Singapore has implemented the Overseas Vendor Registration (OVR) regime from 1 January 2020. Under the OVR regime, any supplier belonging outside Singapore that has a global turnover exceeding S$1 million and makes supplies of digital services exceeding S$100,000 to non-GST registered customers in Singapore (B2C supplies) is required to register, charge and account for GST.
What are digital services?
- Services supplied over the internet or other electronic network
- Automated with minimal or no human intervention, and impossible without the use of IT
- Examples of digital services:
a. Downloadable digital content (e.g. mobile app, e-book)
b. Subscription-based media (e.g. news, magazines, TV shows, music)
c. Software programmes (e.g. software, drivers, website filters and firewalls)
d. Electronic data management (e.g. website hosting, online data warehouse, cloud storage)
e. Support services, performed via electronic means to arrange or facilitate a transaction (e.g. commission, listing fees, service charges)
An electronic marketplace is a medium that allows the suppliers to make supplies available to customers; and is operated by electronic means.
– Includes marketplaces operated via a website, internet portal, gateway, distribution platform or any type of electronic interface but excludes payment processors or internet service providers.
– Some local or overseas electronic marketplaces, under certain conditions, can be regarded as the supplier of the digital services made by the suppliers through these marketplaces. In such cases, the operators are required to register for GST, instead of the overseas suppliers.
Extension of the OVR regime
With effect from 1 Jan 2023, imported non-digital services and Low-Value Goods (LVG) will also be subject to GST by way of an extension of the OVR regime. With this, all B2C supplies of imported services, whether digital or non-digital, will be brought to tax from 1 Jan 2023, if the services can be supplied and received remotely. (“remote services”)
Under the extended OVR regime, any supplier who belongs outside Singapore that:
i. Has a global turnover exceeding S$1 million; and
ii. makes B2C supplies of remote services (i.e. both digital and non-digital services) and LVG to non-GST registered customers in Singapore exceeding S$100,000 is required to register for GST in Singapore.
Definition of LVG
The Inland Revenue Authority of Singapore (IRAS) defines low-value goods which at the point of sale:
- were not subject to duty or may be subject to duty but were exempt from the duty as per Section 11 of the Customs Act;
- are not exempt from GST;
- are kept outside Singapore and have to be delivered to any part of Singapore via air or post; and
- whose value does not exceed the GST import relief threshold of S$400.
“Point of sale” stands for the time at which an order confirmation is issued by the OVR vendor or any such time as agreed with the Comptroller of GST.
What does it mean for you?
If you are an overseas supplier or electronic marketplaces who provide remote services to non-GST registered customers in Singapore, you may be liable to register for GST by way of the extended OVR regime with effect from 1 Jan 2023.
The IRAS has also sent emails/letters to overseas companies that may potentially be liable for GST registration by way of the extended OVR regime such as overseas headquarter or subsidiaries who provide remote services to non-GST registered related companies in Singapore.
Talk to us if you are unsure or are interested to find out more. We welcome any opportunities to discuss the relevance of OVR to your business and provide our assistance in this aspect to ensure compliance.