Singapore to impose tax on digital services from 2020
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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.
Questions & Answers
Q.Which specific types of digital services will be affected by this new tax?
Which specific types of digital services will be affected by this new tax?
The new Goods and Services Tax will apply to digital services such as mobile applications, along with music and show streaming services.
Q.What is the primary reason for Singapore introducing this tax on digital services?
What is the primary reason for Singapore introducing this tax on digital services?
The tax aims to make Singapore's tax system fair and resilient, ensuring local and imported digital services are treated equally for tax purposes.
Q.When will the new tax on digital services come into effect?
When will the new tax on digital services come into effect?
The imposition of Goods and Services Tax on digital services will begin from January 1, 2020.
Q.Will this new tax apply to physical goods purchased online?
Will this new tax apply to physical goods purchased online?
No, the new measure will not affect the online sale of physical goods.