Tax Considerations for Online Sellers & Digital-Only Businesses in Singapore

The rise of e-commerce, social-commerce, and digital-only business models has transformed the way individuals and companies operate in Singapore. Whether you are selling your products or services on Shopee, Lazada, TikTok Shop, Amazon, Carousell or running a purely digital service business such as content creation, dropshipping, affiliate marketing, software subscriptions, or digital products, your online income may be taxable under Singapore law.

Nevertheless, many business owners and side-hustlers are unsure of what is considered as “business income”, how to file taxes correctly, what expenses they can claim, and how IRAS assesses digital activity.

This article will outline the key tax considerations for online sellers and digital-only businesses in Singapore, based on IRAS guidelines and offers practical ways to stay compliant while optimising your tax position.

1. Is Online Income Taxable in Singapore?

a.  According to IRAS’s website, income earned from online platforms is taxable if the activity is carried out as a trade or profession. This applies whether you are:

1)     Running a full online store

2)     Dropshipping or using fulfilment services

3)     Providing services digitally (in respect of design, coaching, consulting or editing)

4)     Selling digital products (templates, subscriptions, e-books, software, memberships)

5)     Earning affiliate commission or influencer income

6)     Doing reselling, group buys, or live-selling activities

b. Online income is taxable if these apply:

1)     You operate the activity with the intention to make a profit

2)     Sales occur regularly or consistently

3)     You promote or advertise your business

4)     You purchase inventory with the purpose of resale

5)     You earn fees for content, promotions, or sponsorships

c. Non-taxable examples (usually):

1)     Selling your used personal items occasionally

2)     One-off casual sales without business intention

3)     Isolated personal transactions

d. However, once your activity becomes systematic or profit-driven, IRAS will consider it as a business.

2. Do I Need to Register a Business?

a. A Sole Proprietor / Self-Employed: Suitable for small sellers, freelancers, creators, and early-stage digital businesses.

b. A Private Limited Company: Suitable when all following conditions are met:

1) Monthly profits grow,

2) You want limited liability,

3) You need separation between personal vs business income,

4) You want to optimise corporate tax rates (up to 75% tax exemption for new start-ups).

3. What Business Expenses Can Online Sellers Claim?

a. IRAS allows deduction of expenses incurred wholly and exclusively to produce income.

b. Correct classification is vital as many online sellers over-claim or under-claim, with increasing the risks of getting penalties.

4. Keeping Proper Records for IRAS Submission

a. IRAS requires all online sellers and digital businesses to maintain proper records for at least 5 years. This includes:

1) Sales invoices or order confirmations

2) Platform payout statements

3) Bank transactions

4) Inventory purchase records

5) Advertising receipts

6) Fulfilment & shipping documents

7) Contracts with influencers or affiliates

8) Foreign platform income records such as Amazon US or Patreon

b. Tip: Most platforms namely Shopee, Amazon, TikTok, Stripe and PayPal allow monthly export of statements, so you should download and store these regularly.

5. How to File Taxes for Online Income

a.  For Sole Proprietors / Self-Employed: Declare under your individual income tax return.

b.  For Companies: Submit the following documents to IRAS:

1) Estimated Chargeable Income (ECI)

2) Form C-S / C-S Lite / Form C

3) Tax Computation & Supporting Schedules

c.  Online sellers who are using company structures must also keep proper corporate accounting records.

6. Whether Overseas Income Is Taxable?

a. This is often misunderstood.

b. IRAS will tax foreign-sourced income when:

1) It is received in Singapore, and

2) The company or individual is considered resident in Singapore, and

3) It does not qualify for a specific exemption

c. This is relevant for:

1) Etsy global sellers

2) YouTube, TikTok or Meta monetisation

3) Affiliate income from US/EU platforms

4) Subscription or SaaS income collected globally

d. Hint: A professional review is recommended if you handle overseas payouts.

7. GST Considerations for Online Sellers

a. Your annual taxable turnover exceeds SGD 1 million, OR

b.  You belong to the Overseas Vendor Registration (OVR) regime (for foreign digital service providers)

c.  Many online businesses cross the threshold without noticing this matter because marketplace sales can escalate quickly.

8. Common Mistakes Online Sellers Make

a. Mixing personal and business funds

b. Under-declaring platform income

c. Claiming personal expenses as business expenses

d. Not keeping proper documentation

e. Ignoring overseas income tax rules

f. Not registering for GST on time

g. Remarks: These mistakes can lead to hefty penalties, queries, or audits.

9. Why Choose Morrison Management for Addressing Your Tax Issues?

a. Online commerce is fast-moving and IRAS tax treatment of digital income is continually evolving.

b. Whether you are a micro-seller, a fast-scaling e-commerce startup, or a digital-only global service provider, accurate tax compliance is crucial.

c.  Morrison specializes in terms of:

1) Tax advisory for online and digital-income businesses

2) Proper expense classification and deduction optimisation

3) GST planning and registration support

4) Overseas income and cross-border tax structuring

5) Full bookkeeping and tax filing for marketplace sellers

6) IRAS audit representation and dispute resolution

d. Our team ensures that you remain IRAS-compliant without overpaying taxes or risking penalties while offering you with the structured and professional support that will eventually assist in your business expansion.

10. Choose an ATA-Qualified Tax Professional for Peace of Mind

a. Morrison is an Accredited Tax Advisor (ATA) in Singapore. This means we meet the professional standards that are set by ISCA and regulatory bodies for ensuring high-quality tax work that protects you during IRAS reviews, audits, and compliance checks.

b. Your online business deserves expert tax guidance, so you can focus on scaling, selling, and building your brand with confidence.

Contact Morrison today to receive professional tax advice that is tailored to you. We can help you to stay compliant, optimise your tax position, and grow sustainably.

Direct IRAS Link for Reference:

https://www.iras.gov.sg/taxes/individual-income-tax/self-employed-and-partnerships/tax-obligations-by-industry-trade-or-profession/tax-guide-for-online-sellers-and-service-providers