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Come 2020, S'pore Consumers Might Need To Pay GST For Overseas Services Like Netflix And Spotify

On 19 November, a Goods and Services Tax (Amendment) Bill was passed in Parliament, and it looks to affect Singapore consumers of overseas services like popular entertainment platforms Netflix and Spotify, and booking platforms like Airbnb.

Here’s a quick breakdown of the news:

  • The amended Bill will allow the Government to collect GST on overseas services
  • It will take effect from the year 2020
  • It will affect B2C companies like “video streaming, apps, listing fees on electronic marketplaces, software, and online subscription fees”
  • Overseas vendors will only need to pay GST if they have an annual global turnover of over S$1 million and make more than S$100,000 in providing digital services to Singapore
  • On the flipside, local GST-registered businesses would need to collect GST from B2B services (like marketing, IT services etc) that they import

The implementation of the rule looks to bring in around S$90 million of tax revenue each year, and would also “protect local retailers, who currently have to pay the tax, by levelling the playing field with overseas vendors”.

In the last 2 years, a similar tax was also implemented in Australia, the EU, South Korea, Japan, and New Zealand.

So…How Are We Affected?

The important thing to note is that vendors might choose to absorb the GST or choose to pass it on to consumers.

A quick check on the Netflix fees of countries affected by the tax shows that subscribers in New Zealand and Australia experienced an increase in their subscription fees.

On Netflix’s FAQ page on tax, it is stated that “Unless otherwise stated, Netflix charged will include VAT or GST”:

Screenshot from Netflix’s website

The same goes for music streaming platform Spotify:

Screenshot from Spotify’s website

And it’s not just a 7% hike that you might need to brace yourself for.

Earlier this year in February, it was also announced that Singapore’s GST rate is set to rise from its current 7% to 9% “some time between 2021 and 2025”.

So the best guess for now is that you have just over 1 year to enjoy what you’re currently paying for these subscriptions.

 

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