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IRAS Updates GST Guidance On Impending Media Sales Changes

Wednesday, January 5, 2022

The Inland Revenue Authority of Singapore has released an update to its goods and services tax guide for the advertising industry.

Singapore will amend the GST rules for supplies of media sales from January 1, 2022, as announced in the 2021 Budget.

In Budget 2021, Singapore announced that the basis for determining whether zero-rating applies to a supply of media sales will be changed from the place of circulation of the advertisement to the place where the customer and direct beneficiary of the service belong.

Presently, the GST treatment depends on the place of circulation of the advertisement. The supply is subject to the standard rate if the advert is circulated locally. If circulated overseas, the media sales are subject to the zero rate of VAT. For mixed supplies, if at least 51 percent of the total circulation of the same advertisement is overseas, the service may be zero-rated.

From January 1, 2022, the standard rate of GST will apply where there is a supply of media sales under a contract agreed with a local customer. A zero rate will apply if the service directly benefits either an overseas person or a GST-registered person in Singapore. Otherwise, the service has to be standard-rated.

On December 16, 2021, IRAS made a number of changes to its guidance – GST: Guide for Advertising Industry – which are intended to help taxpayers identify to whom supplies are made, as explained, with examples, in section 3.12. The following improvements to the guidance have been made:

  • IRAS has amended paragraph 3.12.2 to clarify that both conditions set out in the guidance must be satisfied for the contractual client to be regarded as the sole direct beneficiary;
  • IRAS has inserted paragraph 3.12.4 on factors to consider where the two conditions in paragraph 3.12.2 are not satisfied; and
  • The agency has inserted paragraph 3.12.5 to provide examples on identifying direct beneficiary for the supply of media sales.