Singapore l GST on Imported Services Effective January From 2020

As of 1st January 2020, Singapore is expanding the scope of its GST regime to cover supplies of B2B and B2C imported digital services.

Under current Singapore law, these supplies are outside the scope of the GST rules.  The implementation will create obligations for both established and non-established businesses.

Business-to-business (B2B) imported services

Local supplies of services are generally taxed for GST purposes at the standard 7% rate.

As of 2020, B2B imported services will be drawn into the GST system and will have to be accounted for under a reverse charge mechanism. This means that the local recipient business will be liable to account for the GST due on behalf of the foreign supplier.  However, this will only apply to businesses that cannot recover all of the GST they incur on costs.

Overseas vendor registration regime for business-to-consumer (B2C) imported digital services

Digital services include the provision of digital content (like ebooks), databases, software and web-hosting services, streaming of music and film, and gaming.

The revised rules provide that Singapore GST will apply to these services if they are provided by foreign suppliers. Affected businesses will have to register for, charge and collect the GST due on their supplies if:

  • They have an annual global turnover exceeding Singapore $1 million; and
  • They make B2C supplies of digital services to customers in Singapore exceeding Singapore $100,000.

These changes have been taken to level the playing field of VAT treatment applied to foreign and domestic services delivered into Singapore. The overseas vendor registration requirement reflects the current world-wide trend of national tax authorities forcing foreign suppliers to account for local indirect taxes on their supplies. The European Union and more recently, Russia, South Korea, Australia and Japan have all recently put such laws into place.

Contact our VAT experts now and find out how this change could affect your business.