We have recently shared with our client the GST treatment for advertising services provided by their Singapore entity. They are unclear as some of their services are provided locally as well as overseas to customers at various locations. To understand the various treatments, we have compiled below:
1) Media Sales (such as the sale of airtime, advertising space, and digital media space across various media platforms)
GST Treatment
Effective from January 1, 2022:
The GST treatment depends on the residency status of the contracting party and the direct beneficiary of the service.
Contract with a Local Customer:
- The service is subject to the standard GST rate.
Contract with an Overseas Customer:
- The service is zero-rated under Section 21(3)(j) of the GST Act if it directly benefits an overseas person and/or a GST-registered person in Singapore. Otherwise, the service must be standard-rated.
The Comptroller considers the contractual client as the sole direct beneficiary of the services if the following conditions are met:
- The service agreement does not specify or require the services to be provided to anyone else; and
- You liaise solely with your clients and are accountable to them for the service deliverables.
Before January 1, 2022:
The GST treatment was determined by the place where the advertisement was circulated.
Local Circulation:
- The service was subject to the standard GST rate.
Overseas Circulation:
- The service was zero-rated under Section 21(3)(u) of the GST Act.
Mixed Circulation:
- If at least 51% of the total circulation of the advertisement was overseas, the service could be zero-rated.
2) Media Planning (such as consultation and advisory services related to selecting media channels, scheduling, and frequency to optimise the client’s media investment)
3) Creative & Production Sale (such as services that include designing and creating advertising artwork)
4) Brand Public Relations (such as public relations consulting and managing reputation and relationships)
GST Treatment
The GST treatment is determined by the residency status of the contracting party and the direct beneficiary.
Contract with a Local Customer:
- Subject to the standard GST rate.
Contract with an Overseas Customer:
- The service is zero-rated under Section 21(3)(j) of the GST Act if it directly benefits an overseas individual and/or a GST-registered person in Singapore. Otherwise, the service must be standard-rated.
5) Event Organising (such as organising exhibitions or conventions for marketing campaigns)
GST Treatment
The GST treatment depends on the location of the exhibition or convention:
Held Overseas:
- Zero-rated under Section 21(3)(i) if the event takes place entirely outside Singapore.
Held in Singapore:
- Zero-rated under Section 21(3)(k) of the GST Act if the service is contracted by an overseas person in their business capacity and directly benefits an overseas person and/or a GST-registered person in Singapore.
- If these conditions are not met, the service must be subject to the standard GST rate.