As anticipated in our recent post tonight’s Budget announced new law in relation to the GST treatment of digital products and other services imported by Australian consumers, based on the OECD guidelines for the taxation of cross-border intangibles. The new law will apply to supplies made on or after 1 July 2017. The closing date for the submission of comments on the draft legislation is 7 July 2015, which does not give affected taxpayers long to consult on the process.
On 9 April 2015, the Australian Treasurer announced that the government will be introducing new GST measures aimed at overseas companies supplying digital services into Australia. The Treasurer stated that “a company providing intangible services into Australia, such as media services or so on, wherever they are located they should charge GST on those services.”
Specific details of the proposed changes are not available yet, however, they are widely anticipated to be announced in the May 2015 Budget (on 12 May 2015).
The final report of the Low Value Parcel Processing Taskforce (“the Taskforce”) was recently released by the Australian authorities.
In a previous report in 2011 the Productivity Commission found that the low value import exemption threshold for GST and duty on imported goods (currently set at AUD 1’000) was not the main factor affecting the international competitiveness of Australian retailers (this is a totally opposite conclusion than the one made by the EU – see here for more info) . The Productivity Commission advised that there could be grounds to reduce the low value import relief threshold, but it is not cost-effective to do so without streamlining the procedure of processing low value parcels.
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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.
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.