16 October 2015
On 14 October 2015, the Inland Revenue Authority of Singapore (IRAS) issued the the e-Tax Guide, “GST: Clarification on “Directly in Connection With” and “Directly Benefit” (2nd Ed)”.
This e-Tax guide provides guidance on the interpretation and application of the two expressions “directly in connection with” and “directly benefit” used in section 21(3) of the GST Act to common business scenarios.
Section 21(3) of the GST Act provides for zero-rating relief on a supply of services to the extent that the services are international services.
There are two categories of supplies of services for which the relief may not apply:
- Where there is a direct connection between the supply of services and goods or land situated in Singapore, the supply cannot be zero-rated.
- Where there are local persons who stand to derive benefits from their consumption of the services, the supply, too, cannot be zero-rated.
The updates to this edition include:
- An example added in paragraph 3.3.2(b) (Where the GST Act does not provide specifically for a service to be directly in connection with goods or land)
- Amendments to paragraph 4.8.6 (Directly benefit – Examine the flow of services/benefits) and insertion of footnote 9 to clarify the GST treatment in Diagram 1 (Two classes of persons)
- Amendment to paragraph 4.9.4(c) (Onward supply) to clarify the GST treatment in Diagram 2 (Onward supply)
- Amendment to paragraphs 6.2 (Input tax claims by local beneficiary) and 7.11 (Apportionment) to remove the requirement for the local beneficiary to seek prior approval from the Comptroller before claiming the input tax allowable under the administrative concession
The first edition was published on 31 March 2014.
Source: This article was extracted from the Inland Revenue Authority of Singapore (IRAS) website. Visit www.iras.gov.sg for more information.