26 May 2016
The Inland Revenue Authority of Singapore (IRAS) has updated its website content on section of “business establishment” for purposes of zero-rating of international services.
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.
IRAS will treat the business’s customer as having a business establishment in Singapore if:
- its main seat of economic activity is in Singapore,
- it carries on business through a branch in Singapore, or
- it carries on business through an agency in Singapore.
The main seat of economic activity generally refers to the principal place of business, headquarters or head office i.e. the place where the essential decisions concerning the general management of the company are made and where the functions of its central administration are carried out.
The update was made by IRAS on 25 May 2016.