One of the challenges of operating an e-commerce business is the tax treatment. E-commerce transactions are often multi-jurisdictional in nature and generally involve anonymous parties. E-commerce business owner must be aware of the Singapore tax issues that could arise as a result of running an online business. In general, the Singapore tax regime is very liberal and provides very generous incentives for business owners.

Q:	What is the tax treatment for E-commerce?
A:	If the business operations underpinning the EC transactions are carried out in Singapore, the income so derived is considered as sourced in Singapore and taxable here. Conversely, if the business operations are carried on outside Singapore, the income is considered as foreign-sourced and thus, taxable when remitted back to Singapore.
Q:	What is the difficulty in deciding the tax treatment for E-commerce?
A:	The difficulty is E-commerce deals with electronic borderless transactions and not to the trade of physical goods and services, it eventually comes down to whether the e-merchant is trading in Singapore or with Singapore. In determining this, one has to take into account: 1. The place of contract; 2. The place where operations relating to the e-transactions take place and from which profits are derived such as: (1) Where is the labor employed? (2) Where is the capital invested? (3) In which location are the goods manufactured? (4) In which location are the goods stored? (5) Where are the payments made for expenses incurred? (6) In which location are the sales proceeds received?
Q:	What is the tax treatment for a E-commerce company whose business operations are in Singapore, derives its income from EC activities through a website hosted in Singapore?
A:	As the business operations of the Company are carried out in Singapore, all business income including income from EC activities are sourced in Singapore and are liable to tax in Singapore. Thus, income derived from business conducted through the website will be income sourced in Singapore and subject to tax in Singapore.
Q:	What is the tax treatment for a E-commerce company whose business operations are in Singapore, derives its income from EC activities through a website outside Singapore?
A:	Although the website is located in a foreign country, the fulfillment of the business obligations is done through its operations in Singapore. The Company’s income is derived from activities carried out largely in Singapore. As such, the income derived from its EC transactions via its website will be considered as income sourced in Singapore and is subject to tax in Singapore.
Q:	What is the tax treatment for a E-commerce company whose business operations are in Singapore, derives its income from EC activities through a website and a branch outside Singapore?
A:	Since the branch carries out its activities largely outside Singapore, its income so derived would be considered as sourced in the foreign country and would not be subject to tax in Singapore unless the income is remitted back to Singapore.
Q:	What is the tax treatment for a E-commerce company whose business operations are outside Singapore, derives its income from EC activities through a website in Singapore?
A:	Since most of the Company’s operations are conducted outside Singapore, the Company would not be considered as having its business operations in Singapore. The income from the EC transactions through the website is derived therefore mainly from its operations outside Singapore. Thus, such income would not be considered as sourced in Singapore and taxable in Singapore.
Q:	What is the tax treatment for a E-commerce company whose business operations are outside Singapore, derives its income from EC activities through a website and a branch in Singapore?
A:	Since the company’s business operations are carried out outside Singapore, it is not subject to tax in Singapore. However, as the branch’s operations are undertaken in Singapore, the profits so derived would be considered sourced in Singapore. Therefore, the branch profits are taxable in Singapore.