What is Overseas vendor registration regime?

With effect from 1 January 2020, GST will be applied to cross-border Business-to-Customer (B2C) supplies (such as supplies made to individuals and businesses that are not registered for GST in Singapore) of imported digital services through the overseas vendor registration (OVR) regime. This is to level the playing field in GST treatment for both local and overseas services.

According to the Inland Revenue Authority of Singapore (IRAS) guidelines, ‘digital services’ are services supplied over the internet or an electronic network, where the supply is automated and involves minimal or no human intervention, and is impossible without the use of information technology. These include the supplies of digital products, subscription-based and licensed content as well as support services to arrange or facilitate, via electronic means, the provision of transactions that may not be digital in nature.

Under the OVR regime, any supplier belonging outside Singapore that has a global turnover exceeding S$1million and makes B2C supplies of digital services to customers in Singapore exceeding S$100,000 is required to register, charge and account for GST under a simplified pay-only regime on a quarterly basis.

Under certain conditions, a local or overseas electronic marketplaces operator may be regarded as the supplier of the services made by the suppliers through these marketplaces, and hence, they are required to register, charge and account for GST on these supplies, instead of the suppliers.

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Compulsory GST registration on imported services

An overseas supplier, local or overseas electronic marketplace operator[1] will be liable for GST registration within 30 days at the end of the relevant calendar year or making the forecast, under either the retrospective or prospective basis, if the following conditions are met:

• Retrospective basis:
  Where the global turnover[2] and value of digital services made to non-GST registered customers in Singapore exceed S$1 million and S$100,000 respectively at the end of any calendar year (that is, 1 January to 31 December).However, if the global turnover or value of digital services made to customers in Singapore in the next calendar year does not exceed S$1 million and S$100,000 respectively, and this can be substantiated by documentation, there is no liability for GST registration.
• Prospective basis:
  Where the value of global turnover and supplies of digital services to non-GST registered customers in Singapore is expected to exceed S$1 million and S$100,000 respectively for the next 12 months.

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How to Assess your GST registration liability?

Businesses making sales of digital services to Singapore customers should first assess if the services fall within the scope of digital services under the OVR rules. Thereafter, review the customer base to ascertain the total value of digital supplies made to Singapore customers, and check if the customers are GST registered by requesting the GST registration number. To verify that the customers are indeed registered for GST in Singapore, a check may be done via the “Register of GST-registered Businesses” on the IRAS website.

IRAS has sent letters to overseas companies who may potentially be liable for GST registration under to OVR regime to submit the application. Our team of tax professionals can help to assess if the OVR rules would apply and advise on the appropriate course of action. Reach out to us to find out more!

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Do’s and Don’ts When buying from overseas digital service provider in Singapore
Do not provide incorrect or false information to overseas digital service provider	If unsure whether you need to pay GST when buying from an overseas digital service provider, check with the IRAS Alert IRAS if you encounter any wrong full collection of GST by unregistered overseas digital services provider

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Notes:
[1] Most electronic marketplaces would be regarded as supplier, unless platform purely provides listing services.
[2] Refers to all supplies made that would be taxable supplies if made in Singapore.

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