GST on overseas digital services in Singapore with effect from 1st January 2020

Digital services are services which are supplied over the internet or an electronic network and the nature of which renders their supply essentially automated with minimal or no human intervention and impossible without the use of information technology. 

Many overseas digital service providers have registered for GST under Singapore’s Overseas Vendor Registration (OVR) regime, and will be charging GST on their sales of digital services to Singapore consumers with effect from 1 Jan 2020.

Currently, only locally procured services are subject to GST, while services procured from overseas are not. Announced in the 2018 Budget Statement, the OVR regime is intended to achieve a level playing field in GST treatment for services, whether procured locally or overseas.

Under the OVR regime, overseas digital service providers with a yearly global turnover of more than S$1 million that 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.

Thus currently the digital services that are bought from local companies in Singapore are subject to GST, while those bought from overseas companies are not. This new GST rule levels the playing field for local companies and maintains parity in the GST treatment of all services consumed in Singapore.

With effect from 1st Jan 2020 Prices paid by consumers to GST-registered overseas service providers for the purchase of digital services will be inclusive of GST. Overseas service providers will declare and pay the GST collected to IRAS. Consumers refer to individuals and non-GST registered businesses.

GST-registered businesses that make similar purchases 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 will not be charged.

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 complete and accurate information to registered overseas digital service providers. It is a serious offence to provide incorrect or false information to overseas digital service providers to avoid paying GST on digital services.  




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