Even before the World Health Organisation declared that COVID-19 was no longer a global health emergency on 5 May 2023, travellers hit by wanderlust have been engaging in ‘revenge travel’ to make up for lost time. Businesses in the travel industry have plenty to cheer about with the sector’s recovery due to an increased volume of travellers. As industry players gear up to meet the surge in both leisure and corporate travels, it is important to note the updated GST treatment of travel arranging services with effect from 1 Jan 2023.
Here’s what you need to know:
What are travel arranging services?
Services provided to arrange or facilitate the booking and payment of travel products such as:
- International transport of passengers and related insurance;
- Accommodation; and
- Tour packages.
You may charge a fee to customers (e.g. travellers and corporate customers) and/or earn a commission from the travel product suppliers (e.g. airlines and hotels) for the services provided. The services can be provided via the Internet or through non-digital means.
Can I zero-rate the supply of travel arranging services?
From 1 Jan 2023, the basis in determining whether zero-rating applies to a supply of travel arranging services will depend on where the customer and direct beneficiary of the services belong.
The supply of travel arranging services will qualify for zero-rating under section 21(3)(j) if the services are:
- contractually supplied to an overseas person; and
- directly benefitting an overseas person who is outside Singapore at the time the services are performed or a GST-registered person belonging in Singapore.
You must charge and account for GST on the service fee/commission if any of the above qualifying conditions are not satisfied.
Who is affected by this?
You are affected only if you are arranging or facilitating the booking and payment of the travel products as an agent.
An overview of the GST treatment of travel arranging services is provided below.
|Category of services||GST Treatment|
Arranging of international transport of passengers and related insurance:
- From Singapore to a place outside Singapore;
- From a place outside Singapore to Singapore; or
- From a place outside Singapore to another place outside Singapore
E.g. Services to arrange or facilitate the booking/purchase of air tickets and travel insurance
|Contract with a local customer||Standard-rate|
|Contract with an overseas customer|
Zero-rate if the service directly benefits an overseas person or a GST-registered person in Singapore.
Otherwise, the service has to be standard-rated.
For information on GST treatment prior to 1 Jan 2023, you may refer to our webpage or e-Tax Guide GST: Guide for the Travel Industry.
Arranging of accommodation
E.g. Services to arrange or facilitate the booking of hotels or similar lodging
|Arranging of inbound / outbound tour package|
There is no change to the GST treatment of the underlying travel product. The sale of air tickets and related insurance will continue to be zero-rated under section 21(3)(a) of the GST Act. The supply of local accommodation will continue to be standard-rated and overseas accommodation will remain out-of-scope.
Check out our webpage or e-Tax Guide GST: Guide for the Travel Industry for more information.
Below are some common scenarios and the applicable GST treatment: