Singapore will be imposing the goods and services tax (GST) on imported digital services from 2020, as announced by Finance Minister Heng Swee Keat on Monday (19 February).

The GST, which will also be raised from the current 7% to 9%, will be imposed on business-to-business (B2B) services like marketing, accounting, IT and management, and business-to-consumers (B2C) services like video and music streaming, apps, listing fees on electronic marketplaces, software and online subscription fees.

Presently, the GST is applied on imported services provided by an overseas supplier that has an establishment in Singapore, but not if the provider is not established here.

The Ministry of Finance (MOF) explained that this move is to ensure that imported and local services are ‘accorded the same treatment’ as the advent of technology and the digital economy has seen an increase of services consumed in Singapore being obtained from overseas suppliers that do not have a presence here.

The GST will most likely be placed on the likes of Netflix, Spotify, Google and Apple, which provides B2C video and music streaming services. Meanwhile, B2B imported services will be taxed with a reverse charge mechanism, which will see GST reporting obligation falling on the part of the recipient of the services.

This only applies to businesses which provide exempt supplies and includes the provision of financial services, the sale and lease of residential properties and the import and local supply of investment precious metals.