GST on e-Commerce Transactions in Singapore

by Eddie Lee

Generally, e-commerce is a growing market, with many countries in Asia, including Singapore, accelerating the e-commerce push. This refers to the growing trend of online transactions for the supply of physical goods, digitised goods, and services between two or more contractual parties. Many tax authorities around the world, including the IRAS in Singapore, are keen to tap on this growing source of tax revenue.

Conversely, a supply of services, including those of digital services, supplied over the internet will also attract GST unless it qualifies for zero-rating under section 21(3) of the GST Act.

The following is the GST treatment for some of the common e-commerce transactions.

(a) Physical goods supplied over the internet

(b) Services/digital services supplied over the internet

Digital services, for GST purposes, shall include the supplies of downloadable digital content such as e-books, subscription-based magazines and newspapers, streaming of TV and movies, and online software programs, electronic data management, website hosting, data-sharing and cloud storage services, transactions over e-commerce platforms, etc.

A 7% GST charge is applicable on the value of supply of internet or digital services over the internet to customers who are in Singapore. A 0% GST is applicable if the supply of services over the internet or the digital services can be treated as international services under Section 21(3) of the GST Act.

(c) Overseas Vendor Registration (OVR) regime

From 01 January 2020, individual consumers of music and video streaming services, digital downloads, and online subscriptions purchased from offshore vendors, would have to pay GST on such imported digital services, under the OVR regime. Hence, overseas digital service providers and overseas electronic marketplace operators (such as app stores) will be liable for GST registration in Singapore if their annual global turnover exceeds SGD 1 million and the value of digital services made to non-GST registered customers in Singapore exceeds SGD 100,000.