GST obligations change for digital services to Singapore

By Hana Strait

New Zealand businesses making supplies to Singapore recipients should be aware that, from 1 January 2020, Singapore will impose goods and services tax (GST) at the current standard rate of 7% on imported digital services. This will cover all digital services including downloads, subscription-based media, software programs, electronic data management and support services performed via electronic means to arrange or facilitate transactions.

Where such services are supplied to GST-registered businesses (B2B supplies) that are partly exempt, e.g., financial institutions, charities or grant funded organizations, they will be subject to a reverse-charge regime, with the recipient of the services being required to account for output tax and claim any input tax applicable under the applicable recovery rates for that business. The supplier is required to obtain the GST registration number from the customer and verify it before treating its services as B2B supplies.

If the Singapore customer is not able to provide a GST registration number or is not GST-registered, the supplier of the digital service will be required to treat the supply as a business-to-consumer (B2C) supply.  B2C supplies of digital services will require nonresident suppliers to register for GST where the total B2C digital supplies made in Singapore for a year exceed SGD 100,000 and annual global turnover exceeds SGD 1 million.

In terms of evidence to support that the customer is not a Singaporean recipient, a supplier will be required to hold two pieces of non-conflicting evidence, e.g., a billing address, IP address, or credit card information to support that the recipient is not in Singapore, as well as the GST registration number of the business.

Once registered for GST under the B2C regime (referred to as Overseas Vendor Registration), the supplier will be required to collect GST on the value of the supplies and report the supplies made via a simplified GST return filed online. The GST collected will need to be paid to the Singapore tax authority at the same time as the simplified GST return is due.

June 2019 Tax Alert contents

• How are you affected by new individual tax assessment regime?
• Cautionary tale of GST in land transactions
• IR and ATO release administrative approach to determining residence
• What’s the buzz with tax and charities?
• KiwiSaver – flexibility, suspensions, and those over 65
• Tax Bill returns from the Finance and Expenditure Committee with modifications
• Depreciation myths debunked
• GST legislation one step closer to enactment
• Correcting errors under s. 113 update
• Snapshot of recent developments