## tnmea2021004 - Sections I–III and selected supporting material

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### Overview
- The note deals specifically with the administration of the VAT. It does not address issues concerning the administration of digital services taxes.
- Section I addresses imported services (including imported digital services), Section II covers low-value imported goods (LVIG), and Section III describes key tasks for implementing both regimes.
- European Union practices are highlighted in Appendix I.

### Key challenges (Imported Digital Services)
- Destination principle is the international norm for VAT on cross-border transactions: tax imports similarly to domestic supplies and allow exports to be supplied VAT-free.
- Intangible nature of cross-border services prevents collection of VAT through physical customs control.
- Non-resident suppliers often have no physical presence in the importing country to make them liable for collecting VAT.
- Consumer self-assessment of VAT on imported services has proven unworkable in most jurisdictions.
- Recent surge in imported digital services has increased revenue risk and administrative focus.
- Imported digital services in 22 countries have increased by a weighted average of nearly 60 percent since 2010.
- Countries are concerned about undercollection of VAT and competitive disadvantages for domestic businesses required to charge VAT.

### International guidance and policy differentiation
- Actions guided by the OECD report International VAT Guidelines.
- Separate guidelines for B2C and B2B transactions.
- Country approaches:
  - Australia and New Zealand apply the VAT to all imported services.
  - Norway, Singapore, and the European Union apply the tax only to digital services.
  - The EU has an EUR 10,000 threshold for intra-EU supplies (intra-EU supplies below this threshold may remain subject to VAT in the Member State where the taxable person supplying the (digital) services is established).

### Business-to-Consumer (B2C) imported digital services — vendor collection method
- Over 60 countries have applied the vendor collection method (non-resident businesses register, charge, and remit VAT on supplies to final consumers).
- Key administrative needs under the vendor collection method:
  - Establish a workable definition for the scope of the regime.
  - Provide simplified methods for non-resident businesses to register, charge, and pay VAT in the importing country.
  - Put in place effective methods for identifying and dealing with non-compliant businesses.

Scope design considerations
- Some countries apply the vendor collection method to both digitally and non-digitally supplied B2C services; others restrict it to prescribed digital services.
- Rationale for limiting scope: digital services are most likely procured for final consumption and account for a large share of total imported services.
- Clear definitions are important; example: Norway’s VAT Act (Section 1-3 j) defines digital services as “electronic services capable of provision from a remote location which are supplied via the internet or other electronic network and which cannot be obtained without the use of information technology, and where delivery of the services is essentially automated.”
- Singapore supplements a general definition with a schedule (positive and negative lists).

BOX 1 (Singapore) — examples
- Included (positive list):
  - Digital content (e.g., downloading of mobile applications, e-books, and movies) and online subscription-based media (e.g., news, magazines, streaming of TV shows and music, and online gaming);
  - Software programs (e.g., downloading of software, drivers, website filters and firewalls);
  - Electronic data management (e.g., website hosting, online data warehousing, file-sharing and cloud storage services);
  - Support services performed via electronic means, to arrange or facilitate a transaction (e.g., commission, listing fees and service charges).
- Excluded (negative list):
  - Services that are currently zero-rated (via exclusion list) or exempt to maintain parity with equivalent services provided by local suppliers (for example, international telecommunication services and advertising services substantially promulgated outside Singapore);
  - Services that are supplied electronically but contain a significant human effort are not considered to be digital services.

### Determining place of taxation and consumer residence
- General approach: give taxing rights to the jurisdiction where the final consumer has its usual residence; non-resident supplier charges VAT of the consumer’s country and remits revenue there.
- Legislative presumption commonly: purchaser is a final consumer if purchaser has a residential address in the importing country and has not provided VAT registration information.
- Penalties can apply to purchasers who misrepresent VAT status.

Proxy indicators to determine consumer residence
- Payment proxy: information from credit card or bank account used for payment, third party payment intermediary data.
- Residence proxy: billing or home address supplied in the order.
- Access proxy: IP address, mobile telephone country code of the SIM card used, location of the purchaser’s fixed telephone landline.
- Some countries require two pieces of non-contradictory evidence; others require the supplier to act reasonably.
- Customer data must be maintained by overseas suppliers for audit; tax administrations can require suppliers to explain methods and furnish customer information.

BOX 2 (Proxy example)
- Australian resident visiting Singapore buys and downloads a movie from overseas Company A (registered in Singapore’s vendor collection system).
- IP address (access proxy) indicates Singapore.
- Billing address (residence proxy) indicates Australia and matches credit card information (payment proxy).
- Company A concludes the customer belongs in Australia and does not charge Singapore’s GST.

### Registration, filing, and payment (vendor collection method)
- Registration:
  - Non-resident businesses register where supplies of taxable digital services to final consumers have exceeded or are expected to exceed a prescribed amount in a 12-month period—often equivalent to the threshold for domestic VAT registration.
  - Some countries (e.g., Singapore) supplement the general registration threshold with a worldwide turnover test to limit registration to major corporations.
  - The EU does not provide a registration threshold for non-EU suppliers.
- Marketplaces:
  - Marketplaces commonly required to register and collect VAT for their own supplies and those of other suppliers who make sales through the marketplace.
  - Marketplaces that authorize charge, delivery, set terms and present themselves as making the supply may be treated as “deemed” suppliers.
  - Inclusion of marketplaces significantly reduces registrant numbers and improves compliance efficiency.
- Simplified registration:
  - Simplified registration does not allow non-resident businesses to claim input tax credits for purchased inputs in the importing country; it only enables charging and remitting VAT on outbound supplies to consumers.
  - Non-resident suppliers may opt to register in the standard VAT system if they need to claim input tax credits.
  - Simplified registration information requirements and documentary proofs of identity are typically relaxed.
- Filing:
  - Filing frequency commonly quarterly, though can be monthly for larger taxpayers.
  - Simplified VAT returns generally require reporting only total taxable supplies of digital services and VAT charged.
  - Time of liability typically follows accrual accounting: liability arises at the earliest of payment received or invoice issued.
  - Suppliers required to maintain normal records of account for a period of five years or more in some cases.
  - Detailed tax invoices generally not required for supplies to final consumers.
- Payment:
  - Payment of VAT is due at the same time as the simplified VAT return.
  - A range of commercial payment options is allowed (examples include Swift transfer, PayPal, Western Union, and credit/debit cards).

### Business-to-Business (B2B) imported services
- Separate guidelines exist for B2B transactions; common practice is reverse charge.
- Reverse charge: resident business accounts for VAT as if it were the supplier and may receive an offsetting VAT credit to the extent the service is used to produce taxable supplies.
- Approaches:
  - Apply reverse charge to all imported digital services and allow input tax credits as applicable.
  - Apply reverse charge only where the charge is not fully claimable as an input tax credit.
- Resident businesses report reverse charge on the standard VAT tax return; most countries do not create a special tax return or separate fields for reverse charge supplies.

### Implementation and administrative considerations
- Effective administration requires:
  - Clear legislative scope and definitions.
  - Simplified registration, filing, and payment systems designed for non-resident suppliers.
  - Rules and practical guidance on use of proxy indicators and evidentiary standards.
  - Audit and record-keeping provisions to verify correct application of proxies and compliance.
  - Inclusion and regulation of marketplaces as deemed suppliers to improve compliance and reduce administrative burden.

### Foreign currency exchange rules (Section III.D Figure 5)
- Require acceptable conversion rates to be used and specify when those rates are to be applied or allow the supplier to elect a consistent time from the rates to apply.
- Options could include the time of supply; the end of the taxable period; or the time of filing the VAT tax return.
- If a non-resident supplier has input tax credits it wishes to claim (e.g., due to having a branch located inside the importing country), it may register in the standard VAT system and be subject to normal registration information and additional checks to verify legitimacy.

### Compliance strategy: overview and tools
- Most non-resident businesses, particularly larger ones, voluntarily comply under the vendor collection model; jurisdictions should still “backstop” voluntary compliance with a comprehensive strategy.
- Main compliance risks to address:
  - failure to register,
  - failure to file and pay on time and in full,
  - failure to accurately report the amount of VAT due.
- Registration compliance:
  - Begin with active industry liaison; identify major marketplaces and large direct suppliers.
  - Repeat industry nomination approach to identify second-tier players.
- Third-party data sources (BOX 3):
  - Industry analysis reports, payment services providers’ data showing destination of overseas payments, registrant lists from other administrations.
  - Example: Australian Taxation Office sources information from AUSTRAC including transaction reports for PayPal-enabled transactions.
- Default assessments and legal authority:
  - Revenue administrations can issue default assessments when a supplier fails to file; use reasonable estimation methods and third-party information.
- Payment collection assistance:
  - Revenue administrations may require financial institutions and other businesses in their jurisdiction to stop paying monies owed to the business and instead transfer payment to the revenue administration.
  - Requests for assistance can be made under the Convention on Mutual Administrative Assistance in Tax Matters; 141 jurisdictions currently participate.
- Security bonds:
  - A few countries require non-resident suppliers to post a security bond; example calculation: percentage (e.g., 25 percent) of the estimated annual VAT liability.
  - Utility of bonds for suppliers of imported digital services is questioned due to enduring market presence.
- Reporting compliance and detection:
  - Require suppliers to provide books of account and audited records.
  - Access third-party data, use “secret shopper” purchases, and impose information-retention requirements.
  - Penalties internationally range up to 200 percent of the undercharged tax for underreporting through to fines and imprisonment for willful misrepresentation.

### Low-Value Imported Goods (LVIG) — challenges and reform rationale
- Many countries provide a de minimis exemption for imported goods below a prescribed threshold; growth in internet shopping raised concerns about lost VAT revenue and domestic retailer disadvantage.
- Cross-border B2C merchandise exports estimated to increase from US$ 189 billion in 2015 to US$ 412 billion in 2018; international parcels increased from 115.1 million units to 191.8 million units.
- Some countries require prescribed non-resident businesses to charge VAT on LVIG and remit revenue using simplified vendor collection models.
- Examples of reform timing: Australia (2018), New Zealand (2019), Norway (2020) and the United Kingdom (January 2021). The European Union expected to introduce the same reform in July 2021 and Singapore in January 2023.

LVIG administrative design: registration threshold and ceiling
- LVIG regime provides a registration threshold for businesses and a ceiling for goods subject to the regime.
- Non-resident businesses with supplies of LVIG above the registration threshold must charge, collect, and remit VAT for goods valued below the ceiling.
- Registration threshold should be consistent with the domestic threshold to avoid discrimination against foreign suppliers.
- Generally only B2C LVIG are counted against the registration threshold; higher-value B2C supplies and all B2B supplies excluded.
- Registration threshold applies to the aggregate of LVIG and imported digital services; combined supplies above the threshold require the non-resident to charge VAT on both categories even if separately each falls below the threshold.
- For goods below the LVIG ceiling, the non-resident supplier charges and collects VAT prior to importation; for goods above the ceiling, customs collect VAT upon importation using standard customs procedures.
- Supplies by non-resident suppliers whose supplies fall below the registration threshold are not subject to VAT.

Filing, payment, and taxpayer treatment under LVIG
- Simplified filing and payment systems: same filing and payment periods should be applied to both LVIG and imported digital services regimes.
- The same VAT tax return for imported services can be used by adding fields for imported digital goods values and associated VAT.
- Credits due to reversals or errors can be offset in future period tax returns rather than issuing same-period refunds.
- Vendor collection model does not permit non-resident suppliers to claim credit for VAT paid on purchases from the importing country, but they may register under the importing country’s standard VAT regime to claim such credits.

Leveraging marketplaces and intermediaries
- Two-thirds of cross-border supplies of goods estimated to be through marketplace platforms; more than half transacted through only three platforms.
- Inclusion of marketplaces in the supplier definition allows jurisdictions to achieve broad coverage with a manageable number of businesses (up to 1,000 entities).
- Taxable person defined as either the vendor or an electronic marketplace that intermediates the supply; legislation should specify conditions under which marketplaces are deemed the supplier.
- Postal operators, express carriers, and fulfillment centers generally not considered suppliers and have no VAT collection responsibilities under the vendor collection method.
- Exceptions: Australia and New Zealand include “re-deliverers” as suppliers under LVIG when these intermediaries obscure the final location of the supply.

LVIG compliance strategy
- Mirrors imported digital services regime with added focus on:
  - Re-deliverers identification and enforcement.
  - Cross-checking payment and customs information.
  - Leveraging customs controls to detect undervaluation or misclassification.
- Customs should prepare monthly listings of total value of low-value imports declared for each LVIG-registered supplier; tax authorities compare these with VAT returns to identify discrepancies and unregistered suppliers.
- Compliance program components:
  - Third-party information.
  - Risk profiling, monitoring past trading behaviors, intelligence assessments and industry referrals.
  - X-ray imaging combined with artificial intelligence interpretation to scan packages for content/value consistency.
  - Exploration of blockchain and smart contracts for intermediary-collected VAT transfers (early stage).

Coordination with customs and avoidance of double taxation
- LVIG regime should align with customs duty regime: typically applies to goods equal to or lower than the customs duty exemption threshold; excisable goods usually excluded from LVIG and treated under standard customs procedures.
- To avoid double taxation, non-resident suppliers must advise customs of VAT-paid status in import documentation, including:
  - The supplier’s VAT registration number and/or other business number.
  - Indication whether VAT was charged previously under the LVIG regime.
- This information should feed into the customs cargo system to facilitate quick processing and clearance.

### Implementation tasks and legislative changes
- A comprehensive, timebound implementation plan is crucial; international experience indicates approximately two years is needed to implement the reforms.
- Key implementation tasks include:
  - Extensive industry consultations.
  - Deciding on regime design features.
  - Enacting legislative changes.
  - Adjusting administrative processes and information systems.
  - Providing taxpayer education and tax officer training.
- Legislative changes should define imported services and goods subject to VAT, persons liable for paying and collecting tax, and registration/filing/payment requirements.
- Primary legislation should be supported by secondary legislation (regulations) and operational guidelines.
- Marketplace deemed-supplier conditions include:
  - The marketplace authorizes the charge to the customer;
  - The marketplace authorizes the delivery of the supply to the customer;
  - The marketplace sets the terms and conditions under which the supply is made.

### Implementation Plan (Section 2) — rollout, consultation, systems and timelines
- Sequence of steps:
  - Government announcement
  - Introduction to Parliament
  - System design and integration
  - Review / finalise specifications for build and testlaw design
  - Law enacted by Parliament
  - System testing
  - Simplified report and pay commences (Quarterly)
  - Law commences
  - Simplifiedregistrationcommences
- Consultation and phased engagement:
  - Phase 1 – Aware: Consultation; Direct contact with key suppliers (incl. platforms); Mail Out; Dedicated Web Page; Dedicated email address; Treasury — Media Release
  - Phase 2 – Prepare: Consultation; Direct contact with key suppliers (including platforms); Mail Out; Staff Training; System registration ready; Risk TreatmentPreventative Strategies — Targeted Mail-out; Risk TreatmentPreventative Strategies — Audit
  - Phase 3 – Act Now: System Design; Communication Strategy; Law
- Scoping and planning tasks:
  - Identify third-party data sources and undertake initial modelling
  - Risk assessment
  - Identify suppliers and platforms in scope
  - Refine modelling from third-party data sources and consultation
  - Commence monitoring of VAT registrations
  - 12 Months Minimum for system reporting and payment readiness
  - Design and implement systems and accounting changes
- Documentation and contractual criteria examples:
  - Documentation issued to the customer identifies the supply as made by the marketplace; and/or,
  - The marketplace and merchant contractually agree that the marketplace is responsible for VAT obligations.

Key legislative changes (summary)
- Define digital (and other) services subject to tax, supplemented by place of taxation rules.
- Remove the de minimis exemption for non-resident businesses with supplies that exceed a prescribed threshold and define LVIG subject to tax.
- Define persons to whom the VAT is charged (e.g., final consumer) and taxable persons (e.g., platforms and vendors, re-deliverers).
- Specify circumstances when a platform or re-deliverer can be deemed the supplier.
- Establish simplified registration, filing, and payment processes, including exchange rate and identification number.
- Establish recordkeeping requirements for non-resident suppliers.
- Obligate reverse charge where applicable.
- Specify information to be included in importation documents and provided to customers.
- Define penalties, preserve customs duties and excise treatments, and coordinate with customs processes to avoid double taxation.

### Consultation, administrative systems and compliance unit responsibilities
- Recommended outreach:
  - Industry analysis, liaise with other administrations, contact industry associations, explain regimes, and elicit feedback on design features.
  - Issue detailed technical and procedural advice in languages used by suppliers.
  - Proactive follow-up and designate teams to monitor and follow-up with unresponsive entities.
  - Assign a dedicated tax officer (key client manager) to liaise with the largest businesses.
- Administrative system design principles:
  - Create new systems for non-resident registration.
  - Simplify information requirements and proof of identity for pay-only regimes.
  - Ensure systems and guidance available in English where appropriate.
  - Filing systems must be internet-based; non-resident suppliers report only the amount of VAT due from taxable sales.
  - Provide multiple payment options (direct debit, credit card, SWIFT transfer).
- Compliance unit responsibilities (Box 4):
  - Research internet and third-party data sources to identify non-resident suppliers exceeding registration thresholds.
  - Develop relationships with platform, merchant and redelivery industries for intelligence.
  - Develop close working relationships with Customs.
  - Work with treaty experts to obtain assistance from other administrations and establish protocols for exchange of information.

### Taxpayer education and tax officer training
- Education and assistance program design:
  - Customize remote programs for non-resident taxpayers (written guidance, online seminars, video guides, dedicated website page).
  - Proactive distribution of materials and encourage participation.
  - Assign dedicated tax officers to largest businesses.
- Tax officer training:
  - Induction training immediately after government announcement for taxpayer services officers.
  - Second, technical training near implementation date for all VAT administration staff.
- Timeframe:
  - Tasks can require up to two years to design and implement.
  - 12 Months Minimum for system reporting and payment readiness.

### European Union schemes and low-value import specifics (Appendix 1 highlights)
- OSS / MOSS:
  - MOSS (since 2015) expanded into OSS beginning in July 2021 to cover additional B2C services, intra-Community distance sales of goods, and certain domestic supplies of goods.
  - OSS variants: non-Union scheme (non-EU established suppliers) and Union Scheme (EU established suppliers).
  - OSS filing: taxable persons using OSS must submit a (mini) One Stop Shop VAT return for each calendar quarter; the return and payment are required within 20 days of the end of the period covered by the return.
  - Union scheme differences include application to intra-Community distance sales of goods and certain domestic supplies facilitated by electronic interfaces; and an annual EUR 10 000 turnover threshold supporting micro-businesses.
- Low-Value Import Scheme (IOSS):
  - As from July 1, 2021 the VAT exemption at importation of small consignments up to EUR 22 will be removed.
  - A new scheme (IOSS) created for goods imported with value not exceeding EUR 150 (excluding excisable goods).
  - IOSS is voluntary; EU and non-EU suppliers (vendors and marketplaces) can elect to use IOSS, normal customs procedures, or special arrangements for postal operators and express carriers.
  - Upon registration for IOSS, tax authorities issue an IOSS VAT identification number to suppliers or marketplaces who are deemed suppliers; this number is provided to customs to release goods without charging VAT a second time at import.
  - IOSS returns and payments:
    - Submit a monthly IOSS return to the Member State of identification for eligible supplies; return contains total value of goods sold, VAT rate, total VAT amount broken down by Member State and by rate (standard and reduced).
    - Make a monthly payment to the Member State of identification of the VAT due as declared in the IOSS VAT return.
  - Customs reconciliation:
    - Customs authorities prepare monthly listings of total value of imports of low value goods declared for each IOSS VAT identification number; aggregated monthly listings are shared with tax authorities to compare import declarations with IOSS returns.
  - Intermediary requirement:
    - Taxable persons not established in the EU or in a third country with a VAT mutual assistance agreement must appoint an intermediary established in the EU who fulfils obligations under the import scheme on their behalf.
  - Special arrangements:
    - Sellers and marketplaces may alternatively opt to pass import VAT collections to postal operators, express carriers and customs agents; under special arrangements the customer pays VAT to the declarant, and Special Arrangements operators pay tax authorities monthly on a cash-received basis with deadline the 16th of the month following the month of import.

### Appendix 2 — Singapore vendor collection regime examples
- Scenario: Company A (established in Germany) aggregates accommodation availability and charges service fees to accommodation providers in Singapore and booking fees to customers in Singapore.
- Determinations under Singapore’s vendor collection regime:
  - Service fees to non-GST registered Singapore accommodation providers: Subject to Singapore’s GST as services are within scope and provided to a non-GST registered business.
  - Booking fees charged to non-GST registered Singapore customers: Subject to Singapore’s GST as services are provided to a non-GST registered customer.
  - Service/Booking fees to overseas persons: Not subject to VAT as outside scope because fees paid to an overseas supplier considered for services consumed overseas.
  - Service/Booking fees to GST registered Singapore persons: Subject to reverse charge.
- Electronic marketplace deeming example (two marketplaces assessed against five conditions):
  - Marketplace A (app store):
    - Condition 1 — Authorizes the charge to the customer: Yes
    - Condition 2 — Authorizes the delivery of supply to the customer: Yes
    - Condition 3 — Sets the terms and conditions: Yes
    - Condition 4 — Supply identified as made by the marketplace: Not Applicable
    - Condition 5 — Agreement that marketplace is responsible for VAT: No
    - Conclusion: A is regarded as the supplier of the digital services.
  - Marketplace B (hotel listing platform):
    - Condition 1: No
    - Condition 2: No
    - Condition 3: No
    - Condition 4: No
    - Condition 5: No
    - Conclusion: B is not regarded as the supplier of the digital services.

*Source: Technical Notes and Manuals 2021/004 (tnmea2021004) — Sections I–III and selected supporting material as provided in the supplied content.*

### Section I addresses issues concerning imported services, Section II covers low-value imported goods,

### tnmea2021004 - Section I addresses issues concerning imported services, Section II covers low-value imported goods,

### Overview
- The note deals specifically with the administration of the VAT. It does not address issues concerning the administration of digital services taxes.
- Section I addresses imported services (including imported digital services), Section II covers low-value imported goods (LVIG), and Section III describes key tasks for implementing both regimes.
- European Union practices are highlighted in Appendix I.

### Key challenges (Imported Digital Services)
- The destination principle is the international norm for applying the value-added tax to cross-border transactions; it aims to tax imports on the same basis as domestic supplies and allow exports to be supplied VAT-free.
- Intangible nature of cross-border services prevents collection of VAT through physical customs control at the border.
- Non-resident suppliers often have no physical presence in the importing country to make them liable for collecting VAT.
- Consumer self-assessment of VAT on imported services has proven unworkable in most jurisdictions.
- For many years few cross-border services existed; the recent surge in imported digital services has increased revenue risk and administrative focus.
- Imported digital services in 22 countries have increased by a weighted average of nearly 60 percent since 2010.
- Countries are concerned about undercollection of VAT and competitive disadvantages for domestic businesses required to charge VAT.

### International guidance and policy differentiation
- Actions to improve VAT collection on imported digital services have been guided by the OECD report International VAT Guidelines.
- Separate guidelines are used for business-to-consumer (B2C) and business-to-business (B2B) transactions.
- Different country approaches:
  - Australia and New Zealand apply the VAT to all imported services.
  - Norway, Singapore, and the European Union apply the tax only to digital services.
  - The EU has an EUR 10,000 threshold for intra-EU supplies (intra-EU supplies below this threshold may remain subject to VAT in the Member State where the taxable person supplying the (digital) services is established).

### Business-to-Consumer (B2C) imported digital services — vendor collection method
- Over 60 countries have applied the vendor collection method (non-resident businesses register, charge, and remit VAT on supplies to final consumers).
- Key administrative needs under the vendor collection method:
  - Establish a workable definition for the scope of the regime.
  - Provide simplified methods for non-resident businesses to register, charge, and pay VAT in the importing country.
  - Put in place effective methods for identifying and dealing with non-compliant businesses.

Scope design considerations
- Some countries apply the vendor collection method to both digitally and non-digitally supplied B2C services; others restrict it to prescribed digital services.
- Rationale for limiting scope: digital services are most likely to be procured for final consumption and account for a large share of total imported services.
- Clear definitions are important; example: Norway’s VAT Act (Section 1-3 j) defines digital services as “electronic services capable of provision from a remote location which are supplied via the internet or other electronic network and which cannot be obtained without the use of information technology, and where delivery of the services is essentially automated.”
- Singapore supplements a general definition with a schedule (positive and negative lists) to increase certainty and reduce compliance costs (see BOX 1).

BOX 1 (Singapore): Examples of digital services included and excluded
- Included (positive list):
  - Digital content (e.g., downloading of mobile applications, e-books, and movies) and online subscription-based media (e.g., news, magazines, streaming of TV shows and music, and online gaming);
  - Software programs (e.g., downloading of software, drivers, website filters and firewalls);
  - Electronic data management (e.g., website hosting, online data warehousing, file-sharing and cloud storage services);
  - Support services performed via electronic means, to arrange or facilitate a transaction (e.g., commission, listing fees and service charges).
- Excluded (negative list):
  - Services that are currently zero-rated (via exclusion list) or exempt to maintain parity with equivalent services provided by local suppliers (for example, international telecommunication services and advertising services substantially promulgated outside Singapore);
  - Services that are supplied electronically but contain a significant human effort are not considered to be digital services.

Determining place of taxation and consumer residence
- General approach: give taxing rights to the jurisdiction where the final consumer has its usual residence; non-resident supplier charges VAT of the consumer’s country and remits revenue there.
- Non-resident suppliers need workable rules to determine whether the customer is a final consumer and the consumer’s usual place of residence.
- Common legislative presumption: purchaser is a final consumer if purchaser has a residential address in the importing country and has not provided VAT registration information.
- Penalties can apply to purchasers who misrepresent VAT status.

Proxy indicators to determine consumer residence
- Non-resident suppliers can use payment, residence, and access proxies:
  - Payment proxy: information from credit card or bank account used for payment, third party payment intermediary data.
  - Residence proxy: billing or home address supplied in the order.
  - Access proxy: IP address, mobile telephone country code of the SIM card used, location of the purchaser’s fixed telephone landline.
- Some countries require two pieces of non-contradictory evidence; others require the supplier to act reasonably.
- Customer data must be maintained by overseas suppliers for audit; tax administrations can require suppliers to explain methods and furnish customer information.

BOX 2 (Proxy example)
- An Australian resident visiting Singapore purchases and downloads a movie digitally from overseas Company A, registered in Singapore’s vendor collection system.
- Customer’s IP address (access proxy) indicates Singapore.
- Customer’s billing address (residence proxy) indicates Australia and matches credit card information (payment proxy).
- Company A concludes the customer belongs in Australia and does not charge Singapore’s GST.

Registration, filing, and payment (vendor collection method)
- Registration:
  - Non-resident businesses register where supplies of taxable digital services to final consumers have exceeded or are expected to exceed a prescribed amount in a 12-month period—often equivalent to the threshold for domestic VAT registration.
  - Some countries (e.g., Singapore) supplement the general registration threshold with a worldwide turnover test to limit registration to major corporations.
  - The EU does not provide a registration threshold for non-EU suppliers.
- Marketplaces:
  - Marketplace suppliers are commonly required to register and collect VAT for their own supplies and those of other suppliers who make sales through the marketplace.
  - Marketplaces that authorize charge, delivery, set terms and present themselves as making the supply may be defined as electronic distribution platforms and can be treated as “deemed” suppliers accountable for VAT on supplies transacted through their platform.
  - Inclusion of marketplaces significantly reduces registrant numbers and improves compliance efficiency.
- Simplified registration approach:
  - Simplified registration does not allow non-resident businesses to claim input tax credits for purchased inputs in the importing country; it only enables charging and remitting VAT on outbound supplies to consumers.
  - Non-resident suppliers may opt to register in the standard VAT system if they need to claim input tax credits.
  - Simplified registration information requirements and documentary proofs of identity are typically relaxed.
- Filing:
  - Filing frequency is commonly quarterly, though can be monthly for larger taxpayers.
  - Simplified VAT returns generally require reporting only total taxable supplies of digital services and VAT charged.
  - Time of liability typically follows accrual accounting: liability arises at the earliest of payment received or invoice issued.
  - Suppliers are required to maintain normal records of account for a period of five years or more in some cases.
  - Detailed tax invoices are generally not required for supplies to final consumers.
- Payment:
  - Payment of VAT is due at the same time as the simplified VAT return.
  - A range of commercial payment options is allowed (examples include Swift transfer, PayPal, Western Union, and credit/debit cards).
  - Examples of simplified registration forms, VAT returns, and payment forms are provided in Section III.D (Figures 3–5).

### Business-to-Business (B2B) imported services (overview)
- Separate guidelines exist for B2B transactions; mechanics described in Section I.C (not fully reproduced here).
- The note distinguishes B2C and B2B methods and details for each are provided in Sections I.B and I.C, respectively.

### Implementation and administrative considerations (preview)
- Effective administration requires:
  - Clear legislative scope and definitions.
  - Simplified registration, filing, and payment systems designed for non-resident suppliers.
  - Rules and practical guidance on use of proxy indicators and evidentiary standards.
  - Audit and record-keeping provisions to verify correct application of proxies and compliance.
  - Inclusion and regulation of marketplaces as deemed suppliers to improve compliance and reduce administrative burden.

*Source: Technical Notes and Manuals 2021/004 (tnmea2021004) — Sections I and selected supporting material as provided in the supplied content.*

### Section III.D (Figure 5).

### Section III.D (Figure 5)

### Foreign currency exchange rules
- Foreign currency exchange rules are applied to ensure that transaction values are not manipulated.
- Revenue administrations should require acceptable conversion rates to be used and specify when those rates are to be applied or allow the supplier to elect a consistent time from the rates to apply.
- Options could include the time of supply; the end of the taxable period; or the time of filing the VAT tax return.
- If a non-resident supplier has input tax credits that it wishes to claim, for example due to having a branch located inside the importing country, it has the option to register in the standard VAT system of that country.
  - In this circumstance, the normal amount of registration information would need to be reported to the revenue administration but, being a foreign entity, the supplier may be subject to additional checks to verify its legitimacy.

### Compliance strategy: overview
- International experience has demonstrated that most non-resident businesses, particularly the larger ones, voluntarily comply with their obligations under the vendor collection model.
- Nevertheless, it is essential to “backstop” voluntary compliance with a comprehensive strategy for addressing noncompliance.
- Such a strategy should include methods for identifying and dealing with the main compliance risks, including:
  - failure to register,
  - failure to file and pay on time and in full,
  - failure to accurately report the amount of VAT due.

### Registration compliance: identification and liaison
- Registration compliance begins with active industry liaison.
- The importation of digital services to final consumers is dominated by a relatively small number of corporations, particularly large marketplaces and large corporations whose brands are sufficiently established to be sold directly to consumers without requiring intermediation by a marketplace.
- Liaison with these major players, for example by asking them to identify their competitors in the online markets, will help ensure that all major suppliers have been identified.
- Repeating this approach with subsequent nominees would help identify the second tier of players.
- Periods of economic adjustment can see a rapid and dramatic reshaping of the marketplace such as has occurred during the recent (pandemic-induced) economic downturn which saw some digital suppliers’ business boom.

### Third-party data access and sources
- Third-party data access is crucial to identifying potential registrants.
- Such data sources include industry analysis reports on particular sectors, financial data (including data from payment services providers showing destination of overseas payments) and lists of registrants in the imported services regime of other revenue administrations.
- BOX 3. Third-Party Data Sources
  - The third-party data sources can include:
    - Information from banks and financial institutions about transfers of funds to offshore entities can identify the larger targets of fund outflows  This information is obtained using the tax administration’s powers to require entities to report information relevant for the purposes of administering the tax system
    - Many countries have established agencies to monitor financial flows in and out of the country whose assistance may be obtained if they have the necessary capacity
    - For example, the Australian Taxation Office has a formal arrangement to source information from the Australian Transaction Reports and Analysis Centre (AUSTRAC) which includes transaction reports for all PayPal-enabled transactions  A simple search by entity name can usually source both aggregated and transaction-level data for a non-resident supplier to which PayPal-enabled payments were made

### Evidence from other jurisdictions
- Australia, New Zealand, Norway, and Singapore have found that most of the overseas vendors have voluntarily complied with their registration, filing, and payment obligations. This is likely to have resulted from the

*Technical Notes and Manuals 2021/004     Section III.D (Figure 5)*

### introduction of a registration threshold and the tax agencies’ active outreach efforts.

### introduction of a registration threshold and the tax agencies’ active outreach efforts.

### Marketplace reporting and international exchange
- EU members agreed to amend the directive on administrative cooperation (DAC 7) requiring marketplaces to report the income earned by sellers of goods and services who make use of their platforms.
- Marketplaces can report this information to a tax authority in a single member state, which will in turn exchange the information with its counterparts throughout the EU as appropriate.
- The new rules are expected to apply from January 1, 2023.

### Registration and discovery of non-resident suppliers
- Some countries (for example Japan and Russia) have published publicly accessible lists of registrants; many of these registrants will be doing business in other countries.
- Commercial tools (e.g., Alexa and SimilarWeb) can provide internet-traffic data (number of “visits”) to identify the most popular websites and potential registrants.
- Exchange of Information requests can be made under relevant tax treaties or the OECD Multilateral Convention on Mutual Assistance in Tax Matters where countries are signatories.

### Filing compliance and default assessments
- Revenue administrations can be authorized to issue default assessments of VAT when a supplier fails to file a tax return within the statutory time limit.
- Default assessments allow a revenue administration to make a reasonable estimation of the VAT liability owing, using information from previous filings or third-party information (e.g., payment services providers).
- Legal frameworks should vest tax administrations with the authority to apply “reasonable methods” to assess VAT when a taxpayer fails to file and not require a more time-consuming audit.
- Where such authorities already exist, they should be applicable to VAT owing on account of imported digital services.

### Payment compliance and collection assistance
- Where a non-resident business fails to fully pay its VAT liability, the revenue administration should be authorized to require financial institutions and other businesses in its jurisdiction to stop paying monies owed to the business and instead transfer the payment to the revenue administration.
- A request can be made under the Convention on Mutual Administrative Assistance in Tax Matters to the country where the non-resident business is based for assistance in collecting outstanding amounts, to the extent that the country is a signatory.
- 141 jurisdictions currently participate in the Convention.

### Security bonds
- A few countries require non-resident suppliers to post a security bond as a condition for registering in their VAT system.
- Example bond calculation: percentage (e.g., 25 percent) of the estimated annual VAT liability.
- The utility of bonds for suppliers of imported digital services is questioned because such suppliers typically seek enduring market share and future revenue flows remain available for seizure.

### Reporting compliance and detection methods
- Under-reported VAT liabilities can be detected by:
  - Requiring suppliers to provide copies of their books of account for the period under review and for those books to be audited.
  - Accessing third-party data sources, such as payment systems data, industry sector analysis, observations from other revenue administrations, and social media reports.
  - Using “secret shopper” purchasing to test supplier treatment of customer status and taxable status of supplies.
- Information-retention and production requirements for non-resident suppliers mirror domestic VAT payers; legislation in some countries (e.g., Australia) prevents a business from producing that information as evidence in subsequent hearings, providing strong motivation to cooperate.
- A robust penalty system is crucial; internationally, penalties range up to 200 percent of the undercharged tax for underreporting through to fines and imprisonment for willful misrepresentation.

### Business-to-Business (B2B) imported digital services — reverse charge
- Tax administrations commonly require resident businesses to apply the reverse charge method for B2B imported digital services.
- Reverse charge: resident business charges the VAT as if it were the supplier and may receive an offsetting VAT credit to the extent the service is used to produce taxable supplies.
- Approaches:
  - Apply reverse charge to all imported digital services and allow input tax credits as applicable.
  - Apply reverse charge only where the charge is not fully claimable as an input tax credit.
- Resident businesses report reverse charge on the standard VAT tax return; most countries do not create a special tax return or separate fields for reverse charge supplies.

### Low-Value Imported Goods (LVIG) — challenges and reform rationale
- Many countries provide a de minimis exemption for imported goods below a prescribed threshold; internet shopping growth has raised concerns about lost VAT revenue and competitive disadvantages for domestic retailers.
- Cross-border supplies of business-to-consumer merchandise exports estimated to increase from US$ 189 billion in 2015 to US$ 412 billion in 2018; international parcels increased from 115.1 million units to 191.8 million units (sources cited in the original text).
- Some countries now require prescribed non-resident businesses to charge VAT on low-value imported goods to final consumers and remit the revenue to the importing country, using simplified vendor collection models.
- Examples of reform timing: Australia (2018), New Zealand (2019), Norway (2020) and the United Kingdom (January 2021). The European Union expected to introduce the same reform in July 2021 and Singapore in January 2023.

### LVIG administrative design: registration threshold and ceiling
- LVIG regime provides a registration threshold for businesses and a ceiling for goods subject to the regime.
- Non-resident businesses with supplies of low-value imported goods above the registration threshold must charge, collect, and remit VAT for goods valued below the ceiling.
- The registration threshold should be consistent with the domestic threshold to avoid discrimination against foreign suppliers.
- Generally only B2C low-value imported goods are counted against the registration threshold; higher-value B2C supplies and all B2B supplies are excluded.
- The registration threshold applies to the aggregate of low-value imported goods and imported digital services; combined supplies above the threshold require the non-resident to charge VAT on both categories even if separately each falls below the threshold.
- For goods below the LVIG ceiling, the non-resident supplier charges and collects VAT prior to importation; for goods above the ceiling, customs collect VAT upon importation using standard customs procedures.
- Supplies by non-resident suppliers whose supplies fall below the registration threshold are not subject to VAT (neither LVIG regime nor customs apply VAT).

### Filing, payment, and taxpayer treatment under LVIG
- Simplified filing and payment systems: same filing and payment periods should be applied to both LVIG and imported digital services regimes.
- The same VAT tax return for imported services can be used by adding fields for imported digital goods values and associated VAT.
- Credits due to reversals or errors can be offset in future period tax returns rather than issuing same-period refunds.
- Vendor collection model does not permit non-resident suppliers to claim credit for VAT paid on purchases from the importing country, but they may register under the importing country’s standard VAT regime to claim such credits.

### Leveraging marketplaces and scope of intermediaries
- Two-thirds of cross-border supplies of goods estimated to be through marketplace platforms; more than half transacted through only three platforms.
- Inclusion of marketplaces in the supplier definition allows jurisdictions to achieve broad coverage with a manageable number of businesses (up to 1,000 entities).
- Taxable person defined as either the vendor or an electronic marketplace that intermediates the supply; legislation should specify conditions under which marketplaces are deemed the supplier.
- Postal operators, express carriers, and fulfillment centers are generally not considered suppliers and have no responsibilities in collecting VAT under the vendor collection method.
- Exceptions: Australia and New Zealand include “re-deliverers” (offshore mailbox/shopping services) as suppliers under LVIG when these intermediaries obscure the final location of the supply.

### Compliance strategy for LVIG
- LVIG compliance methods mirror imported digital services regime and add special focus on:
  - Re-deliverers identification and enforcement.
  - Cross-checking payment and customs information.
  - Leveraging customs controls to detect undervaluation or misclassification.
- Customs should prepare monthly listings of total value of low-value imports declared for each LVIG-registered supplier; tax authorities compare these with VAT returns to identify discrepancies and unregistered suppliers.
- Compliance program components:
  - Third-party information.
  - Risk profiling, monitoring past trading behaviors, intelligence assessments and industry referrals.
  - X-ray imaging combined with artificial intelligence interpretation to scan packages for content/value consistency.
  - Exploration of blockchain and smart contracts for intermediary-collected VAT transfers (early stage).

### Coordination with customs and avoidance of double taxation
- LVIG regime should align with customs duty regime: typically applies to goods equal to or lower than the customs duty exemption threshold; excisable goods are usually excluded from LVIG and treated under standard customs procedures.
- To avoid double taxation, non-resident suppliers must advise customs of VAT-paid status in import documentation, including:
  - The supplier’s VAT registration number and/or other business number.
  - Indication whether VAT was charged previously under the LVIG regime.
- This information should feed into the customs cargo system to facilitate quick processing and clearance.

### Implementation tasks and legislative changes
- A comprehensive, timebound implementation plan is crucial; international experience indicates approximately two years is needed to implement the reforms.
- Key implementation tasks include:
  - Extensive industry consultations.
  - Deciding on regime design features.
  - Enacting legislative changes.
  - Adjusting administrative processes and information systems.
  - Providing taxpayer education and tax officer training.
- Legislative changes should define imported services and goods subject to VAT, persons liable for paying and collecting tax, and registration/filing/payment requirements.
- Primary legislation should be supported by secondary legislation (regulations) and operational guidelines for practical application.
- Legislation must clearly define electronic marketplaces and conditions under which they are deemed the supplier. Marketplace deemed-supplier conditions include:
  - The marketplace authorizes the charge to the customer;
  - The marketplace authorizes the delivery of the supply to the customer;
  - The marketplace sets the terms and conditions under which the supply is made.

*Source: Technical Notes and Manuals 2021/004 (tnmea2021004) — introduction of a registration threshold and the tax agencies’ active outreach efforts.*

### 2. Implementation Plan

### 2. Implementation Plan

### Government announcement, system rollout and timeline
- Sequence of steps:
  - Government announcement
  - Introduction to Parliament
  - System design and integration
  - Review / finalise specifications for build and testlaw design
  - Law enacted by Parliament
  - System testing
  - Simplified report and pay commences (Quarterly)
  - Law commences
  - Simplifiedregistrationcommences
- Consultation and phased engagement:
  - Phase 1 – Aware
    - Consultation
    - Direct contact with key suppliers (incl. platforms)
    - Mail Out
    - Dedicated Web Page
    - Dedicated email address
    - Treasury — Media Release
  - Phase 2 – Prepare
    - Consultation
    - Direct contact with key suppliers (including platforms)
    - Mail Out
    - Staff Training
    - System registration ready
    - Risk TreatmentPreventative Strategies — Targeted Mail-out
    - Risk TreatmentPreventative Strategies — Audit
  - Phase 3 – Act Now
    - System Design
    - Communication Strategy
    - Law
- Target audiences and actions:
  - Non-resident Businesses, Marketplaces, Clients
  - Client awareness mail, contact and consultation
  - Commence charging VAT on consumer sales
  - Report and pay VAT/GST
  - Register
  - Compliance/Enforcement
  - Early awareness of Government announcement about VAT law changes
- Scoping and planning tasks:
  - Identify third-party data sources and undertake initial modelling
  - Risk assessment
  - Identify suppliers and platforms in scope
  - Refine modelling from third-party data sources and consultation
  - Commence monitoring of VAT registrations (listed twice in source)
  - 12 Months Minimum for system reporting and payment readiness
  - Design and implement systems and accounting changes
- Documentation and contractual criteria:
  - yDocumentation issued to the customer identifies the supply as made by the marketplace; and /or,
  - yThe marketplace and merchant contractually agree that the marketplace is responsible for VAT obligations.

### Key legislative changes (Imported Digital Services and Low-Value Imported Goods)
- Common and parallel changes noted in TABULAR format (preserve terminology):
  - Definition of digital (and other) services that are subject to tax, supplemented by appropriate place of taxation rules
  - Remove the de minimis exemption for non-resident businesses with supplies that exceed a prescribed threshold and define the supply of low-value goods subject to tax
  - Definition of persons to whom the VAT is charged (e.g., final consumer)
  - Definition of taxable persons (e.g., platforms and vendors) / (e.g., vendors, platforms, re-deliverers)
  - Circumstances when the platform or other intermediary can be deemed as supplier for underlying suppliers that make supplies on the platform
  - Circumstances when the platform or re-deliverer can be deemed as a supplier for underlying suppliers that make supplies on the platform or re-deliverer
  - Simplified registration, filing, and payment processes, including exchange rate and identification number
  - Establish recordkeeping requirements for non-resident suppliers
  - Obligation to use reverse charge either on all importations by a VAT registered business or on those importations that will not be able to fully be credited by that business (if not currently in existence)
  - Information to be included in importation documents and information to be provided to customers
  - Penalties, including for consumer misrepresenting as business / Penalties, for consumer misrepresenting as a business (if applicable)
  - Preserve the customs duty paid on goods above the LVIG threshold and the excise on excisable goods
  - Coordinate with customs processes to avoid double taxation

### Consultation and engagement (Section C)
- Early and effective consultation is key to obtaining high levels of compliance from non-resident suppliers.
- Recommended outreach steps:
  - Conduct industry analysis, liaise with other administrations, contact industry associations to identify potentially affected companies.
  - Contact each company to explain the operation of the new regimes and elicit feedback on key design features.
  - Issue detailed technical and procedural advice simultaneously with the release of the legislation; guidance should be available in the languages used by the suppliers.
  - Proactive follow-up: send a registration form to all potential registrants requiring completion or an explanation for non-registration; set up designated teams to monitor and follow-up with unresponsive entities.
  - Assign a dedicated tax officer (key client manager) to liaise with the largest businesses to assist in answering questions and resolving LVIG regime issues.

### Administrative processes and information systems (Section D)
- System design principles:
  - Create new systems to facilitate registration by non-resident businesses.
  - Simplify information requirements and proof of identity given the regime is “pay-only” (no credits claimed).
  - Ensure systems and guidance are available in English where this is not the local language.
- Registration and filing forms:
  - A simplified registration form can be adopted; non-resident businesses may use the same form to register for both imported services and low-value-imported goods regimes.
  - Filing systems must be simplified and filed over the internet; non-resident suppliers report only the amount of VAT due from taxable sales (pay-only).
- Payment options:
  - Provide a range of payment options for non-resident suppliers, which may include payment by direct debit, credit card, SWIFT transfer.
- Reporting cadence:
  - Example: OSS VAT return required to be submitted within 20 days of the end of the period covered by the return (quarterly filing reference).
- New compliance capability:
  - Establish an administrative unit to design and implement strategy for identifying, assisting, and ensuring compliance under the digital services and LVIG regimes.

### Compliance unit responsibilities (Box 4)
- Research the internet and third-party data sources to identify the non-resident entities who are supplying digital services and low-value imported goods to the country in excess of that country’s registration threshold. In addition to identifying the major platform operators, this unit would also work out how to conduct analysis to identify the significant direct suppliers and re-delivers in major sectors
- Develop the relationships necessary for liaising with the platform, merchant and redelivery industries to obtain intelligence about compliance problems for the industries and potential compliance gaps in the industries
- Develop close working relationships with the Customs department operating in that country. Not only will they be a valuable source of intelligence, a smooth operating relationship between the revenue and Customs authorities is necessary to deliver the smooth passage of goods for compliant LVIG suppliers
- Work with the tax administration’s treaty experts to build the protocols under which the administration could obtain help from other administrations on how to set up and operate a digital services and LVIG regime. They would also work with the treaty experts in establishing the protocols under which exchange of information provisions might be lawfully used to obtain information from other administrations under Treaty or Convention provisions

### Taxpayer education, outreach and tax officer training (Section E)
- Education and assistance program design:
  - Customize programs to the needs and circumstances of non-resident taxpayers; deliver remotely through online means.
  - Educational materials should include written guidance, online seminars and video guides, and a dedicated website page.
  - Tax agencies should proactively send materials and encourage participation.
  - Largest businesses should be assigned a dedicated tax officer as a single point of contact.
- Tax officer training:
  - Design a tax officer training program with both induction training and special topic training.
  - Initial induction training targeted at taxpayer services officers should be delivered immediately after the government announcement to handle initial enquiries.
  - A second, more technical round of training should be delivered near the implementation date for all staff who administer VAT.
- Timeframe:
  - The tasks described can require up to two years to design and implement.
  - 12 Months Minimum noted earlier for system reporting and payment readiness; overall implementation effort may take longer and determines success of vendor collection model.

### European Union schemes and low-value import specifics (Appendix 1 highlights)
- OSS / MOSS:
  - MOSS (since 2015) expanded into OSS beginning in July 2021 to cover additional B2C services, intra-Community distance sales of goods, and certain domestic supplies of goods.
  - OSS variants: non-Union scheme (non-EU established suppliers) and Union Scheme (EU established suppliers).
  - OSS filing: taxable persons using OSS must submit a (mini) One Stop Shop VAT return for each calendar quarter; the return and payment are required within 20 days of the end of the period covered by the return.
  - Union scheme differences include application to intra-Community distance sales of goods and certain domestic supplies facilitated by electronic interfaces; and an annual EUR 10 000 turnover threshold supporting micro-businesses.
- Low-Value Import Scheme (IOSS):
  - As from July 1, 2021 the VAT exemption at importation of small consignments up to EUR 22 will be removed.
  - A new scheme (IOSS) created for goods imported with value not exceeding EUR 150 (excluding excisable goods).
  - IOSS is voluntary; EU and non-EU suppliers (vendors and marketplaces) can elect to use IOSS, normal customs procedures, or special arrangements for postal operators and express carriers.
  - Upon registration for IOSS, tax authorities issue an IOSS VAT identification number to suppliers or marketplaces who are deemed suppliers; this number is provided to customs to release goods without charging VAT a second time at import.
  - IOSS returns and payments:
    - Submit a monthly IOSS return to the Member State of identification for eligible supplies; return contains total value of goods sold, VAT rate, total VAT amount broken down by Member State and by rate (standard and reduced).
    - Make a monthly payment to the Member State of identification of the VAT due as declared in the IOSS VAT return.
  - Customs reconciliation:
    - Customs authorities prepare monthly listings of total value of imports of low value goods declared for each IOSS VAT identification number; aggregated monthly listings are shared with tax authorities to compare import declarations with IOSS returns.
  - Intermediary requirement:
    - Taxable persons not established in the EU or in a third country with a VAT mutual assistance agreement must appoint an intermediary established in the EU who fulfils obligations under the import scheme on their behalf.
  - Special arrangements:
    - Sellers and marketplaces may alternatively opt to pass import VAT collections to postal operators, express carriers and customs agents; under special arrangements the customer pays VAT to the declarant, and Special Arrangements operators pay tax authorities monthly on a cash-received basis with deadline the 16th of the month following the month of import.

*Technical Notes and Manuals 2021/004 — Section 2, Implementation Plan*

### APPENDIX 2. EXAMPLE OF DETERMINING THE SCOPE

### APPENDIX 2. EXAMPLE OF DETERMINING THE SCOPE OF THE VENDOR COLLECTION REGIME (SINGAPORE)

### Scenario description
- Company A, established in Germany, aggregates accommodation availability from accommodation providers worldwide on its website and allows customers to search and book accommodation.
- Upon each confirmed booking, Company A charges a service fee to the respective accommodation providers in Singapore and a booking fee to customers in Singapore.
- The service and booking fees are described as charges for the services provided by the platforms (online marketplaces) to the accommodation providers and customers, and are different and separate from the accommodation charges.
- The accommodation itself is provided by the accommodation providers (and not the platform); the accommodation charges (i.e. in respect of properties in Singapore) will be subject to Singapore GST, if the accommodation providers are GST-registered.

### Determinations under Singapore’s vendor collection regime (Appendix Table 1)
- Service fees to non-GST registered Singapore accommodation providers
  - Subject to Singapore’s GST as services are within scope and provided to a non-GST registered business
- Booking fees charged to non-GST registered Singapore customers
  - Subject to Singapore’s GST as services are provided to a non-GST registered customer
- Service/Booking fees to overseas persons
  - Not subject to VAT as outside scope of the regime because the fees are paid to an overseas supplier and are considered to be for services (i e , booking/brokerage services) consumed overseas
- Service/Booking fees to GST registered Singapore persons
  - Subject to reverse charge

### Additional example: deeming an electronic marketplace as the supplier for businesses that make taxable supplies on the platform (Appendix 3 and Appendix Table 2)
- Two electronic marketplaces are assessed:
  - Electronic marketplace A: operator selling phone applications on behalf of underlying developers who utilize its platform.
  - Electronic marketplace B: platform providing hotel listing services where terms of supply are privately arranged by the hotels and their customers.
- Assessment against five conditions (summary of Appendix Table 2):
  - Condition 1 — Authorizes the charge to the customer
    - A: Yes — A initiates the charging process and receives payment from the customer
    - B: No — Payment is separately settled between buyer and seller
  - Condition 2 — Authorizes the delivery of supply to the customer
    - A: Yes — A arranges for delivery of the supply to the customer
    - B: No — Delivery is separately arranged between buyer and seller
  - Condition 3 — Sets the terms and conditions under which the supply is made
    - A: Yes — A provides customer support and sets return policy
    - B: No — Terms and conditions separately negotiated between buyer and seller
  - Condition 4 — Supply identified as made by the marketplace
    - A: Not Applicable — Depends on sales arrangements
    - B: No
  - Condition 5 — Agreement that marketplace is responsible for VAT
    - A: No
    - B: No
- Conclusions drawn in the assessment
  - A is regarded as the supplier of the digital services
  - B is not regarded as the supplier of the digital services

*APPENDIX 2. EXAMPLE OF DETERMINING THE SCOPE OF THE VENDOR COLLECTION REGIME (SINGAPORE) — tnmea2021004*

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_Source: https://www.imf.org/-/media/files/publications/tnm/2021/english/tnmea2021004.pdf_