Netflix, Spotify and Amazon are among the foreign overseas services that will be charged Goods and Services Tax (GST) on their sales of digital services to Singapore consumers with effect from 1 January 2020. According to the Inland Revenue Authority of Singapore (IRAS), more than 100 overseas digital service providers have registered for GST under Singaporeâs Overseas Vendor Registration (OVR) regime.
This comes a year afterÂ the Parliament passed aÂ Goods and Services Tax (Amendment) Bill that allows the government to collect GST from overseas services from the year 2020. SeveralÂ netizens raised questions if services such as Netflix, iflix and Spotify would fall under the amended bill.Â When contacted byÂ Marketing then, a Netflix spokesperson said the video streaming platform pays relevant taxes where applicable and look forward to further details.Â MarketingÂ has reached out to Netflix, Spotify, Amazon and others for additional information.
Currently, only locally procured services are subject to GST, while services procured from overseas are not. Announced in the 2018 Budget Statement, the OVR regime is aimed at achieving a level playing field in GST treatment for services, whether procured locally or overseas. The Singapore government said that similar measures have been taken by countries such as Australia, Japan, New Zealand and South Korea from as early as 2015.
Digital services that are subjected to GST are defined as services that are supplied over the internet or an electronic network that require minimal or no human intervention, and are impossible without the use of information technology. These includeÂ downloadable digital content such as mobile apps, e-books and movies, subscription-based media such as news, magazines, streaming of TV shows and music, and online gaming,Â software programs such as photoshop tools, anti-virus software and office suites, electronic data management such as website hosting and cloud storage services.
Under the OVR regime, overseas digital service providers with a yearly global turnover of more than SG$1 million that sell more than SG$100,000 worth of digital services to customers in Singapore in a 12-month period are required to register for GST and charge GST.Â Meanwhile, there will be no changes in the GST treatment for online purchases of goods, as GST remains payable on all goods imported into Singapore, with the exception of goods valued SG$400 and below imported via air or post.
Hence, prices paid by consumers to GST-registered overseas service providers for the purchase of digital services will be inclusive of GST from 1 January 2020.Â As overseas digital service providers use information such as payment and billing information to determine if customers reside in Singapore, businesses and consumers are requested by IRAS to be responsible for providing complete and accurate information to registered overseas digital service providers.
Meanwhile,Â Google Malaysia recently announced that it will be adding on a 6% digital tax charge beginning 1 January 2020. Currently, the tax charge is applicable to its Google G Suite account holders, which includes apps such as Gmail, Docs, Hangouts, Slides, Drive, and Calendar. According to Google, the amount of service tax charged will be reflected as a separate line in âTransactionsâ under âBilling and Paymentsâ. It added that consumersâ invoice will show the amount of service tax charged.