Range of imported digital services to be taxed under GST: IRAS draft guide

Range of imported digital services to be taxed under GST: IRAS draft guide

Channel NewsAsia·2018-02-21 19:10

File photo of a person using a smartphone. (File photo: Xabryna Kek)

SINGAPORE: The recently announced goods and services tax (GST) on imported digital serviceswill cover a wide umbrella of services, ranging from the downloading of mobile apps, e-books and movies, to subscriptions for online gaming and newspapers and the streaming of TV shows and music.

The affected services could also include the downloading of software, website filters and firewalls, electronic data management such as website hosting and cloud storage services, as well as online courses and listing services for merchants.

These were the examples of digital services listed in a 36-page draft e-tax guide released by the Inland Revenue Authority of Singapore (IRAS) on Tuesday (Feb 20).

IRAS draft guide follows the announcement by Finance Minister Heng Swee Keat in his Budget 2018 speech on Monday that Singapore will impose GST on overseas companies that supply digital services from January 2020.

The draft guide also included guidelines covering electronic marketplaces, including when such marketplaces are regarded as suppliers and how to account for GST on supplies made by local companies through such marketplaces.

Under the new tax, overseas companies that have an annual global turnover exceeding S$1 million and sells more than S$100,000 worth of digital services to customers in Singapore in a year will have to register, charge and account for GST, said IRAS.

It gave an example of an accommodation services company established in Germany that charges a service fee to accommodation providers and a booking fee to customers upon each confirmed booking.

If the German company is registered under the overseas vendor registration regime, it will have to charge and account for GST for the services made to non-GST registered customers - both the providers of accommodation as well as those who book accommodation - in Singapore.

"As the fees charged relate to support services provided to facilitate the booking of accommodation, and are performed via electronic means, these fees fall within the definition of digital services," said IRAS.

The authority is currently seeking feedback on its draft guidelines from the public and will provide a summary of responses by May 31.


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Singapore Tax Policy