A broad swathe of e-services ranging from downloadable digital content such as mobile applications, e-books and movies, to subscription-based media including news, magazines, streaming of TV shows, music and online gaming are set to be included in the proposed Goods and Services Tax (GST) on digital services.
The announcement regarding imposition of GST on businesses that provide digital services from January 1, 2020 was made by the Finance Minister Heng Swee Keat while presenting the annual budget in Parliament.
In addition to this, businesses that will attract the proposed GST also include software programmes such as security softwares, website filters and firewalls, as well as electronic data management systems such as cloud storage devices.
This was revealed in the examples provided in the Inland Revenue Authority of Singapore’s (IRAS) draft guide. It also explained the application and operational details of the overseas vendor registration system, as well as details on the scope of services, the administration of the GST, and what it means for customers.
Other digital services that are subject to GST include the supply of customised search engine services, listing fees for merchants who list their items online for sale, and supply of online courses.
Under the current GST rules, a supply of services is subject to GST if it is provided by a supplier in Singapore, which means that services supplied by those outside of the country fall outside the scope.
However, under the new GST on imported e-services, the registration of overseas vendors will apply to those whose annual global turnover exceeds SGD1 million, and if the sale of digital services to consumers in Singapore exceeds SGD100,000.
Under the new system, companies that fall within the requirements will have to charge and account for GST. For instance, a Germany-based company that provides accommodation services online will have to pay GST for the fees charged for services rendered to facilitate a Singapore-based customer's accommodation booking.