies of digital services, once you have determined that it is a B2C transaction, and that the customer belongs in Singapore.

Yes, as the implementation date is 1 Jan 2020, you will have approximately 22 months to prepare for the implementation of overseas vendor registration regime from the date of announcement.

IRAS has published an e-Tax Guide (903KB) to aid businesses in understanding the features of the overseas vendor registration regime 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 GST under the regime.

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