It appears to be that not enough of us were displeased about the plan to implement Goods and Services Tax (GST) on online services when the Ministry of Finance called for feedback. In Parliament yesterday, the amendment to the GST Tax Bill passed, ensuring that we’ll have to pay extra for digital goods come Jan 1, 2020.
The amendment will allow the government to collect GST on overseas services by imposing a registration regime on business-to-consumer services. The registration will be mandatory for vendors that make sales of digital services of at least $100,000 to consumers in Singapore and have a global annual turnover of $1 million or more.
“These GST-registered overseas vendors will then charge and collect GST on their sale of digital services to consumers in Singapore, and pay the GST they collect to the Inland Revenue Authority of Singapore,” said Second Minister for Finance Lawrence Wong in Parliament yesterday.
He pinpointed video and music streaming services, mobile applications and software — effectively meaning that we will be paying more for things such as video games on Steam, apps from iTunes and Google Play stores, as well as subscriptions to Amazon Prime Video, Netflix and Spotify.
Interestingly enough, Netflix is exploring a mobile-only subscription plan in Asian markets that could cut membership costs by about 50 percent, according to Malaysia’s The Star.
According to Wong, the new taxes are expected to rake in $90 million of tax revenue each year and will help level the playing field between local retailers and overseas vendors.
In response to concerns about implementing the taxes on lower income groups, the minister stated that the government has the GST voucher scheme in place to help such households offset the GST burden, but didn’t elaborate further.
Associate Professor of Accounting Simon Poh from the National University of Singapore Business School forecasts that we might have to foot between 7 to 9 percent GST if the changes take place, according to a TODAY report.
