Singapore: Application of GST in “direct selling” business model (High Court decision)
A High Court decision concerning application of GST in “direct selling” business model
A High Court decision concerning application of GST in “direct selling” business model
The High Court held goods and services tax (GST) must be charged based on the actual price of the goods sold, after taking into account tiered discounts, rather than the open market value of the goods.
Summary
The taxpayer sold nutritional supplements, weight-management products, and other personal care products to consumers through members. Under its business model, commonly known as “direct selling,” the taxpayer only sells products to members of the company and offers several tiers of discounts depending on the volume of products purchased.
The issue before the court was whether the value of the goods for GST purposes is the open market value of the goods, or the actual price at which the goods were sold to members, including the tiered discounts. The court also considered whether there was any non-monetary consideration provided by members to the taxpayer in the form of marketing considerations that must be taken into account in determining the value of the goods for GST purposes.
The court concluded that the value of the goods for GST purposes is the actual price of the goods sold, taking into account the tiered discounts, and that no non-monetary consideration arguably provided by the members of the taxpayer must be taken into account.
Read a May 2023 report [PDF 337 KB] prepared by the KPMG member firm in Singapore
The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. KPMG International Limited is a private English company limited by guarantee and does not provide services to clients. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 3712, 1801 K Street NW, Washington, DC 20006.