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Overseas Digital Services Providers Are Subjected to GST Beginning January 2020

GST Payable on Overseas Digital ServicesToday, our lives are enveloped in digital technology as we embrace it to improve our lives. But living with robots among us is not what we truly desire. For now, the technology that we consume merely encompasses our needs and wants. Our need for constant connectivity requires us to possess a mobile phone and data. On the other hand, we also desire for portable convenience. Hence, we are now presented with an array of digital services that we can choose with a few taps. In Singapore, mobile consumers, young and old, are glued to their smartphones. Singaporeans are spoilt for choice with local and overseas digital services. Thus, these foreign digital service providers will be subjected to GST for the overseas digital services. 


Entertainment and Information Source

The little rectangular screen now has become our source of entertainment and information. With the advent of internet connectivity, we can obtain information from around the globe, anytime, anywhere. The same applies to movies, musical or shows. The previous generation had to leave the comfort of their homes to get some entertainment. Entertainment shows back then are explicitly located in commercial developments. With the internet and smart technology, consumers now can enjoy their favourite music playlist or TV series by subscribing to digital service providers. Most of the entertainment content that we consume are from overseas. Hence, it is the overseas digital service providers that are raking in millions from subscribers from around the world. 


Digital Tax

The digital tax is applied to companies that provide digital services to consumers or subscribers. Digital services are content that consumers would need to obtain digitally via mobile apps or specific websites. Among the standard digital services that consumers use or subscribe are: 

  • Subscription-based media such as news, streaming of TV shows or music, and online gaming, 
  • E-books and downloadable digital content,
  • Electronic data management, as well as downloadable software programmes and upgrades. 

It is essential to take note that buying physical goods through online shopping platform, GST is payable for all imported goods into Singapore unless valued less than SGD400.

Most of these digital services providers are globally known brands. There are also local digital service providers that fall in the above services, but the local services providers are already tax accordingly. The overseas digital services tax is subjected to seven per cent GST if their yearly global turnover exceeding S$1 million and sell more than S$100,000 worth of digital services to customers in Singapore in a 12 months period. Currently, more than 100 overseas digital service providers have registered for GST. They are registered under the Singapore’s Overseas Vendor Registration (OVR) regime and will begin charging GST on their sales of digital services starting 1st January 2020.


Level Playing Field

The move for OVRs charging GST to Singapore consumers is to have a level playing field for all digital services providers in Singapore. A level playing field is vital for both consumers and services providers so that competition is healthy and fair. Consumers can also play an essential role in IRAS as overseas digital service providers are required to register for GST. Before purchasing digital services, consumers can check if the service provider is registered in IRAS on the IRAS website

GST Payable on Overseas Digital Services