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Singapore Publishes New e-Tax Guide on GST for the Travel Industry — Orbitax Tax News & Alerts

The Inland Revenue Authority of Singapore (IRAS) has published a new e-Tax Guide, GST: Guide for the Travel Industry (First Edition), which replaces the e-Tax Guide, GST: Travel Industry (Seventh Edition). The new guide explains the GST principles and treatment for the supplies of travel products, services, and transactions commonly encountered in the travel industry. The guide also covers the Budget 2022 announcement on the change in the GST treatment of services comprising the arranging of international transport of passengers and related insurance as well as the arranging or facilitating the booking of accommodation (travel arranging services), which takes effect from 1 January 2023 with transitional rules for such services straddling that date.

The GST treatment for travel products and related travel arranging services are summarized as follows:

GST Treatment for Travel Products

  • Supply of services comprising the international transport of passengers from Singapore to a place outside Singapore and vice versa, and from a place outside Singapore to another place outside Singapore: Zero-rated under section 21(3)(a) of the GST Act;
  • Supply of accommodation (e.g., hotels or similar lodging) - Depends on the location of the property:
    • Standard-rated if the property is located in Singapore;
    • Outside the scope of GST if the property is located outside Singapore;
  • Supply of outbound package tours: Zero-rated under section 21(3)(i) of the GST Act; and
  • Supply of inbound package tours: Standard-rated.

GST Treatment for Travel Arranging Services, including treatment before and on or after 1 January 2023

Arranging international transport of passengers and related insurance:

  • Supply of travel arranging services by a local GST-registered travel agent:
    • Before 1 Jan 2023: Zero-rated under section 21(3)(c) of the GST Act;
    • On or after 1 Jan 2023:
      • Standard-rated if the travel arranging services are contractually supplied to a person belonging in Singapore;
      • Standard-rated if the travel arranging services directly benefit a non-GST registered person belonging in Singapore. This is regardless of whether the services are contractually supplied to an overseas or local person; and
      • Zero-rated under section 21(3)(j) of the GST Act if the travel arranging services are contractually supplied to an overseas person and directly benefit an overseas person or a GST-registered person belonging in Singapore;
  • Supply of travel arranging services by an overseas travel agent to a Reverse Charge (RC) business in Singapore:
    • Before 1 Jan 2023: Outside the scope of RC;
    • On or after 1 Jan 2023: Subject to RC;
  • Supply of travel arranging services by an overseas travel agent to a non-GST registered customer in Singapore:
    • Before 1 Jan 2023: Subject to GST under the overseas vendor registration (OVR) regime if the arranging services qualify as digital services;
    • On or after 1 Jan 2023: Subject to GST under the OVR regime.

Arranging accommodation:

  • Supply of travel arranging services by a local GST-registered travel agent:
    • Before 1 Jan 2023 - Depends on the location of the property:
      • Standard-rated if the property is located in Singapore; and
      • Zero-rated under section 21(3)(e) of the GST Act if the property is located outside Singapore;
    • On or after 1 Jan 2023:
      • Standard-rated if the travel arranging services are contractually supplied to a person belonging in Singapore;
      • Standard-rated if the travel arranging services directly benefit a non-GST registered person belonging in Singapore. This is regardless of whether the services are contractually supplied to an overseas or local person; and
      • Zero-rated under section 21(3)(j) of the GST Act if the arranging services are contractually supplied to an overseas person and directly benefit an overseas person or a GST-registered person belonging in Singapore;
  • Supply of travel arranging services by an overseas travel agent to an RC business in Singapore:
    • Before 1 Jan 2023: Not subject to RC if the property is located outside Singapore;
    • On or after 1 Jan 2023: Subject to RC regardless of the location of the property;
  • Supply of travel arranging services by an overseas travel agent to a non-GST registered customer in Singapore:
    • Before 1 Jan 2023: Subject to GST under the OVR regime if the arranging services qualify as digital services;
    • On or after 1 Jan 2023: Subject to GST under the OVR regime.

Arranging package tours (inbound/outbound):

  • Supply of travel arranging services by a local GST-registered travel agent:
    • Before 1 Jan 2023:
      • Standard-rated if the arranging services are contractually supplied to a person belonging in Singapore; and
      • Zero-rated under section 21(3)(j) of the GST Act if the arranging services are contractually supplied to an overseas person and directly benefitting an overseas person or a GST-registered person belonging in Singapore;
    • On or after 1 Jan 2023: No change;
  • Supply of travel arranging services by an overseas travel agent to a RC business in Singapore:
    • Before 1 Jan 2023: Subject to RC
    • On or after 1 Jan 2023: No change
  • Supply of travel arranging services by an overseas travel agent to a non-GST registered customer:
    • Before 1 Jan 2023: Subject to GST under the OVR regime if the arranging services qualify as digital services;
    • On or after 1 Jan 2023: Subject to GST under the OVR regime.

Note, whether a person (customer) is treated as "belonging in Singapore" depends on whether the persons is corporate body or an individual. If a person is a corporate body, it is treated as belonging in Singapore if:

  • it has a business establishment (BE) (i.e., an agency or a branch in Singapore) or fixed establishment (FE) only in Singapore;
  • it has a BE or FE both in Singapore and outside Singapore and the services are most directly used or to be used by the establishment in Singapore; or
  • it does not have a BE or FE in any country but its usual place of residence (i.e., place of incorporation or place of legal constitution) is in Singapore.

If a person is an individual, they are treated as belonging in Singapore if their usual place of residence is in Singapore.