Director, Tax Services, Intertrust Singapore
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.
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:
From 1 January 2023, the OVR regime will be extended to cover:
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.
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.
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.