E-Tax Guide on GST for the Advertising Industry

Singapore is a country that is continuously changing, always looking for new advances and technologies. The country provides so many options when it comes to advertising. Even as digital advertising takes on a larger role in Singapore’s advertising landscape, conventional offline media are fighting back with creative formats and increasingly digitalized solutions. With the digitization of formats and the development of programmatic solutions, outdoor advertising (OOH) is also doing fairly well.

As the advertising industry keeps growing, it is expected to account for an increasing share of advertising spending. Therefore, it is subject to specific goods and services tax (GST) rules, depending on where the media content is substantially circulated. However, due to the challenges that taxpayers in the industry faced in determining whether their work qualifies for zero-rating or not under the current rules, the Inland Revenue Authority of Singapore (IRAS) has revised the e-Tax guide for the advertising industry, which has taken effect as of January 1, 2022. 

This guide outlines the (GST) principles that apply to the advertising sector and is applicable to media owners, media agencies, and creative agencies, as well as full-service advertising agencies.  For general information about Singapore GST, please refer to this article. 

Forms of advertising in Singapore

Some of the common forms of advertising and related services in Singapore are:

• Media Sales,
• Media Planning,
• Creative and Production Sales,
• Brand Public Relations (PR), and
• Events Organizing.

This article will also specifically talk about the new GST treatment of media sales and the transitional provisions that apply to the supply of media.

GST treatment of media sales before and after Jan 1, 2022

Media sales refer to:

• Sale of advertising space for hardcopy print and outdoor advertisements via newspapers, magazines, billboards, etc.
• Sale of advertising airtime for broadcasting via TV and radio
• Sale of media space for online advertising (in the form of a page view, impression, hit rate, electronic data mail, SMS messages, etc.) in other digital media via email, internet, and mobile phone.

The table below shows the GST treatment of media sales before and after the revision:

With effect from January 1, 2022, the GST treatment of media sales will no longer be determined by the location of the advertisement’s distribution. Instead, if the supply is contractually made to an overseas person and directly benefits an overseas person and/or a GST-registered person in Singapore, the supply of media sales shall be zero-rated under section 21(3)(j). The service will not be considered directly related to the advertising media in circulation or the advertisement’s subject matter.

GST treatment for media planning

Media planning is not directly related to the distribution of advertising media and the subject of advertising. The mode of advertisement and the countries of circulation are just the basis of planning. Therefore, the zero-rating concept based on media circulation rules for media sales advertising cannot be applied to media planning services.

If media planning services are provided to a Singapore client, the supplier must charge and account for GST at the rate applicable to the supply. On the other hand, if the supplier is engaged by a Singapore client to provide media planning for their group of companies located outside Singapore or located within and outside Singapore, the supplier must similarly standard-rate its supply.

The provision of media planning services to a client outside of Singapore can be zero-rated under section 21(3)(j) of the GST Act if the following requirements are met:

• The service is provided under the terms of a contract (written or verbal) with an overseas client who does not reside in Singapore, and the invoice is sent directly to the overseas client who hired the provider.
• The service must directly benefit the overseas client, another overseas person(s), and/or GST-registered local person(s) only (with effect from January 1, 2020).

In addition, the supplier can zero-rate their supply if the client is an overseas advertiser who will directly benefit from their services, provided that the contract does not name a local non-GST registered person as the recipient or beneficiary of the services. The supplier can zero-rate their supply if they are engaged by an overseas holding company/group HQ/regional office to do media planning for their group of companies which could include Singapore and overseas entities.

GST treatment for creative and production sales 

The sale of creative and production services is a service that has no direct connection to the advertisement’s subject matter (i.e., whether it is an advertisement for a particular land or goods or service). It also has no direct connection to the media or the distribution of the commercial.

As of Jan 1, 2020, the creative and production services can be zero-rated if the service directly benefits overseas person(s) and/or local GST-registered person(s). Otherwise, the service has to be standard-rated.

GST treatment of Brand PR 

An advertising agency can be involved in Brand PR when launching a marketing campaign. The role entails PR consultation, reputation management, and interactions with targeted audiences, as well as planning and preparation for media releases, activity planning, and scheduling.

If the supply of Brand PR is made to a local person, the supplier has to standard-rate its fee. However, it can be zero-rated if the overseas person and/or a local GST registered person are the immediate recipient(s) directly benefiting from the service.

GST treatment of Events Organizing

An advertising agency can also organize exhibitions or conventions for promotional campaigns. These events can be held in Singapore or outside Singapore. If the advertising agency is organizing such events, it can zero-rate its supply of exhibition or convention services if:

• the exhibition or convention events are held outside Singapore (regardless of whether the client is a local or overseas person); or
• the supply of event organizing services is contractually made to a person wholly in their business capacity and who in that capacity belongs outside Singapore and directly benefits them.

The table below provides the summary of the GST treatment for various advertising services in Singapore:

If you need more information about GST, including its registration and exemption criteria, or if you need help with GST tax returns, don’t hesitate to talk to us. We’re always available for a chat, just fill out our contact us form, and we’ll get in touch!

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