Ecommerce in Asia is booming. China alone is forecast to grow to an over US $350 billion industry by 2016. While some markets may already be considered mature (Australia, for example), the growth of internet connectivity and consumer purchasing power cannot be ignored by either small-to-medium enterprises or multi-national corporations looking to reach new consumers.
Ultimately, e-commerce is likely to continue growing because it can more easily provide a wide variety of products at lower prices and greater flexibility to customers, which in turn leads to an enhanced shopping experience.
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To provide clarity on the Goods and Services Tax (“GST”) treatment for e-commerce transactions, the Inland Revenue Authority of Singapore (“IRAS”) has issued a new e-tax guide: “GST: Guide for e-Commerce”.
The e-tax guide clarifies that the medium through which a transaction occurs does not alter the taxability of the transaction. In other words, a supply of goods or services made via the Internet or other electronic media is no different from that made via traditional methods. As such, a GST-registered business is required to charge and account for GST on such transactions, as applicable. The e-tax guide also provides guidance on the GST treatment for the supply of physical goods, digitised goods and services made via the Internet and other electronic media.
What does this mean for you?
If you do business in Singapore and also have a GST registration, you should be aware that GST should be applied to all goods that are ordered or delivered on-line.