On or about 8 January 2020, the Inland Revenue Authority of Singapore has updated its webpage regarding GST on imported services.
GST is a tax on local consumption. Under the 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.
In Budget 2018, the Minister for Finance has announced to level the GST treatment for all services consumed in Singapore, the following regimes will be implemented from 1 January 2020 to tax imported services:
- Reverse charge regime for Business-to-Business (B2B) supplies* of imported services, and
- 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. 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.
GST-registered businesses from 1 January 2020 will be classified either as a GST-registered partially exempt business that is not entitled to a full input tax credit or a GST-registered charity or voluntary welfare organization that receives non-business receipts.
Non-GST registered businesses are however not entitled to a full input tax credit if their total value of imported services for a 12-month period exceeds S$1m.
Overseas vendors are required to register for GST if they have an annual global turnover exceeding $1m and make B2C supplies of digital services to customers in Singapore exceeding $100,000.
Electronic marketplace operators are required to register for GST only under certain conditions.
Under the Overseas Vendor Registration regime, supplies of digital services to consumers (i.e. individuals and non-GST registered businesses) are subject to GST. A GST-registered overseas service provider will thus have to determine if a customer is GST-registered to charge GST correctly.
For more information on GST on imported services, please visit the IRAS website.
Source: IRAS website, 8 January 2020