24 October 2016

On 14 October 2016, the Inland Revenue Authority of Singapore (IRAS) issued an e-Tax Guide, “GST: GST Guide on Zero-rating Telecommunication and Related Services under section 21(3)(q)”.

Section 21(3) of the GST Act provides zero-rating relief on the supply of international services and section 21(3)(q) specifies that prescribed services involving international telecommunication transmission can qualify for zero-rating (i.e. charging GST at 0%). The qualifying telecommunication services that can be zero-rated under section 21(3)(q) are prescribed under Fifth Schedule of the GST (International Services Order).

GST-registered business will have to charge and account for GST, at the prevailing tax rate, on their supply of telecommunication service unless it qualifies as an international service under section 21(3)(q). To be zero-rated as an international service under section 21(3)(q), the telecommunication service has to satisfy both the conditions below:

(1) Falls within paragraphs 1 to 5 of the prescribed services in the Fifth Schedule, and

(2) Comprises international transmission, i.e. the provision of any means of telecommunication transmitted:

• from a place outside Singapore to another place outside Singapore,
• from a place in Singapore to a place outside Singapore, or
• from a place outside Singapore to a place in Singapore.

The telecommunication service cannot qualify for zero-rating under section 21(3)(q) if the transmission is from a place in Singapore to another place in Singapore (i.e. local transmission).

This e-Tax Guide explains the application of the zero-rating relief for telecommunication and telecommunication-related services, namely:

• Fifth Schedule – Paragraph 1: Transmission services
• Fifth Schedule – Paragraph 2: Leased circuit, line or network
• Fifth Schedule – Paragraph 3: Right to access or use
• Fifth Schedule – Paragraph 4: Onward supply of international calls
• Fifth Schedule – Paragraph 5: Ancillary services
• Fifth Schedule – Paragraph 6: Supplies that are specifically excluded from the Fifth Schedule
• Apportionment of Supplies

Annex A of the e-Tax Guide lists the prescribed telecommunication services under Fifth Schedule of the GST (International Services Order). Annex B provides a list of the broad categories of services that are commonly provided by telecommunication service providers and the applicability of section 21(3)(q).

This e-Tax Guide replaces the IRAS’s e-Tax Guide “A Guide on Zero-rating Telecommunication and Related Services under section 21(3)(q)” published on 26 April 2007.

For full details, please refer to the e-Tax Guide on the IRAS website.

Source: This article was extracted from the Inland Revenue Authority of Singapore’s (IRAS) website. Visit http://www.iras.gov.sg/ for more information.