From 1 January 2020, GST will apply to digital services purchased by consumers in Singapore from GST-registered overseas service providers.
This was announced in Budget 2018 and it intends to achieve a level playing field in GST treatment for services either procured locally or overseas. Digital services are defined as automated services supplied over the Internet with minimal or no human interaction.
Currently, only locally procured services are subject to GST, while services procured from overseas are not.
There is no change in GST treatment for online purchases of goods. GST is payable on goods imported into Singapore, at the point of importation, with the exception of goods valued $400 and below which are imported via air or post.
Only digital services provided by GST-registered service providers are subject to GST.
Overseas digital service providers with an annual global turnover of more than S$1 million that sell more than S$100,000 worth of digital services to customers in Singapore in a 12-month period, are required to register for GST and charge GST. Some overseas digital service providers may also be registered on a voluntary basis.
The price for internet services may vary depending on whether Singapore GST is chargeable.
Overseas digital service providers will determine if the purchasers reside in Singapore based on information provide to them, including payment and billing information.
The IRAS has clarified that the customers are responsible for providing complete and accurate information to GST-registered overseas service providers. It is a serious offence to provide incorrect or false information to overseas providers to avoid paying GST on digital services and that offenders may face penalties of up to 3 times the amount of tax chargeable and a jail term of up to 7 years.
Source: IRAS website, 2 January 2020