Starting from 1st January 2020, consumers in Singapore will have to pay Goods and Services Tax (GST) on digital services purchased from GST-registered overseas service providers. Currently, only locally procured services are subject to GST, while services procured from overseas are not. This measure was announced in the 2018 Budget with the intent to achieve a level playing field and maintain parity in the GST treatment for all services consumed in Singapore – whether local or overseas. Similar measures have been taken by countries like Australia, Japan, New Zealand and South Korea from as early as 2015.
What are Digital Services?
Digital services are defined as services that are supplied over the internet or an electronic network that require minimal or no human intervention, and are impossible without the use of information technology.
Overseas Digital services providers must register for GST and charge GST from 1 Jan 2020, if they meet the following criteria:
- Yearly global turnover exceeding S$1Million
- Sell more than S$100,000 worth of digital services to customers in Singapore during a period of 12 months
Overseas Digital Services providers who do not meet the above criteria may also voluntarily register for GST.
Examples of Digital Services
Some common examples of digital services provided by overseas providers that will be subject to GST from 1 Jan 2020 are:
Downloadable Digital Content such as mobile apps, e-books and movies
Subscription based Media like news, content streaming and online gaming
Software Programs such as Photoshop, Office suites and Anti-virus software
Electronic Data Management Services like website hosting or cloud storage services
What can consumers expect?
Prices paid by individual consumers to GST-registered overseas service providers for the purchase of digital services will be inclusive of GST from 1 Jan 2020. Overseas service providers will declare and pay the GST collected to IRAS.
Similarly, GST-registered businesses that purchase overseas digital services may have to account for GST via reverse charge instead. They should provide their GST registration number to the overseas service providers so that GST is not charged.
For more information on what consumers need to know about GST payable on overseas digital services, you can check the IRAS website here.
Consumers can check whether an overseas digital service provider is registered for GST in Singapore, by searching for the business using the GST-registered Businesses Search e-Service on the IRAS website.
Date: 10 Dec 2019
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