Explains how GST should be charged on electronic commerce transactions of physical goods, and services supplied over the internet including digital services.
- Physical goods supplied over the internet
- Overseas Vendor Registration (OVR) regime on B2C import of low-value goods
- Services supplied over the internet
- Overseas Vendor Registration (OVR) regime on B2C imported digital services and non-digital services
- Belonging status of customers
- Common e-commerce items
- Sale of computer software and maintenance services
- Sale of virtual items in online games
- Advertising services over the internet
- Web-hosting services
- Server co-location services
Generally, the medium through which the transaction occurs does not alter the taxability of the transaction. Hence, the same GST rules apply for supplies of goods and services made in Singapore regardless of whether they are made via the internet or an electronic network (including electronic marketplaces) or through traditional means.
On this page:
Physical goods supplied over the internet
When you sell goods via the internet and deliver the goods locally in Singapore, you should standard-rate your supply and charge GST.
You can zero-rate your supply and charge 0% GST when you export the goods out of Singapore and maintain the necessary export documents. For more information on the types of documents to maintain under different export scenarios, please refer to GST: Guide on Exports (PDF, 717KB).
If the physical delivery of the goods is from a place outside Singapore to another place outside Singapore, it is out of scope for GST purpose (i.e. out-of-scope supply). No GST needs to be charged on the supply.
Example 1: Supply of Goods
You own a local online bookstore, Virtual Bookland. Mr John bought some books via online order from Virual Bookland and requested that the books be delivered to his son in England.
If you maintain the required export evidence, you may zero-rate your supply of books.
Overseas Vendor Registration (OVR) regime on B2C imports of low-value goods
With effect from 1 Jan 2023, the OVR regime will be extended to low-value goods (LVG). A local or an overseas supplier making B2C supplies of LVG to Singapore may be required to register for GST and charge GST on such supplies. B2C stands for business-to-consumer and refers to supplies made to a non-GST registered person.
Low-value goods (LVG) 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.
Hence, from 1 Jan 2023, you are required to charge and account for GST on your supplies of LVG made to non-GST registered customers if you are GST-registered and are:
(i) A supplier with goods located outside Singapore and makes direct sales of LVG to Singapore;
(ii) An electronic marketplace operator who is regarded as the supplier for LVG supplied through your marketplace, on behalf of local and overseas suppliers; or
(iii) A redeliverer who is regarded as the supplier for the LVG supplied by local and overseas suppliers and electronic marketplace operators which you assist your customers to purchase and/or deliver to Singapore.
Services supplied over the internet
You must standard-rate your supply and charge GST when you supply services over the internet to local customers. You can zero-rate your supply and charge 0% GST only if your services qualify as international services under Section 21(3) of the GST Act.
Zero-rating your services
A common provision under which you can zero-rate your services is Section 21(3)(j). Zero-rating will apply for your services if you meet both conditions (a) and (b) below:
Condition (a)
- The services are supplied under a contract with and directly benefit a person who belongs in a country outside Singapore (i.e. an overseas person), who is outside Singapore at the time the services are performed; or
- With effect from 1 Jan 2020, the services are supplied under a contract with an overseas person and directly benefit a GST-registered person in Singapore.
Condition (b)
- The services are not supplied directly in connection with land or goods in Singapore.
Overseas Vendor Registration (OVR) regime on B2C imported digital services and non-digital services
With the implementation of the OVR regime on 1 Jan 2020, an overseas supplier making B2C supplies* of digital services to customers in Singapore may be required to register for GST and charge GST on its supplies.
From 1 Jan 2023, the OVR regime will be extended to include B2C supplies of non-digital services made by overseas suppliers to customers in Singapore. All such imported services, whether digital or non-digital, that can be supplied and received remotely, will be regarded as remote services.
Scope of services subject to GST under the overseas vendor registration (OVR) regime
Scope of services subject to GST under OVR regime from 1 Jan 2020 to 31 Dec 2022
From 1 Jan 2020 to 31 Dec 2022, only digital services fall within the scope of the OVR regime and GST will apply on digital services during this period. Digital services are services which are supplied over the internet or an electronic network and the nature of which renders their supply essentially automated with minimal or no human intervention and impossible without the use of information technology. These include supplies of:
- downloadable digital content (e.g. mobile applications, e-books and movies),
- subscription-based media (e.g. news, magazines, streaming of TV shows and music),
- software programs (e.g. software, drivers and website filters),
- electronic data management services (e.g. website hosting and cloud storage),
- support services performed via electronic means to arrange or facilitate transactions, which may not be digital in nature (e.g. service or booking fee charged to the suppliers or customers).
Scope of services subject to GST under OVR regime from 1 Jan 2023
From 1 Jan 2023, GST will apply on all remote services (i.e. digital services and non-digital services) which can be supplied and received remotely. Remote services refer to any services where, at the time of the performance of the service, there is no necessary connection between the physical location of the recipient and the place of physical performance. This includes supplies of:
- downloadable digital content (e.g. mobile applications, e-books and movies),
- subscription-based media (e.g. news, magazines, streaming of TV shows and music),
- software programs (e.g. software, drivers and website filters),
- electronic data management services (e.g. website hosting and cloud storage),
- support services performed via electronic means to arrange or facilitate transactions, which may not be digital in nature (e.g. service or booking fee charged to the suppliers or customers),
- professional services (e.g. investment advisory, brokerage services, legal, tax and accounting services),
- educational, professional membership and examination services (e.g. distance learning classes, online examinations to obtain professional certification, membership subscription to professional associations),
- personal services (e.g. online counselling, matchmaking and telemedicine services), and
- consultancy and advisory services (e.g. advertising and digital marketing consultancy services, data analysis and research services).
Under certain conditions, an electronic marketplace operator (whether local or overseas) supplying B2C supplies* of remote^ services (i.e., digital and non-digital services) on behalf of overseas suppliers to customers in Singapore may also be regarded as the supplier of the remote services and be required to register for GST and charge GST on the supplies.
An electronic marketplace operator may also make the following elections:
- B2C election for supplies of remote services: An electronic marketplace operator (whether local or overseas) may elect to charge and account GST on all B2C supplies* of remote services made by local suppliers through its marketplace, in addition to those made by overseas suppliers.
- B2B election for supplies of remote services: A local electronic marketplace operator may elect to charge and account GST on B2B supplies# of remote services made by overseas suppliers through the marketplace, in addition to the B2C supplies* of remote services made by the overseas suppliers. This would also cover B2B supplies# of remote services made by local suppliers if the local marketplace operator has made the B2C election in (1) as well.
Where an electronic marketplace operator has made any of the elections, a local supplier supplying remote services over the platform would be treated as making the supply to the electronic marketplace operator instead of the end-customer. The electronic marketplace operator is in turn treated as making another supply of remote services to the end-customer.
To make the elections in (1) and (2), the electronic marketplace operator must seek approval from the Comptroller of GST in writing and agree with its suppliers that it will be accounting for GST on the remote services made through the marketplace.
*B2C stands for business-to-consumer and refers to supplies made to a non-GST registered person.
^For the period 1 Jan 2020 to 31 Dec 2022, the reference to remote services only covers digital services.
#B2B stands for business-to-business and refers to supplies made to a GST-registered person.
For more information on the OVR regime and the elections available to electronic marketplace operators, please refer to our e-Tax Guides GST: Taxing imported services by way of an overseas vendor registration regime (PDF, 453KB), GST: Taxing imported remote services by way of an overseas vendor registration regime (PDF, 420KB) and GST: Guide for e-Commerce (PDF, 341KB).
Belonging Status of Customer
Amongst other conditions, the “belonging status” of your customer is relevant in determining if you can zero-rate your services supplied over the internet under the GST Act, e.g., Section 21(3)(j).
Generally, if your customer has a Singapore address in your database, a Singapore domain name (e.g. [email protected]) or a Singapore IP address, you should treat your customer as belonging in Singapore. In the absence of such information, you should obtain a declaration from your customer on his location / usual place of residence.
For more information on determining where your customer belongs for e-Commerce transactions, please refer to GST: Guide for e-Commerce (PDF, 341KB).
If you are registered under the OVR regime as you are an overseas vendor or an electronic marketplace operator supplying remote services on behalf of suppliers, you are required to determine the belonging status of your customer based on a specified set of proxies. These proxies are set out in the e-Tax Guides GST: Taxing imported services by way of an overseas vendor registration regime (PDF, 453KB) and GST: Taxing imported remote services by way of an overseas vendor registration regime (PDF, 420KB).
Common e-Commerce Items
Sale of Computer Software and Maintenance Services
Standard (Off-the-Shelf) Computer Software
Standard (off-the-shelf) computer software refers to software that is developed and designed to be mass produced for sale to general public. The manner in which the standard computer software is being delivered to your customer determines whether you are making a supply of goods or a supply of digital services.-computer-software-min.jpg?sfvrsn=c6bfe64c_0 "Standard (off-the-shelf) Computer Software-min")
Customised Computer Software
Unlike standard computer software, customised software is developed or modified to meet the specific requirement of your customer. A supply of customised software is treated as a supply of digital services, regardless of whether it is delivered in physical storage media or electronically.
Maintenance of Computer Software
Maintenance of computer software is a supply of services. To determine the GST treatment, you need to consider the original sale of the computer software and assess whether the maintenance service is directly in connection with goods.
If the original sale of computer software is a supply of goods, your provision of software maintenance service may be regarded as directly in connection with goods if it satisfies the 5 indicators for "directly in connection with" in "Clarification on 'Directly in Connection with' and 'Directly Benefit'" (PDF, 384.5KB).
If your provision of software maintenance service qualifies as "directly in connection with" goods
You must standard-rate your maintenance service and charge GST when the software is situated in Singapore.
You may zero-rate your maintenance service under Section 21(3)(f) of the GST Act if you perform physical work on the software situated outside Singapore.
If your provision of software maintenance service does not qualify as "directly in connection with" goods
Your service can be zero-rated under Section 21(3)(j) of the GST Act if the conditions for zero-rating international services are satisfied. Otherwise, you must charge GST on your software maintenance service.
If the original sale of computer software is a supply of service, your provision of software maintenance service is not directly in connection with goods. Your service can be zero-rated under Section 21(3)(j) of the GST Act if the conditions for zero-rating international services are satisfied.
Sale of Virtual Items in Online Games
Online games are games played over an internet or computer network that allow multiple players to interact simultaneously in real time and form social communities within a game environment.
Within the virtual world, players may purchase virtual goods/services (e.g. weapons, clothing and accessories for avatars) and in-game currencies / in-game credits.
When you sell these virtual items, you are transferring the right to use the virtual items to another party.
For GST purposes, you are making a supply of digital services and must charge GST on the sale of virtual items to your customer if:
- You are GST-registered;
- You are selling the virtual items in the course or furtherance of your business; and
- The virtual items are sold for real monies/digital payment tokens or exchanged for real goods or services.
You can zero-rate your supply and charge 0% GST if your services qualify as international services under Section 21(3) of the GST Act. Specifically, you can zero-rate your services under Section 21(3)(j) of the GST Act if the services meet both conditions (a) and (b) below:
Condition (a)
- The services are supplied under a contract with and directly benefit a person who belongs in a country outside Singapore (i.e. an overseas person), who is outside Singapore at the time the services are performed; or
- With effect from 1 Jan 2020, the services are supplied under a contract with an overseas person and directly benefit a GST-registered person in Singapore.
Condition (b)
- The services are not supplied directly in connection with land or goods in Singapore.
Advertising Services Over the Internet
Provision of web-advertising service (e.g. banner ad, sidebar ad and pop-up ad) is a sale of advertising space or time. It is a form of media sales.
Prior to 1 Jan 2022
The entire package of media sales may be zero-rated under Section 21(3)(u) if the advertisement is placed on a webpage or website that allows access to both Singapore and overseas viewers/browsers.
However, if the advertisement is placed on a website or webpage that only allows access to Singapore viewers/browser (i.e. sg domain), the entire package of media sale must be standard-rated.
For more information, please refer to GST: Guide for Advertising Industry.
On or after 1 Jan 2022
The supply of media sales, including web-advertising media space, will be zero-rated under Section 21(3)(j) if the service is contractually supplied to an overseas person and directly benefits an overseas person or a GST-registered person belonging in Singapore.
For more information, please refer to GST: Guide for Advertising Industry.
Web-Hosting services
Web-hosting services involve hosting your client's website on a shared server or dedicated server that belongs to you.
You must charge GST to your customer for the services. However, if the services qualify as international services under Section 21(3) of the GST Act, you may zero-rate your supply of service.
Even though you may be hosting the client's website on your server that is situated in Singapore, you can zero-rate your web-hosting services under Section 21(3)(j) of the GST Act if the services meet both conditions (a) and (b) below:
Condition (a)
- The services are supplied under a contract with and directly benefit a person who belongs in a country outside Singapore (i.e. an overseas person), who is outside Singapore at the time the services are performed; or
- With effect from 1 Jan 2020, the services are supplied under a contract with an overseas person and directly benefit a GST-registered person in Singapore.
Condition (b)
- The services are not supplied directly in connection with land or goods (not referring to your server or equipment that is used as a tool to carry out your services) in Singapore.
For more information, please refer to GST Treatment of Web-Hosting Services and Server Co-location Services (PDF, 703KB).
Server Co-Location Services
Under a co-location arrangement, a server (that does not belong to you) is placed at your facility or data centre and you are providing a physical environment for the operation of the server.
You must charge GST to your customer for the services.
However, you can zero-rate your server co-location services (even though the server is placed in Singapore) under Section 21(3)(s) of the GST Act if:
- The services are supplied under a contract with and directly benefit a person who belongs in a country outside Singapore (an overseas person); and
- The services supplied relate to the co-location in Singapore of computer server equipment belonging to the overseas customer or the overseas person who directly benefits from the services.
With the introduction of reverse charge from 1 Jan 2020, you may also zero-rate your server co-location services supplied to an overseas person that directly benefit local GST-registered persons (e.g. a local related company of the overseas person), where your services relate to server that belong to overseas persons or the local GST-registered persons.
For more information, please refer to GST Treatment of Web-Hosting Services and Server Co-location Services (PDF, 703KB).
FAQs
Can I zero-rate the goods supplied over the Internet which are exported via a postal or courier company?
Yes, provided you have the required documents to support zero-rating. The required documents include parcel posting receipt / courier consignment note and invoice to your overseas customer. For more information, please refer to GST: Guide on Exports (PDF, 717KB).
Do I have to charge GST on the sale of virtual goods and services in return for in-game currencies / in-game credits?
No. You only need to charge GST if the virtual items are sold for real monies/ digital payment tokens or exchanged for real goods and services in the course or furtherance of your business.
Do I have to charge GST if I purchase goods or services using virtual currencies?
From 1 Jan 2020, the use of virtual currencies which qualify as digital payment tokens as payment for the purchase of goods or services is disregarded as a supply for GST purposes. Hence, you are not required to charge and account for output tax when you use your digital payment tokens to exchange for real goods or services.
Prior to 1 Jan 2020, the exchange of virtual currencies (including digital payment tokens) for other goods or services is treated as a barter trade. You must charge GST on the sale of virtual currencies if the virtual currencies are exchanged for goods or services in the course or furtherance of your business.
Do I have to charge GST if I accept virtual currencies for the supply of goods or services made to my customer?
Yes. You must charge GST on the supply of goods or services made to your customer, regardless of whether the payment is made using cash or virtual currencies.