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Prepare now for changes to the Overseas Vendor Registration rules in Singapore

21 December 2022

Margaret Lim

Director, Tax Services, Intertrust Singapore

Margaret Lim

Director, Tax Services, Intertrust Singapore

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Regulatory changes to Singapore’s OVR scheme will require many more firms to register for goods and services tax.

The tax burden for overseas companies providing services to individuals or businesses in Singapore will increase from 2023.

This is a consequence of Singapore extending its Overseas Vendor Registration (OVR) regime, meaning that more companies will now need to register for goods and services tax (GST).

As we explained in our article about GST, the rate is also changing, rising from 7% to 8% on 1 January 2023.

Overseas vendors planning to provide services or low-value goods to Singapore individuals need to act now to ensure they comply with the new rules.

What are the important changes to the Singapore OVR scheme?

Since 1 January 2020, many overseas companies providing imported business-to-consumer (B2C) digital services in Singapore from outside the jurisdiction have had to be registered under the OVR regime and collect GST on behalf of the Inland Revenue Authority of Singapore (IRAS).

As the IRAS explained: “Any supplier belonging outside Singapore that has a global turnover exceeding SGD 1m and makes supplies of digital services exceeding SGD 100,000 to non-GST-registered customers in Singapore (B2C supplies) is required to register, charge and account for GST.”

From 1 January 2023, more companies will need to register for GST.

Previously, the rules were as follows:

  • Digital services: For example, downloadable digital content, subscription-based media, software programmes and electronic data management services. GST was imposed on the imports of these digital services under the OVR regime.
  • Non-digital services: For example, live interaction with providers of educational learning, fitness training, counselling and telemedicine. Imported services, which do not fall within the definition of “digital services”, were not subject to GST.
  • Low-value goods: Goods imported via air or post, with a value not exceeding SGD 400, were not subject to GST.

From 1 January 2023, the OVR regime will be extended to cover:

  • Digital services: Those that were taxable under the old regime and which are currently subject to GST will remain taxable.
  • Non-digital services: B2C imported non-digital services.
  • Low-value goods: Goods imported via air or post with a value not exceeding SGD 400.

In other words, from the beginning of next year, any company which provides imported B2C services may have to be registered under the OVR regime, whether the services are digital or non-digital.

This is a significant change. It requires companies to register with the IRAS and pay GST at the prevailing rate. GST will be 8% from 1 January 2023 but will rise to 9% on 1 January 2024.

It’s important for both overseas companies selling goods and services in Singapore and companies running overseas electronics marketplaces, to be aware of these changes. Particularly as it will affect their tax position and costs.

Which companies need to register for GST under the new OVR rules?

The requirement for compulsory GST registration affects companies whose global turnover is more than SGD 1m and makes supplies exceeding SGD 100,00 to non-GST registered customers (including consumers and businesses) in Singapore (B2C) within a calendar year.

You may need to analyse what proportion of your business is B2C and the value of the services provided to consumers in Singapore. It’s important to check your customer base because if you are not selling to consumers and your business is wholly B2B with GST-registered Singapore businesses, then you will not have to register for GST in Singapore.

It can be helpful to get advice from a trusted partner who will be able to explain the details of the scheme, help you scrutinise and evaluate your customer base and ensure that your company is compliant with the new OVR rules.

How Intertrust Group can help in Singapore

As one of the most business-friendly jurisdictions in the world, Singapore provides a combination of factors, including political stability, a trusted legal system, high-quality infrastructure, openness to foreign talent and an attractive tax regime. This makes the country a hub for corporate and financial services activities.

Our highly specialised teams can provide help in every aspect of setting up and running companies, trusts and investment vehicles, with an extensive knowledge of local rules and regulations in the region.

Why Intertrust Group?

  • We provide world-leading, specialised administration services in more than 30 jurisdictions. Intertrust Group has been acquired by CSC, the world’s leading provider of business, legal, tax and digital brand services.
  • Our focus on bespoke corporate services, funds, capital market and private client services enables our clients to invest, grow and thrive anywhere in the world.