2 February 2016

The Inland Revenue Authority of Singapore (IRAS) has updated its website on the GST treatment of computer software maintenance.

 Computer software maintenance is a supply of services. To determine the GST treatment:

• the original sale of the computer software has to be considered, and
• the maintenance service has to be assessed if it is “directly in connection with” goods.

Where the original sale of the computer software is a supply of goods:

• The provision of software maintenance service may be regarded as being “directly in connection with” goods if it satisfies the factors as explained in the e-Tax Guide, “GST: Clarification on “Directly in Connection With” and “Directly Benefit” (2nd Ed)”.

• Where it the maintenance service is “directly in connection with” goods, it should be standard-rated i.e. GST is to be charged when the software is situated in Singapore or otherwise, zero-rate if physical work is performed on the software situated out of Singapore.

• Where the provision of software maintenance service does not qualify as “directly in connection with” goods, then the service can be zero-rated provided the conditions for zero-rating international services are satisfied. GST is to be charged on the software maintenance service if otherwise.

Where the original sale of computer software is a supply of service:

• the provision of software maintenance service will therefore not be “directly in connection” with goods. The maintenance service can be zero-rated if the conditions for zero-rating international services are satisfied.

For further details, please refer to the IRAS’s website under the GST e-Commerce.

The update was made on 27 January 2016.

Source: IRAS