Singapore to impose tax on digital services from 2020

Singapore’s Finance Minister Heng Swee Keat announced at the country’s Budget 2018 yesterday, Feb 19, that Goods and Services Tax (GST) will be imposed on businesses providing digital services from Jan 1, 2020.

These services include mobile applications, and the streaming of music and shows. It is likely that firms affected by the measure to pass on the extra cost to consumers.

The move is aimed at making tax system in Singapore “fair and resilient” in today’s digital economy, said Heng. “Today, services such as consultancy and marketing purchased from overseas suppliers are not subject to GST. Local consumers also do not pay GST when they download apps and music from overseas. This change will ensure that imported and local services are accorded the same treatment.”

Measure will not apply to online sale of goods

It is reported that according to a statement by the Ministry of Finance, this new measure will not affect online sale of goods.

With regards to online retail, Mr Heng commented that international discussions are ongoing to see how taxes could be applied. There would also be a review before a decision is made.