Advertising Industry: GST Updates

One of the recent 2021 budget changes for GST is that the rule for determining the GST treatment for media sales (i.e. advertisement space) will change with effect from 1 January 2022.

Currently, the GST treatment for media sales depends on the place of circulation of the advertisement. From 1 January 2022, zero-rating will be based on the country of the customer and the direct beneficiary. If the customer belongs outside Singapore and the direct beneficiary either belongs outside Singapore or is GST-registered in Singapore, the media sales will be zero-rated.

There were many questions surrounding who are considered direct beneficiaries of media sales. Would the people who view the advertisement be considered direct beneficiaries? If yes, how does one assess the belonging status and GST-registration status of the customers who view the advertisements?

The above questions have been answered in the new GST Guide on Advertising Industry published by the IRAS on 11 June 2021.

It is clearly stated that the viewers of the advertisement are not direct beneficiaries of the supply of media space as they merely obtain “spin-off” benefits (e.g. gaining product knowledge) from the advertisements.

We would go further to add that not only are the viewers not considered direct beneficiaries, but most of the viewers are actually “victims” of the advertisement as we the consumers are spending too much money on unnecessary items because of the advertisements 😊.

Please have a read of the new GST guide if you are in the advertising industry or if you are a partial exempt person buying media sales from overseas suppliers as the media sales will be caught under the reverse charge mechanism with effect from 1 January 2022.

Do contact us if you need any help in understanding or interpreting the new changes.

Advertising Industry



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