GST treatment of media sales in Singapore: changes from January 2022

The Inland Revenue Authority of Singapore (IRAS) has outlined the basis for which the supply of media sales will be subject to a zero percent Goods and Services Tax (Zero-Rated GST). The change takes effect on January 1, 2022.

GST, also known as Value Added Tax (VAT), is a consumption tax imposed on goods and services in Singapore, whether acquired from domestic or foreign suppliers. The current GST rate is seven percent, although it is expected to increase in 2022 and reach nine percent by 2025.

Currently, the supply of media space for online advertising by a taxable person is a GST-free supply if the advertisement is widely distributed (at least 51%) outside Canada. Under the amendments, if the contract customer is located outside of Singapore or is a GST registrant in Singapore, media sales will be zero-rated.

Like most digital sectors, online advertising has seen immense growth during the pandemic and, coupled with new technological developments, it has become increasingly difficult for taxpayers to determine whether these media supplies are eligible for zero-rated GST. .

The newly revised e-Tax Guide, released on June 11, 2021, provides detailed details on the various GST treatments for sub-sectors of Singapore’s advertising industries.

What are media sales in Singapore?

According to IRAS, media sales refer to:

• The sale of advertising airtime for broadcasting by radio or television;
• The sale of media space for online advertising; and
• The sale of advertising space for printed matter such as billboards, newspapers and magazines.

Sourcing media sales from local vendors

As previously stated, effective January 1, 2022, the supply of media sales will be zero-rated if it directly benefits a person overseas or a GST registrant in Singapore.

For the provision of media sales, the controller – the person responsible for the quality of financial reporting in an organization – will consider the contract client as the sole beneficiary of the services if the following criteria are met:

• The service agreement between the media provider and its contractual customer does not require that the services be provided to any other party; and
• The supplier only accepts instructions from the contract customer for the service.

The supply of media sales from foreign suppliers to GST registered businesses in Singapore

From 1 January 2022, if an overseas supplier makes a supply of media sales to a GST-registered person/company in Singapore, the recipient, if it is a reverse charge (RC) company, must apply RC and account for GST on the value of their imported services as if they were the supplier; regardless of where the ads are shown.

RC businesses refer to those that are subject to reverse charge where they are not entitled to a full input tax credit or belong to a GST group that is not entitled to a full input tax credit .

Previously, the supply of media sales from an overseas supplier to a GST registrant did not fall within the scope of RC if the advertisements were widely distributed outside of Singapore.

The Supply of Digital Media Sales by Foreign Suppliers to Non-GST Registrants in Singapore

From 1 January 2022, the supply of digital media sales by an overseas vendor to a non-GST registered person in Singapore will be subject to GST, under the Overseas Sellers Registration Scheme (OVR ).

The OVR regime was released in January 2020 and requires foreign digital service providers to register and pay GST. Companies must have an annual global turnover of more than S$1 million (US$731,000) and sell more than S$100,000 (US$73,000) worth of digital services to customers in Singapore, within 12 month.

Currently, the overseas provider can only charge GST if the advertisements are widely distributed in Singapore.

The OVR scheme aims to create a “level playing field” by protecting local retailers, especially as Singapore imports billions of dollars worth of digital imports each year.