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Last year, a Bill was passed which will introduce Goods and Services Tax (GST) to overseas digital services starting 1 January 2020.

This is mandatory for overseas vendors who have an annual global turnover of over S$1 million, and make more than S$100,000 in providing digital services to Singapore yearly.

The new law intends to “achieve a level playing field in GST treatment for services, whether procured locally or overseas”.

It also expects to bring in around S$90 million of tax revenue for Singapore each year.

What Services Will We Pay GST For?

According to the Inland Revenue Authority of Singapore (IRAS), more than 100 overseas digital service providers have already registered for GST as of 9 December, and will start charging GST to Singapore consumers from 1 January.

Through a check on IRAS’ portal, we found that Netflix, Spotify and Airbnb are among the providers who have been registered.

Screenshots from IRAS GST Registered Business Search portal

Besides these popular services, you may also be paying GST when you consume other subscription-based digital services such as online magazines and online gaming.

Digital services also extend to downloadable digital content like e-books and movies, software programs like office suites and creative editing tools, and data management services like web hosting and cloud storage.

To check whether an overseas provider is GST-registered in Singapore, you can look up the business’ name on IRAS’ portal here.

How Will Prices Change?

Generally speaking, overseas vendors that are GST-registered must make their prices inclusive of 7% GST from next year onward.

However, it’s up to each vendor to decide if they’ll absorb the GST and keep their existing pricing, or increase their prices accordingly.

It’s important to note that when this rule starts, some providers may only be able to display the GST-inclusive prices after verifying that you reside in Singapore.

In other words, don’t be surprised if the prices displayed for some digital services are not final until you have entered your location.

Only GST-registered providers are authorised to charge and collect GST from consumers in Singapore.

If you encounter wrongful charges from unregistered overseas providers, you should alert IRAS.

Featured Image Credit: Vulcan Post

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© 2021 GRVTY Media Pte. Ltd.
(UEN 201431998C.)

Vulcan Post aims to be the knowledge hub of Singapore and Malaysia.

© 2021 GRVTY Media Pte. Ltd.
(UEN 201431998C.)