GST treatment of travel arranging services

Even before the World Health Organisation declared that COVID-19 was no longer a global health emergency on 5 May 2023, travellers hit by wanderlust have been engaging in ‘revenge travel’ to make up for lost time. Businesses in the travel industry have plenty to cheer about with the sector’s recovery due to an increased volume of travellers. As industry players gear up to meet the surge in both leisure and corporate travels, it is important to note the updated GST treatment of travel arranging services with effect from 1 Jan 2023.

Here’s what you need to know:

What are travel arranging services?

Services provided to arrange or facilitate the booking and payment of travel products such as:

International transport of passengers and related insurance;
Accommodation; and
Tour packages.

You may charge a fee to customers (e.g. travellers and corporate customers) and/or earn a commission from the travel product suppliers (e.g. airlines and hotels) for the services provided. The services can be provided via the Internet or through non-digital means.

Can I zero-rate the supply of travel arranging services?

From 1 Jan 2023, the basis in determining whether zero-rating applies to a supply of travel arranging services will depend on where the customer and direct beneficiary of the services belong.

The supply of travel arranging services will qualify for zero-rating under section 21(3)(j) if the services are:

contractually supplied to an overseas person; and
directly benefitting an overseas person who is outside Singapore at the time the services are performed or a GST-registered person belonging in Singapore.

You must charge and account for GST on the service fee/commission if any of the above qualifying conditions are not satisfied.

Who is affected by this?

You are affected only if you are arranging or facilitating the booking and payment of the travel products as an agent.

Refer to paragraph 10 of the e-Tax Guide GST: Guide for the Travel Industry to determine if you are making the supplies as a principal or agent.

An overview of the GST treatment of travel arranging services is provided below.

Category of services

GST Treatment

Arranging of international transport of passengers and related insurance:

From Singapore to a place outside Singapore;
From a place outside Singapore to Singapore; or
From a place outside Singapore to another place outside Singapore

E.g. Services to arrange or facilitate the booking/purchase of air tickets and travel insurance

Contract with a local customer

Standard-rate

Contract with an overseas customer

Zero-rate if the service directly benefits an overseas person or a GST-registered person in Singapore.

Otherwise, the service has to be standard-rated.

For information on GST treatment prior to 1 Jan 2023, you may refer to our webpage or e-Tax Guide GST: Guide for the Travel Industry.

Arranging of accommodation

E.g. Services to arrange or facilitate the booking of hotels or similar lodging

Arranging of inbound / outbound tour package

There is no change to the GST treatment of the underlying travel product. The sale of air tickets and related insurance will continue to be zero-rated under section 21(3)(a) of the GST Act. The supply of local accommodation will continue to be standard-rated and overseas accommodation will remain out-of-scope.

Check out our webpage or e-Tax Guide GST: Guide for the Travel Industry for more information.

Common Scenarios

Below are some common scenarios and the applicable GST treatment:

Scenario 1: Facilitation of air ticket booking for a local traveller

ABC Pte Ltd assists an individual who is residing in Singapore (“local traveller”) to book an air ticket to Japan and charges a service fee of $50 for the booking services.

ABC Pte Ltd must charge and account for GST on the service fee as the travel arranging service is supplied to a traveller who belongs in Singapore.

Scenario 2: Facilitation of local hotel accommodation booking for an overseas traveller

ABC Pte Ltd assists a walk-in traveller from Australia to book a hotel accommodation in Singapore and charges a service fee of $20 for the booking services.

ABC Pte Ltd must charge and account for GST on the service fee as the traveller is physically present in Singapore to receive the booking services.

Scenario 3: Facilitation of tour package booking for a local traveller

ABC Pte Ltd assists a local traveller to book a tour package to Japan offered by an overseas tour operator and charges a service fee of $100 for its travel arranging services.

ABC Pte Ltd must charge and account for GST on the service fee as the travel arranging service is supplied to a traveller who belongs in Singapore.

The sale of the tour package will not attract GST as it is sold on behalf of the overseas tour operator and is not ABC Pte Ltd’s supply.

Scenario 4: Management of corporate travel needs under a global service agreement

ABC Pte Ltd signed a global service agreement with an overseas holding company, GHI Co. to manage corporate travel of its subsidiaries in the Southeast Asia region including Singapore. The scope of services includes booking of flights and accommodation for employees who are travelling for business.

In this scenario, the contractual customer is GHI Co. who belongs outside Singapore, and the direct beneficiaries are the subsidiaries since the services are meant for arranging business trips of the subsidiaries’ employees.

ABC Pte Ltd can zero-rate the service fee if the services are performed for an overseas subsidiary or a local GST-registered subsidiary.

ABC Pte Ltd must charge and account for GST on the service fee if the services are performed for a local non-GST registered subsidiary.

Scenario 5: Facilitatation of overseas hotel accommodation booking through an online platform

DEF Pte Ltd operates an online booking platform which allows travellers to search for and book hotel accommodation. Under an agreement with an overseas hotel, it is agreed that DEF Pte Ltd will earn a commission for each successful online booking via the platform.

DEF Pte Ltd can zero-rate the commission received from the hotel as the service is supplied to and directly benefits the hotel which belongs outside Singapore.