GST treatment of travel products
Supply of services/goods | GST Treatment |
---|---|
Supply of international transport of passengers:
E.g. Sale of air tickets, ferry tickets and coach tickets to neighbouring countries. | Zero-rate under section 21(3)(a) |
Supply of travel insurance for international transport of passengers | Zero-rate under section 21(3)(c) |
Supply of travel accommodation
| Depends on the location of property Standard-rate if the property is located in Singapore |
Supply of outbound tour package | Zero-rate under section 21(3)(i) |
Supply of inbound tour package | Standard-rate |
GST treatment of travel arranging services
Travel arranging services refer to services which facilitate the booking and payment of the underlying travel product(s) (e.g. international transport of passengers and travel accommodation). Such services can be provided via the Internet or through non-digital means (e.g. walk-in or over the phone).
In Budget 2022, the Minister for Finance announced that the basis for determining whether zero-rating applies to a supply of travel arranging services will be updated, to be based on where the customer and direct beneficiary of the services belong. Specifically, zero-rating will apply if the services are contractually supplied to an overseas person and directly benefiting an overseas person or a GST-registered person in Singapore. If the customer belongs in Singapore, the supply of travel arranging services will be standard-rated.
This change will ensure that the GST rules accurately reflect the place of consumption of travel arranging services and parity in GST treatment between the local and overseas suppliers on their supplies of such travel arranging services.
There is no change in the GST treatment of the supply of the underlying travel product.
The revised GST treatment will apply to supplies of arranging services made in the capacity of an agent on or after 1 Jan 2023. Please refer to the GST: Guide for the Travel Industry (Second Edition) (PDF, 316KB) for more information.
Supply of services | GST Treatment | ||||
---|---|---|---|---|---|
Arranging of international transport of passengers and related insurance:
E.g. Services to arrange or facilitate the booking/purchase of air tickets, travel insurance | Prior to 1 Jan 2023 Zero-rate under section 21(3)(c) On/after 1 Jan 2023
| ||||
Arranging of accommodation
E.g. Services to arrange or facilitate the booking of hotels or hostels | Prior to 1 Jan 2023 Depends on the location of property
Standard-rate if the property is located in Singapore
Zero-rate under section 21(3)(e) if the property is located outside Singapore
On/after 1 Jan 2023
| ||||
Arranging of inbound/outbound tour package | Prior to 1 Jan 2023
On/after 1 Jan 2023 No change |
Cancellation fees imposed for inbound and outbound tour packages
Generally, cancellation fees are imposed to deter customers from backing out of their bookings or compensate the travel agency for the loss suffered as a result of cancellation. In such situations, GST is not chargeable on the cancellation fees as there are no goods or services provided in return to the customers.
FAQs
I assist a local traveller to book a flight from Singapore to London. In addition to the airfare of $1,200 charged by the airline, I charge a service fee of $20 for my arranging services. Do I need to charge GST on the service fee?
Prior to 1 Jan 2023, you can zero-rate the service fee under section 21(3)(c) of the GST Act. However, with effect from 1 Jan 2023, you will have to charge GST on the service fee as your arranging services are supplied to and directly benefitting a traveller who belongs in Singapore.
I assist a local traveller to book a tour package to Germany offered by an overseas tour operator. The price of the tour package quoted by the overseas tour operator is $4,500. I charge a service fee of $200 to the traveller for my services in arranging for the tour package.
As you are merely facilitating the booking of an outbound travel package, the service fee of $200 charged to the traveller represents fees earned for providing arranging services to him/her. As your arranging services are contractually supplied to and directly benefiting the traveller who belongs in Singapore, you will have to charge GST on the service fee.
I assist a local traveller to book a tour package to Germany offered by an overseas tour operator. The price of the tour package quoted by the overseas tour operator is $4,500. I received a commission of $500 from the overseas tour operator for my services in arranging for the tour package.
I provide a regional tour package (covering Singapore, Malaysia and Thailand) to overseas customers. Do I need to charge GST on the tour package?
For example, the price of your regional tour package is $1,000. It includes $300 for the tour in Singapore and $700 for the tour in Malaysia and Thailand. In this case, GST is chargeable on $300 only.