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GST Reverse Charges

Reverse charge brings to tax Business-to-Business (B2B) supplies of imported services.

The reverse charge mechanism requires the GST- registered recipient of the imported services to account for GST on the services as if he were the supplier. At the same time, the GST-registered recipient would be entitled to claim the GST as his input tax subject to the normal input tax recovery rules.

Reverse charge does not apply to all imported services. The following services are excluded from the scope of reverse charge:

i. Services that fall within the description of exempt supplies under the Fourth Schedule to the GST Act;

ii. Services that would qualify for zero-rating under section 21(3) of the GST Act had the services been made by a taxable person belonging in Singapore;

iii. Services that are directly attributable to taxable supplies (note: this does not apply to partially exempt persons who are granted a fixed input tax recovery rate or a special input tax recovery formula to be applied on all input tax claims); and

iv. Services provided by the government of a jurisdiction outside Singapore, if the services fall within the description of non-taxable government supplies under the Schedule to the GST (Non- Taxable Government Supplies) Order of the GST Act.

Currently, you are not required to track your imported services for GST purposes.

If you will be subject to reverse charge, you could modify your accounting system to keep track of your imported services from 1 Jan 2020. Modifying your accounting system to track your imported services will ease your compliance for GST reporting purposes. Imported services which are within the scope of reverse charge should be assigned a different tax code from the imported services which are outside the scope of reverse charge. Where possible, the accounting of output tax and corresponding input tax could be automated too.

More information can be found here.