Must You Charge GST If You Are Doing E-Commerce Business Online Exceeding S$1m Annually?
This is the common enquiry I received lately.
The common e-Commerce items, according to IRAS, are :
1. Sale of physical or digitized goods via Internet ( eg CDs, Music )
2. Sale of standard computer software
3. Sale of customized computer software
4. Maintenance of computer
As a general rule of thumb, the usual 3 tests whether to charge GST are :
1. You need to charge GST on goods that you supply locally.
2. For goods that are exported, you may zero-rate the supply if you maintain the required documents.
3. If the physical delivery of the goods is from a place outside Singapore to another place outside Singapore, it is outside the scope of our GST law (i.e. Out-of-scope supply. No GST needs to be charged on the supply.
However, please take note on Zero-Rating International Services ( test #4 )
You are required to charge GST to your customer for the services for International Services.
Where the services qualify as international services under Section 21(3) of the GST Act, you may zero-rate your supply of service.
International Services according to S21(3) of the GST Act refer to :
1. Advertising services
2. Co-location services for computer server equipment
3. International Transport for goods and passengers
4. Lease of Hire of Transport
5. Services performed completely overseas
6. Services pertaining to goods for export or goods moving outside Singapore
7. Services pertaining to Land / Building located overseas
8. Services supplied to overseas person
9. Supplies related to Ships or Aircrafts
10. Services related to Electronic System
11. Services performed on goods stores in a warehouse under Specialized Warehouse Scheme
12. Supplies related to Air and Sea Containers
13. Telecommunication Services
14. Trust Services
If you are still unclear, a supply that meets the following conditions will qualify as international services under Section 21(3)(j):
1. it is supplied under a contract with a person who belongs in a country outside Singapore;
2. it directly benefits a person who belongs in a country outside Singapore and who is outside Singapore at the time the services are performed; and
3. it is not supplied directly in connection with land or goods in Singapore.
Belonging Status of your Customers
To determine whether the customer belongs in a country outside Singapore, the business address, domain name, and IP address can be used as indicators.
Hope above clarifies.
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