(8 November 2022, Singapore) With effect from 1 Jan 2023, a standard-rated GST will be applied to Singapore consumers when using travel arranging services.
Travel arranging services include services that facilitate the booking and payment of the underlying travel product(s), such as the international transport of passengers, travel accommodation, as well as travel insurance. GST is payable if the beneficiary of the service belongs in Singapore.
DPM Lawrence Wong stated during the second reading on the Goods and Services Tax (Amendment) Bill in Parliament on Monday (7 November 2022) that Singapore will update the GST treatment for travel arranging services.
Currently, the basis of determining whether zero-rating applies based on factors such as the location of the accommodation and whether the transportation arrangements are cross-border in nature. For example, if the hotel is in Singapore, consumers will have to pay GST; conversely, consumers will not have to pay GST when booking a hotel.
However, DPM Lawrence Wong also mentioned that the current practice does not accurately reflect the place of consumption of travel arranging services. When the GST treatment of the travel arranging services is updated, it will determine whether GST is payable based on where the customer and direct beneficiary of the services belong.