Tax

GST reverse charge Jan 2020 –

what businesses need to know

What this means for businesses Who will be affected by RC?

The reverse charge (“RC”) is one of the mechanisms frequently
used to “level the playing field” in the GST treatment of services
supplied by domestic and overseas suppliers. The Inland
Revenue Authority of Singapore (“IRAS”) recently released their
revised guidance in advance of the regime go-live date of 1
January 2020.
Without the RC, when a supplier that belongs outside Singapore
makes a supply of services to a GST-registered business in
Singapore (“B2B”), the supply would not be subject to GST, while
the same supply of services provided by a domestic supplier
would be subject to GST, thus creating an unlevel playing field
in favour of oversea suppliers.
From 1 January 2020, the GST-registered recipient would
be liable to account for GST (“output tax”) on the value of
the imported services (with some exceptions) from overseas
suppliers. At the same time, the GST-registered recipient would
be entitled to claim the self-accounted output tax as input tax,
subject to the usual partial exemption recovery rules.
The RC will largely affect two types of businesses in Singapore
(irrelevant of their legal structure):
• GST-registered businesses who procure services from overseas
suppliers and are not entitled to full input tax recovery or
it belongs to a GST group that is not entitled to full input
tax recovery. Examples of such businesses include taxable
businesses that do not meet the De Minimis rules, financial
institutions, mixed property developers, and charitable and
welfare organisations that provide free or subsidised (non-
business) activities; and
• Non-GST registered businesses who procure services from
overseas suppliers exceeding SGD1 million in a 12-month
period and would not be entitled to fully input tax recovery
if they were GST registered. Examples of such businesses
include pure investment holding companies, residential
property developers and charitable and welfare organisations
that provide free or subsidised (non-business) activities that
are not already registered.

© 2019 Grant Thornton International Ltd. All rights reserved.

‘Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory
services to their clients and/or refers to one or more member firms, as the context requires. Grant Thornton International
Ltd (GTIL) and the member firms are not a worldwide partnership. GTIL and each member firm is a separate legal entity.
Services are delivered by the member firms. GTIL does not provide services to clients. GTIL and its member firms are not
agents of, and do not obligate, one another and are not liable for one another’s acts or omissions.
 Next steps - What should you consider in order to be ready?
As always, the key to staying compliant lies in preparing ahead of time. Here is a handy checklist to help you get started:

1. Identify your imported services that are subject to the reverse charge.
2. If you are not GST registered, monitor the value of imported services that may tip you over the GST registration threshold
and if you exceed the threshold, to ensure that you are registered by 1 January 2020.
3. If you are GST registered, consider whether you are entitled to full input tax recovery to avoid the liability to account for
reverse charge on your imported services.
4. Ensure that your accounting system has the relevant tax codes for imported services to ensure you can easily track and
account for the reverse charge on such supplies.
5. Consider automating the process of accounting for the reverse charge.
6. If necessary, undertake additional training for your procurement and finance teams to ensure that they understand
the rules and identify the services that are within scope of the reverse charge including inter-branch and inter-GST group
transactions.
7. Consider the impact for services which span 1 January 2020 implementation date (there are complex transitional
provisions and opportunities for planning and cost mitigation); and
8. Consider the possibility of seeking professional advice or clarification from the IRAS on uncertain transactions.

Grant Thornton is organising a free seminar on the reverse charge on 24 October 2019 and we would be pleased to have your
attendance if you register early due to limited places. Click on this link to register.

Jeremy O’Neill
Manager - Indirect Tax

T +65 6805 4110

E jeremy.s.oneill@sg.gt.com

© 2019 Grant Thornton International Ltd. All rights reserved.

‘Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory
services to their clients and/or refers to one or more member firms, as the context requires. Grant Thornton International
Ltd (GTIL) and the member firms are not a worldwide partnership. GTIL and each member firm is a separate legal entity.
Services are delivered by the member firms. GTIL does not provide services to clients. GTIL and its member firms are not
agents of, and do not obligate, one another and are not liable for one another’s acts or omissions.