100+ DIGITAL SERVICE PROVIDERS ENROLLED
To start the year, Singapore has today kicked-off its goods and services tax (GST) extension to now include overseas digital services such as, cloud storage, media subscription, and mobile apps.
The GST extension implies that from January 1, 2020; Singapore consumers will be charged a goods and services tax on not just locally acquired products/services but also on overseas digital services. This will affect costs of downloadable content such as e-books and mobile apps, utility software such as office suites, subscription-based media services, as well as electronic data management which fully includes cloud storage and web hosting.
The Inland Revenue Authority of Singapore (IRAS) revealed that over 100 providers of such digital services have enrolled under the city-state’s Overseas Vendor Registration (OVR) regime, which mean vendors will begin charging GST on the sale of their digital services from today.
According to the new regime, overseas digital service providers with a yearly global turnover of more than S$1 million and over S$100,000 sales worth of digital services to customers in Singapore in a 12-month period were required to register for GST and apply charges.
Before now, GST was already payable on goods that are valued above S$400 – imported into Singapore, via air or post. Hence, IRAS notes that the new tax would not apply to online purchases of goods. The government, however, adds that it would continue to review the tax regime on such e-commerce transactions before determining how it should proceed.
The government of Singapore first disclosed its plan to impose a GST on overseas digital services in the budget statement of February 2018. The tax targets business-to-business (B2B) and business-to-consumer services, such as marketing, accounting, and IT services, online software subscription fees, as well as, video and music streaming services.