Determining whether a supply is a B2B supply or B2C supply
Under the Overseas Vendor Registration (OVR) regime, overseas suppliers are required to treat the services as supplied to a non-GST registered customer and charge and account for GST on their supplies. This is unless the customer provides his GST registration number.
Operationally, this would mean that overseas suppliers must have the necessary processes in place to capture their customer’s GST registration details and status in order to determine whether a supply is a B2B supply or B2C supply, and accordingly, whether GST needs to be charged at the outset.
Determining belonging status of customers
A key issue for overseas suppliers is determining whether a customer belongs in Singapore and accordingly, whether they are required to charge GST on the supplies of services.
Overseas suppliers must therefore examine indicators to determine if a customer belongs in Singapore. Generally, a business belongs in Singapore if it has a business establishment or fixed establishment in Singapore, while an individual would belong in Singapore if his usual place of residence is in Singapore.
As such, overseas suppliers should ensure their systems can capture information that indicates the belonging status of the customer (for example, residential address or IP address), by ensuring that customers declare their belonging status during the order or checkout process.
Determining registration requirement
Overseas suppliers would have to consider their liability to register for GST on their supply of B2C digital services (including supply of non-digital services and LVGs starting from 1 January 2023) in the countries in which sales of such services were made.
A good first step would be to identify and segregate customers that belong in each country and evaluate whether digital services provided to these customers fall within the definition of digital services defined by the local tax authority.
Once a potential GST liability in a country has been identified, businesses must establish whether their levels of sales exceed the registration thresholds, and where exceeded, prepare the relevant registration documentation.