Netflix, Spotify, other foreign digital vendors to charge GST in Singapore next year

Overseas digital services such as Netflix will charge consumers in Singapore goods and services tax (GST) starting January 1, 2020.

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According to a statement from the Inland Revenue Authority of Singapore (IRAS), overseas digital service providers with an annual global turnover of more than S$1 million that sell more than S$100,000 worth of digital services in Singapore within 12 months are required to register for and charge GST.

Over 100 foreign digital service providers have registered for GST, the agency said. Vulcan Post found that Spotify and Airbnb, in addition to Netflix, have registered.

The development comes a year after the Parliament of Singapore passed an amendment to its GST bill, aimed at leveling the playing field in tax treatment for services. Currently, only local services are subject to GST. The Singapore government also said that countries such as Australia, Japan, New Zealand, and South Korea have taken similar measures from as early as 2015.

The IRAS defined digital services subjected to GST as those that are provided over the internet, require little to no human intervention, and impossible without the use of information technology.

Some examples are subscription-based media like news and magazines, video and music streaming, and online gaming. Software programs such as photo editing tools and office suites are also included, as well as electronic data management services such as website hosting and cloud storage services, and downloadable digital content like apps and movies.

The IRAS warned that offenders may be charged penalties of up to three times the amount of tax chargeable and a jail term of up to seven years.