GST Zero Rating on Supply of Services

It is important to note that unlike for export of goods, not all services supplied outside of Singapore can be zero-rated. This is because the Singapore’s GST Act states that zero rating can only apply to services that falls within the description of international services under Section 21(3).  What this means is that even if your supply of services are performed completely outside Singapore, it may not be zero-rated if it does not falls within the list of services described in Section 21(3).

For example, your company was engaged by a local Singaporean company to perform consultancy services outside of Singapore. To most people, this supply should be zero rated because it was performed overseas as Singapore’s GST only applies for goods and services supplied in Singapore. You are wrong if you think this should be the case. This is because consultancy services does not fall within the description of international services that qualifies for zero rating, as provided for under Section 21(3).

So it is of utmost importance to actually make sure that you should only zero rate your supply of services if it falls within the description of international services under Section 21(3).

To compound the difficulty further, depending on the nature of the services provided, you are also required to determine the belonging status of your customer – whether your customer is a local person or an overseas person, for zero-rating to apply. Your customer can also be either an individual or a business.

The test to determine the belonging status of an individual and a business is different. For an individual, the usual place of residence test is used to determine whether your customer belongs to a country outside Singapore for zero rating to apply. Whereas for a business, it must not have a business establishment or some fixed establishment in Singapore for it to be treated as belonging outside Singapore.

Therefore it is essential to bear in mind that not all services provided to overseas customers can be zero-rated.


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