GST payable on overseas digital services from 1 January 2020
19 December 2019
On 9 December 2019, the Inland Revenue Authority of Singapore (“IRAS”) issued a press release announcing that the more than 100 overseas digital services providers registered for goods and services tax (“GST”) under the Overseas Vendor Registration (“OVR”) regime will be charging GST on their sales of digital services to Singapore consumers with effect from 1 January 2020.
“Digital services” are defined as services that are supplied over the internet or an electronic network that requires minimal or no human intervention, and are impossible without the use of information technology. Examples of digital services provided by overseas providers that will be subject to GST from 1 January 2020 include downloadable digital content (mobile apps, e-books, movies), subscription-based media (news, magazines, streaming of TV shows and music, online gaming), software programs (photoshop tools, anti-virus software and office suites) and electronic data management (website hosting, cloud storage services).
Under the OVR regime, overseas digital service providers with a yearly global turnover of more than S$1 million which 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. The IRAS press release explains that the OVR regime is intended to achieve a level playing field in GST treatment for services, whether procured locally or overseas. Similar measures have been taken by countries like Australia, Japan, New Zealand and South Korea from as early as 2015.
There will be no change in the GST treatment for online purchase of goods, i.e. GST remains payable on all goods imported into Singapore, with the exception of goods valued S$400 and below imported via air or post. Finally, the IRAS press release reminds that, as overseas digital service providers use information such as payment and billing information to determine if customers reside in Singapore, businesses and consumers are responsible for providing accurate and complete information in this regard. It is an offence to provide incorrect or false information to avoid paying GST on digital services.
The Goods and Services Tax Act will be amended to implement these changes.
The following materials are found on the IRAS website www.iras.gov.sg:
- IRAS press release: GST payable on overseas digital services from 1 January 2020
- IRAS webpage: Purchasing Digital Services from Overseas Vendors.