Dear Mr
I refer to your feedback sent via our website on 29 Oct 2015.
To determine if the GST rate of 7% is to be computed based on 100% or 50% of the commission that you have to pay in a co-broking scenario where one agent is GST-registered while the other is not, you would need to look at which agent are you contracting with.
A co-broking arrangement is commonly seen in the real estate agency industry where the estate agent enter into a co-brokering arrangement with another estate agent on the sale of property. Below is an illustration on how GST should be accounted for in a situation where one agent is GST-registered while the other is not.
Illustration:
A Realty Pte Ltd (GST-registered) is contracted by a seller to market his property. Separately, B Realty Pte Ltd (Non-GST-registered) assist A Realty Pte Ltd to find a buyer for the property and both estate agency agreed to share the commission equally. For the purpose of GST, there are 2 separate transactions in this case.
(1) A Realty Pte Ltd’s supply of service to seller; and
(2) B Realty Pte Ltd’s supply of service to A Realty Pte Ltd.
In transaction 1, the full commission payable by the seller to A Realty Pte Ltd, (i.e. consideration for A Realty Pte Ltd’s supply of service) will be subject to GST. This is regardless of the co-broking arrangement which is a separate transaction between A Realty Pte Ltd and B Realty Pte Ltd. Separately, in transaction 2, no GST need to be accounted by B Realty Pte Ltd when it receives 50% of the commission from A Realty Pte Ltd as the former is not a GST-registered person.
Hope the above clarifies.
For future correspondence with us, please quote your email reference number.
Regards
LOW Wan Yeong, Mabel (Ms)
Senior Tax Officer (GST-General) | Inland Revenue Authority of Singapore
1800- 356 8633 | (65) 6351 3553 (fax) | http://www.iras.gov.sg | http://twitter.com/IRAS_SG