Charging GST on e-Commerce Transactions
Updated: Aug 13
Charging GST on e-Commerce Transactions and Overseas Vendor Registration (OVR) Regime
The Inland Revenue Authority of Singapore (IRAS) introduced the Overseas Vendor Registration (OVR) regime in January 2020 to extend the Goods and Services Tax (GST) to overseas suppliers of digital services to customers in Singapore. The OVR regime requires overseas suppliers to register for GST and charge GST on their supplies of digital services to customers in Singapore if they meet certain criteria, such as having a global turnover exceeding S$1 million and making B2C supplies of digital services to customers in Singapore exceeding S$100,000.
From January 2023, the OVR regime will be extended to include overseas suppliers of non-digital services to customers in Singapore. This means that overseas suppliers of services such as online courses, software, and cloud computing will be required to register for GST and charge GST on their supplies to customers in Singapore if they meet the same criteria as overseas suppliers of digital services.
The OVR regime is designed to ensure that all suppliers of digital and non-digital services to customers in Singapore, regardless of their location, are subject to GST. This will help to level the playing field for local businesses and ensure that all consumers pay the same GST on their purchases.
If you are an overseas supplier of digital or non-digital services to customers in Singapore, you should check the IRAS website to see if you are required to register for GST under the OVR regime. If you are required to register, you can do so online through the IRAS e-Services portal.
Once you have registered for GST, you will need to charge GST on your supplies of digital or non-digital services to customers in Singapore. You can do this by adding GST to the price of your services or by issuing a separate GST invoice to your customers.
You are also required to submit GST returns to IRAS on a quarterly basis. You can do this through the IRAS e-Services portal.
If you have any questions about the OVR regime, you can contact the IRAS GST Helpline at 1800-356-8855.
GST Charge on Electronic Commerce Transactions of Physical Goods, and Services Supplied over the Internet including Digital Services
Generally, the medium through which the transaction occurs does not alter the taxability of the transaction. Hence, the same GST rules apply for supplies of goods and services made in Singapore regardless of whether they are made via the internet or an electronic network (including electronic marketplaces) or through traditional means.
Services / Digital Services Supplied over the Internet
Supply can be zero-rated and charged 0% GST only if services qualify as international services under Section 21(3) of the GST Act. This also applies to supplies of digital services.
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.
Digital services include the supplies of the following:
Downloadable digital content (e.g. downloading of mobile applications, e-books and movies);
Subscription-based media (e.g. news, magazines, streaming of TV sows and music, and online gaming);
Software programs (e.g. downloading of software, drivers, website filters and firewalls);
Electronic data management (e.g. website hosting, online data warehousing, file-sharing and cloud storage services); and
Support services, performed via electronic means, to arrange or facilitate a transaction, which may not be digital in nature (e.g. commission, listing fees and service charges by electronic marketplaces).
Zero-Rating Services / Digital Services
Zero-rating will apply for services if they meet both conditions (a) and (b) below:
The services are supplied under a contract with and directly benefit a person who belongs in a country outside Singapore (i.e. an overseas person), who is outside Singapore at the time the services are performed; or
The services are supplied under a contract with an overseas person and directly benefit a GST-registered person in Singapore.
The services are not supplied directly in connection with land or goods in Singapore.
Overseas Vendor Registration (OVR) Regime
An overseas supplier making supplies of digital services to customers in Singapore may be required to register for GST and charge GST on its supplies.
An electronic marketplace operator (whether local or overseas) supplying supplies of digital services on behalf of overseas suppliers to customers in Singapore may also be regarded as the supplier of the digital services and be required to register for GST and charge GST on the supplies.
An electronic marketplace operator (whether local or overseas) may elect to charge and account GST on all supplies of digital services made by local suppliers through its marketplace, in addition to those made by overseas suppliers.
A local electronic marketplace operator may elect to charge and account GST on supplies of digital services made by overseas suppliers through the marketplace.
Where an electronic marketplace operator has made any of the elections, a local supplier supplying digital services over the platform would be treated as making the supply to the electronic marketplace operator instead of the end-customer. The electronic marketplace operator is in turn treated as making another supply of digital services to the end-customer.
To make the elections to charge GST, the electronic marketplace operator has to seek approval from the Comptroller of GST in writing and agree with his suppliers that it will be accounting for GST on the digital services made through the marketplace.
Belonging Status of Customers
Amongst other conditions, the “belonging status” of customer is relevant in determining if digital services can be zero-rated under the GST Act, e.g., Section 21(3)(j).
If an overseas vendor registered under the OVR regime or an electronic marketplace operator supplies digital services on behalf of suppliers, he is required to determine the belonging status of his customer based on a specified set of proxies.
Generally, if customer has a Singapore address in the database, a Singapore domain name (e.g. email@example.com) or a Singapore IP address, the customer should be treated as belonging in Singapore. In the absence of such information, a declaration from the customer on his location / usual place of residence should be obtained.
Common e-Commerce Items
Common e-commerce items include sale of computer software and maintenance services, sale of virtual items in online games, advertising services over the internet, web-hosting services, and server co-location services.
How Bestar can Help
Bestar can help you with charging GST on e-commerce transactions and the Overseas Vendor Registration (OVR) regime in Singapore in the following ways:
Advise on the regulatory requirements. We will advise you on the regulatory requirements for charging GST on e-commerce transactions and the OVR regime in Singapore. This includes the requirements for registering for GST, charging GST, and submitting GST returns.
Assist with the registration process. We will assist you with the registration process for GST, if you are required to register. We will also help you to obtain the necessary documentation and file the necessary paperwork with IRAS.
Provide GST advisory services. We will provide you with GST advisory services, such as helping you to determine whether you are required to register for GST, calculating the GST on your supplies, and preparing GST invoices.
Submit GST returns. We will submit GST returns on your behalf, if you are required to do so. This will save you time and hassle.
Represent you before IRAS. We can represent you before IRAS if you have any queries or disputes regarding GST. This will give you peace of mind knowing that your interests are being represented by a professional.
We have a team of experienced professionals who can help you with charging GST on e-commerce transactions and the OVR regime in Singapore. We understand the regulatory requirements for GST in Singapore and we have a proven track record of helping clients to comply with GST.
If you are looking for help with charging GST on e-commerce transactions and the OVR regime in Singapore, contact us for a consultation. We would be happy to discuss your needs and how we can help you achieve your goals.
Here are some additional benefits of using Bestar to help you with charging GST on e-commerce transactions and the OVR regime in Singapore:
We have a deep understanding of the Singapore GST regime and the OVR regime.
We have a proven track record of helping clients to comply with GST.
We offer a wide range of services to help you with every aspect of charging GST on e-commerce transactions and the OVR regime, from registration to compliance.
We are committed to providing our clients with the highest level of service and support.
If you are looking for a reliable and experienced partner to help you with charging GST on e-commerce transactions and the OVR regime in Singapore, Bestar is the right choice for you.
If you would like to know more, please contact Bestar.