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GST treatment of travel products

Supply of services/goodsGST Treatment

Supply of international transport of passengers: 

  • 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. Sale of air tickets, ferry tickets and coach tickets to neighbouring countries.

Zero-rate under section 21(3)(a)

Supply of travel insurance for international transport of passengers

Zero-rate under section 21(3)(c)

Supply of travel accommodation

 

Depends on the location of property

Standard-rate if the property is located in Singapore

Outside the scope of GST if the property is located outside Singapore

Supply of outbound tour package

Zero-rate under section 21(3)(i)

Supply of inbound tour package

Standard-rate

GST treatment of travel arranging services

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.

Such services can be provided via the Internet or through non-digital means (e.g. walk-in or over the phone).

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 table below summarises the GST treatment for travel arranging services.

There is no change in the GST treatment of the supply of the underlying travel product.

The revised GST treatment will apply to supplies of arranging services made in the capacity of an agent on or after 1 Jan 2023. Please refer to the GST: Guide for the Travel Industry (Second Edition) (PDF, 316KB) for more information. 

Supply of servicesGST 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, travel insurance

Prior to 1 Jan 2023

Zero-rate under section 21(3)(c)

On/after 1 Jan 2023

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.

 

Arranging of accommodation

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

Prior to 1 Jan 2023

Depends on the location of property.

Standard-rate if the property is located in Singapore.

Zero-rate under section 21(3)(e) if the property is located outside Singapore.

On/after 1 Jan 2023

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.

 

Arranging of inbound/outbound tour package

Prior to 1 Jan 2023

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.

On/after 1 Jan 2023

No change


Cancellation fees imposed for inbound and outbound tour packages

Cancellation fees serve as a deterrent or compensation, often imposed to prevent booking cancellations or cover losses suffered by the travel agency. In such situations, GST is not chargeable on the cancellation fees as there are no goods or services provided in return to the customers.


However, GST is chargeable if any fees are imposed for administrative services provided to assist customers in cancelling their bookings or effecting the cancellation. This is notwithstanding that the travel agency may have collected such fees as part of the cancellation fee from the customers. For administrative services provided to an overseas person, the fees may qualify for zero-rating under section 21(3)(j) of the GST Act if all the qualifying conditions are satisfied.

FAQs

I assist a local traveller to book a flight from Singapore to London. In addition to the airfare of $1,200 charged by the airline, I charge a service fee of $20 for my arranging services. Do I need to charge GST on the service fee?

Prior to 1 Jan 2023, you can zero-rate the service fee under section 21(3)(c) of the GST Act. However, with effect from 1 Jan 2023, you will have to charge GST on the service fee as your arranging services are supplied to and directly benefitting a traveller who belongs in Singapore.

I assist a local traveller to book a tour package to Germany offered by an overseas tour operator. The price of the tour package quoted by the overseas tour operator is $4,500. I charge a service fee of $200 to the traveller for my services in arranging for the tour package.

As you are merely facilitating the booking of an outbound travel package, the service fee of $200 charged to the traveller represents fees earned for providing arranging services to him/her. As your arranging services are contractually supplied to and directly benefiting the traveller who belongs in Singapore, you will have to charge GST on the service fee. 

I assist a local traveller to book a tour package to Germany offered by an overseas tour operator. The price of the tour package quoted by the overseas tour operator is $4,500. I received a commission of $500 from the overseas tour operator for my services in arranging for the tour package.

In this case, the commission of $500 received from the overseas tour operator represents fees earned for facilitating the booking of an outbound travel package. As your arranging services are contractually supplied to and directly benefiting the overseas tour operator, you can zero-rate the commission income.

I provide a regional tour package (covering Singapore, Malaysia and Thailand) to overseas customers. Do I need to charge GST on the tour package?

GST is chargeable on the portion of the tour package covering Singapore as the travellers are physically present in Singapore to enjoy this part of the tour package, hence this part of the package is consumed locally. The portion of the tour package that is wholly consumed overseas (i.e. in Malaysia and Thailand) may be zero-rated.

For example, the price of your regional tour package is $1,000. It includes $300 for the tour in Singapore and $700 for the tour in Malaysia and Thailand. In this case, GST is chargeable on $300 only.

I collected a non-refundable deposit for a booking of tour package. The deposit will be used as part payment for the tour package. Is GST chargeable when a deposit is received?

Where a deposit forms partial payment for inbound tour package, GST has to be charged on the amount of deposit and accounted for in the accounting period in which the deposit is received. Where the deposit forms partial payment for outbound tour package, the deposit received may be zero-rated.

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