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Singapore Issues GST Form Instructions For Reverse Charge Supplies

by Mary Swire, Tax-News.com, Hong Kong

08 August 2019


The Inland Revenue Authority of Singapore (IRAS) has released new guidance for GST-registered persons on the completion of new boxes in the GST F5 return from next year.

The changes are necessary due to the introduction, from January 1, 2020, of a new regime to ensure collection of GST on B2B imported services, under a reverse charge.

The change will affect taxpayers who are either:

  • a GST-registered partially exempt business that is not entitled to full input tax credit; or
  • a GST-registered charity or voluntary welfare organization that receives non-business receipts.

These taxpayers will be required to account for GST on all services that they procure from overseas suppliers as if they were the supplier, except for certain services which are specifically excluded from the scope of reverse charge.

This will impact, for example:

  • banks and other financial institutions;
  • investment-holding companies that derive dividend income;
  • companies that derive substantial interest income from providing inter-company loans;
  • residential or mixed-used property developer; and
  • charity/voluntary welfare organizations that provide free or subsidized services.

These taxpayers will be entitled to claim the corresponding GST as input tax, subject to the normal input tax recovery rules.

Further, a new GST registration obligation is being introduced where a non-GST registered person imports services worth SGP1m (USD726,700) or more during a 12-month period, where the person would not be entitled to full input tax credit even if they were GST registered.

On changes to filing arrangements, IRAS has highlighted that from January 1, 2020, there will be changes made to box 11 to include adjustments made from implementation of reverse charge. Box 11 will cover the following:

  • Bad debt relief claims made. Taxpayers should ensure they satisfy all conditions of the Self-review of Eligibility to Claim Bad Debt Relief (130KB) checklist; and/or
  • Refund claims made for reverse charge transactions where a taxpayer did not make payment to the overseas suppliers within 12 months.

IRAS said taxpayers should ensure that they satisfy all the conditions listed in the e-Tax Guide "GST: Taxing imported services by way of reverse charge" before submitting a refund claim.

A new box 14 is being added to the return. The instructions state that those required to account for GST under the reverse charge regime should indicate "yes" in this box and state the value of imported services that is subject to GST. The same amount should also be included in the total value of standard-rated supplies reported in box 1.

Finally, a new box 15 is being added to the return, for those operating an electronic marketplace to supply digital services subject to GST on behalf of third-party suppliers, to indicate that they are engaged in these activities. The value of such digital services subject to GST should be included in this box, and also included in the value of standard-rated supplies reported in box 1.

TAGS: compliance | VAT tax authority guidance | tax | investment | business | value added tax (VAT) | interest | Singapore | tax authority | services | VAT compliance matters | Tax

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