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:

  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.

Taxing B2B imported services by way of reverse charge

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 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:

  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

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).

 

FAQs

  • Mechanics of Overseas Vendor Registration

  • Overseas Vendor Registration for Businesses

    • How does the change affect e-commerce businesses?

      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.

    • I am an overseas online merchant providing digital 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 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 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]

    • 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 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.

    • Will IRAS give us sufficient time to prepare for the change?

      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.

    • What resources / support will IRAS provide to help businesses cope with the change?

      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.

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