Singapore Budget 2018: Iras releases consultation papers on e-commerce transactions

Singapore

THE Inland Revenue Authority Of Singapore (Iras) published two consultation papers on Feb 20 regarding taxing e-commerce transactions for businesses and individuals buying digital services from overseas providers.

This follows the announcement by Minister of Finance Heng Swee Keat during his Budget speech on Feb 19 that Singapore would implement GST on imported services with effect from Jan 1, 2020. Mr Heng said that this was meant to "make sure that our tax system remains fair and resilient in a digital economy".

In the case of business-to-consumer (B2C) transactions, a consumer subscribing to cable TV from a local provider would be charged GST, whereas a foreign one providing the same channels would not under current rules, for example.

However, Iras said in its paper that it would launch an overseas vendor registration regime that would require foreign suppliers with a global turnover exceeding S$1 million, supplying digital services to consumers here exceeding S$100,000 to register, charge and account for GST.

Under certain conditions, "a local or overseas operator of electronic marketplaces" could also be considered a supplier as well for services rendered on these platforms. For instance, this could include an e-book supplier established in the United Kingdom that allows customers to download materials from its website, or a Germany-established accommodation-booking website that charges service and booking fees to facilitate the booking of accommodation.

Iras also wants to implement a reverse charge mechanism for business-to-business (B2B) transactions. Businesses would then have to account for GST for services obtained from overseas suppliers, and allow them to make input tax claims. This would apply to those GST-registered and not entitled to full input tax credit or belonging to GST groups that are not entitled to full input tax credit.

It would also apply to those non-GST registered if their services purchased from suppliers abroad exceeds S$1 million in a 12-month period and would not be entitled to full input tax credit even if GST-registered.

The consultation papers are available on Iras' website. Iras is accepting submission of responses till March 20, and will provide a summary of responses to the feedback by May 31.

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