29 July 2021
From 6 to 27 July 2021, the Ministry of Finance (“MOF”) conducted a public consultation on a draft Goods and Services Tax (Amendment) Bill 2021. The draft Bill proposes to make two amendments to the Goods and Services Tax Act (“GST Act”) which were announced in the 2021 Budget Statement and two other amendments to improve GST administration and the clarity of existing legislation.
Budget 2021 amendments
Introduce GST on imported low-value goods and business-to-consumer imported non-digital services from 1 January 2023
Currently, goods valued up to the current GST import relief threshold of S$400 (“low-value goods”) which are imported via air or post are not subject to GST. Business-to-consumer (“B2C”) imported non-digital services (such as live interaction with overseas providers of educational learning, fitness training, counselling and telemedicine) are also not subject to GST.
It was announced in Budget 2021 that GST will be extended to:
- Low-value goods which are imported via air or post: This will be effected via widening the scope of the existing Overseas Vendor Registration and Reverse Charge regimes. GST is already, and will continue to be, collected on goods imported via land or sea, regardless of value.
- B2C imported non-digital services: This will be effected via widening the scope of the existing Overseas Vendor Registration regime.
This change, together with the introduction of GST on business-to-business (B2B) imported services and B2C imported digital services that took effect from 1 January 2020, will ensure a level playing field for local businesses to be competitive.
These proposed amendments are expected to take effect from 1 January 2023.
Update of GST treatment for supply of media sales
Currently, whether a supply of media sales is zero-rated or standard-rated depends on the place of circulation of the advertisement. The media sales is zero-rated if the advertisement is intended to be substantially circulated outside Singapore, and standard-rated if the advertisement is intended to be substantially circulated in Singapore.
MOF proposes to update the basis for determining whether zero-rating applies to a supply of media sales by having it based on the place where the customer (i.e. the contractual customer) and direct beneficiary of the service belong:
- If the customer of the service belongs outside Singapore and the direct beneficiary either belongs outside Singapore or is GST-registered in Singapore, the media sales will be zero-rated; and
- If the customer belongs in Singapore, the media sales will be standard-rated.
These proposed amendments are expected to take effect from 1 January 2022.
Other proposed amendments
The draft Bill provides for two other proposed amendments arising from a periodic review of Singapore’s GST system:
- Update the transitional rules for changes in GST treatment; and
- Make miscellaneous changes to the existing Overseas Vendor Registration regime and Reverse Charge regime to mitigate revenue risks, provide tax certainty, and ease compliance burden.