This webpage explains how the implementation of reverse charge and the overseas vendor registration regimes affect you as a local business.
On this page:
Overview
As GST is a tax on local consumption in Singapore, it should apply to all goods and services consumed in the country, whether the services are obtained from local or overseas suppliers, or whether the goods are purchased locally or imported from overseas. To level the GST treatment of all services and goods consumed in Singapore, two regimes were implemented in 2020 with the scope extended in 2023:
- Reverse Charge for Business-to-Business1 (“B2B”) Imports:
- Overseas Vendor Registration for Business-to-Consumer2 (“B2C”) Supplies:
GST- registered businesses belonging in Singapore which are not entitled to full input tax claims must account for GST, as if they were the supplier, on imported services and low-value goods.
GST-registered overseas vendors must account for GST on B2C supplies of remote services and low-value goods made to customers in Singapore.
With the implementation of GST on low-value goods, local suppliers (including electronic marketplace operators and redeliverers) are also required to account for GST on B2C supplies of low-value goods. Local electronic marketplace operators may also need to account for GST on remote services supplied by overseas suppliers through their platforms.
1 B2B imports refer to supplies made to GST-registered persons, including companies, partnerships and sole-proprietors.
2 B2C supplies refer to supplies made to non-GST registered persons, including individuals and businesses that are not registered for GST.
Reverse Charge for B2B imports
Under the reverse charge mechanism, the GST-registered recipient of the imported services or low-value goods, accounts for GST on those services or goods as if he were the supplier. Concurrently, he may claim the GST as his input tax subject to the normal input tax recovery rules.
If you are a GST-registered business
If you are not entitled to full input tax credit as you make exempt supplies or receive non-business receipts (e.g. you receive donations as you are a charitable organisation), you must account for GST on the following:
- from 1 Jan 2020, on all services procured from overseas suppliers (“imported services”), except for services specifically excluded from the scope of reverse charge;
- from 1 Jan 2023, on low-value goods purchased, whether such goods are purchased from local/overseas suppliers, electronic marketplace operators or redeliverers and regardless of whether these entities are GST-registered or not. This is in addition to accounting for GST on imported services.
You can claim the GST accounted for as your input tax, subject to the normal input tax recovery rules.
If you are a non-GST registered business
Where you would not be entitled to full input tax credit even if you were GST-registered, you should consider the annual value of your imported services and low-value goods to determine whether you are liable for GST-registration. You are required to register for GST if:
- your taxable turnover; and/or
- the total value of your imported services and low-value goods
exceeds S$1 million over a 12-month period.
Once registered for GST, you must account for GST on your taxable supplies, imported services and low-value goods which are subject to reverse charge.
For more information, please refer to the e-Tax Guide GST: Reverse Charge (PDF, 1202KB).
Supplying Low-Value Goods
Prior to 1 Jan 2023, sales of goods while the goods were warehoused overseas were not subject to GST as the goods were located outside Singapore at the time of supply and therefore, the sales were regarded as out-of-scope supplies.
From 1 Jan 2023, with the extension of the overseas vendor registration (“OVR”) regime to B2C supplies of low-value goods, sales of low-value goods by local suppliers to customers who are not GST-registered in Singapore will fall within the scope of GST. Non-GST registered persons include individuals and businesses that are not registered for GST.
Hence, local businesses that are liable for GST registration or are already GST-registered will be required to account for GST on the sale of such goods.
Low-value goods are goods which at the point of sale:
- are not dutiable goods, or are dutiable goods, but payment of the customs duty or excise duty chargeable on the goods is waived under section 11 of the Customs Act;
- are not exempt from GST;
- are located outside Singapore and are to be delivered to Singapore via air or post; and
- have a value not exceeding the GST import relief threshold of S$400.
If you are a local supplier with low-value goods outside Singapore
If you are a GST-registered local supplier, you must charge and account for GST on your direct sales3 of low-value goods to customers who are not GST-registered in Singapore.
If you are a non-GST registered local supplier who makes such direct sales of low-value goods, you must include such supplies in your taxable turnover in determining your GST registration liability. The domestic registration threshold, i.e. the annual taxable turnover of $1 million, will apply to you.
3 Direct sales refer to goods that are supplied directly by local and overseas suppliers to customers who are not GST-registered in Singapore (e.g., through the supplier’s own website), instead of supplying the goods through an electronic marketplace or redeliverer.
If you are a local electronic marketplace operator
Under certain conditions, if you are an operator of an electronic marketplace, you may be regarded as the supplier of the following B2C supplies of:
- low-value goods supplied by local and overseas suppliers through your marketplace.
- remote services4 supplied by overseas suppliers through your marketplace.
If you are GST-registered, you must charge and account for GST on such B2C supplies made through your marketplace to customers in Singapore. This is in addition to your own supplies made directly to customers in Singapore. If you are not GST-registered, you must include the value of these supplies to determine your GST registration liability.
4 Remote services are generally services where the recipient of the services need not be at the location where the services are physically performed in order to enjoy/consume the services.
If you are a local redeliverer
Under certain conditions, if you are a redeliverer5, you may be regarded as the supplier of low-value goods if you assist to purchase and/deliver them to a customer in Singapore.
If you are GST-registered, you must charge and account for GST on the B2C supplies of low-value goods made to customers in Singapore, in addition to your own taxable supplies (e.g. delivery services). If you are not GST-registered, you must include the value of these supplies to determine your GST registration liability.
For more information on the supplies of low-value goods that you make whether as a direct seller, an electronic marketplace operator or a redeliverer, please refer to the e-Tax Guide GST: Taxing imported low-value goods by way of the overseas vendor registration regime (PDF, 487KB).
For more information on the supplies of remote services that you make as an electronic marketplace operator, please refer to the e-Tax Guide GST: Taxing imported services by way of an overseas vendor registration regime (PDF, 903KB).
5 A redeliverer is a person who arranges with the customer to:
i. deliver or facilitate the delivery of goods to Singapore; and
ii. provide or facilitate the use of an address outside of Singapore for delivery of the goods; or
iii. purchase or facilitate the purchase of the goods.
Other information on low-value goods
If you are a transporter or declaring agent for low-value goods imported into Singapore
If you are a transporter assisting your client to transport low-value goods into Singapore or a declaring agent assisting your client to take up permits for imports of low-value goods, you will need to take note of the revised import procedures and permit requirements from 1 Jan 2023. For more details, please refer to the slide and the FAQ for transporters.
Please refer to the following video for more information on how the OVR regime affect local vendors, including local electronic marketplace operators/redeliverers who are regarded as the suppliers of the remote services/low value goods made by suppliers through their marketplace:
Purchasing remote services or low-value goods from GST-Registered Overseas Vendors
Under the OVR regime, only B2C supplies of remote services and low-value goods are subject to GST. A GST-registered overseas vendor will thus have to determine if a customer is GST-registered to charge GST correctly.
If you are a GST-registered business purchasing remote services or low-value goods from a GST-registered overseas vendor, you need to provide your GST registration number to the vendor so that the vendor will not charge you GST on your business purchases. If you are not entitled to full input tax credit as you make exempt supplies or receive non-business receipts, you are required to account for GST on the imported remote services or low-value goods by way of reverse charge instead.
To check whether your overseas vendor is registered for GST, you can use the GST-registered Business Search.
FAQs
A. Mechanics of Overseas Vendor Registration
Who will be impacted by the changes?
If you are a consumer of remote services or low-value goods, please refer to Purchasing Remote Services from Overseas Service Providers and Purchasing Imported Low-Value Goods for more information.
B. Overseas Vendor Registration for Businesses
How does the change affect e-Commerce businesses?
It levels the playing field between local and overseas suppliers by requiring overseas suppliers and electronic marketplace operators/redeliverers to register for GST if they make substantial supplies of remote services and low-value goods to customers in Singapore.
I am a local business providing platform services to local and overseas vendors. Am I impacted by overseas vendor registration?
If you are an operator of an electronic marketplace and you fulfil the conditions to be regarded as the supplier for remote services and low-value goods made to customers in Singapore through your marketplace, you are required to add the value of such supplies and your own taxable supplies to determine your GST registration liability. If you are liable for GST registration or are already GST-registered, you have to account for GST on your taxable supplies , remote services made by overseas suppliers as well as low-value goods made by local or overseas suppliers through your marketplace to non-GST registered customers in Singapore.
[Note: As you belong in Singapore, the domestic registration threshold i.e. annual taxable turnover of $1 million, will apply to you.]
Would the current import GST relief for post and air be removed from 1 Jan 2023?
No. The current import GST relief for goods imported by post or air (excluding intoxicating liquors and tobacco) with a total Cost, Insurance and Freight (CIF) value not exceeding S$400 will remain.
C. Overseas Vendor Registration for Consumers
Do I need to pay GST on all services and goods I purchase from overseas suppliers and/or through overseas platforms?
What about services purchased online from local suppliers?
Normal GST rules will continue to apply. Supplies of services are generally subject to GST, unless they are exempt or qualify for zero-rating as international services.
Will all overseas suppliers of services be registered for GST under overseas vendor registration?
Only overseas suppliers and electronic marketplace operators that make supplies of remote services and/or low-value goods exceeding the registration threshold are required to register for GST. Businesses that are not liable may also apply for voluntary GST registration, subject to conditions imposed by the Comptroller.
Do I need to provide GST registration number when I make online purchase of services?
If you are making a purchase for your GST-registered business, you are required to furnish your GST registration number to the overseas vendor. If you fail to do so and are incorrectly charged with GST, you should contact the overseas vendor to obtain a refund, instead of claiming input tax on the purchase. If applicable, you should apply reverse charge on the purchase.
However, if you are making the purchase in a private capacity, you should not provide incorrect or false information to the overseas vendor. It is a serious offence for a non-GST registered customer to misrepresent himself as a GST-registered person or as a customer belonging outside Singapore for the purpose of avoiding GST. Upon conviction, offenders may face heavy penalties.
How do I provide my GST registration number to the overseas vendor?
GST-registered overseas service providers have different ways of verifying the registration status of their customers, including but not limited to:
- contacting existing customers in Singapore to check if they are registered for GST and request for their GST registration number
- requesting for the GST registration number when customer registers an account/profile on their platform (for subscription-based services)
- requesting for the GST registration number at the point of check-out (for discrete one-off purchases)
Please check with your overseas service provider if you need clarifications on how to provide your GST registration number so that GST will not be charged.