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Singapore Updates Guidance On 2020 GST Reverse Charge Change

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

30 August 2019


The Inland Revenue Authority of Singapore has updated its guidance on the introduction from January 1, 2020, of an obligation on Singaporean taxpayers to collect GST on imported services under a reverse charge.

From January 1, 2020, goods and services tax (GST) will be applied on imported services in the context of business-to-business transactions. The IRAS guide sets out the features of the reverse charge mechanism and the related registration and compliance rules. Both the guidance document on the changes, and accompanying FAQs have been updated in various places.

The guide explains that, under the reverse charge mechanism, when a person who belongs outside Singapore and makes a business-to-business supply of services to a GST-registered person who belongs in Singapore, the GST-registered recipient would be required to account for GST on the value of the imported services as if they were the supplier, to the extent that the imported services fall within the scope of the reverse charge. The recipient would be allowed to claim the corresponding GST as their input tax, subject to the normal input tax recovery rules.

A non-GST-registered recipient of supplies of imported services may become liable for GST registration by virtue of the reverse charge rules. Once registered, they would be required to apply the reverse charge and account for GST on the imported services.

The guide is applicable to GST-registered persons who procure services from overseas suppliers and are either not entitled to full input tax credit or belong to GST groups that are not entitled to full input tax credit. It is also applicable to non-GST registered persons who procure services from overseas suppliers exceeding SGD1m (USD721,217) in a 12-month period and would not be entitled to full input tax credit even if GST-registered.

TAGS: compliance | VAT tax authority guidance | tax | business | revenue guidance | VAT legislation | goods and services tax (GST) | Singapore | tax authority | legislation | services | VAT compliance matters | BEPS

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