In the era of rapid internet and technology advancement, the increasing accessibility and connectivity has created mass opportunities for the E-commerce industry. In view of the massive outreach in which the internet has created, there has never been a better time to start on an E-commerce business. E-commerce refers to the business that uses the internet platform for sale of goods or services via electronic means. The following discussion will touch on some of the essential legal consideration when one embarks on an E-commerce.
Domain names are a huge part of the E-commerce businesses. Many businesses will register domain names that contain their trademark to boost brand recognition. When creating domain names, one should be cautious not to infringe the trademark of other businesses by creating domain names that will confuse the general public or induce the general public to associate the website with another brand. For instance, the domain name “www.amazoon.com” may give rise to confusion and the general public may mistakenly associate the website with another brand.
It is preferable to create a unique and distinctive domain name to avoid trademark infringement and also, more importantly, to establish a clear internet identity and to enhance brand recognition. Further, the E-commerce should register their trademark to deter and prohibit others from using similar or identical domain names. Should there be any unauthorized use of your registered trademark, as the proprietor of the trade mark, you are entitled to apply to court for relief (such as an injunction, damages or an account of profit) to be granted.
In a business with a physical storefront, the collection of Government Service Tax (GST) is straightforward. How then is GST imposed on E-commerce transactions? The simple rule is that the imposition of GST pays no regard to the medium in which the transaction is made. GST will be imposed on goods and services supplied over the internet within Singapore so long as the supplier is a GST-registered person or a person required to be registered under the Goods and Services Tax Act (“GST Act”). Things get a little more complicated when the goods are supplied to customers outside Singapore. In such instances, where goods are exported out of Singapore, no GST will be imposed so long as the business owner is able to produce the necessary export documents.
Apart from GST, another important tax consideration would be the imposition of Income Tax on E-commerce. The general principle is that income tax is imposed on income accruing in or derived from Singapore or received in Singapore from outside Singapore. This general principle applies uniformly across the board to traditional commerce and E-commerce.
In a typical scenario where the E-Commerce company sets up its business in Singapore and hosts its website in Singapore, all business income are regarded as being sourced in Singapore is are liable to be tax. This is so even if the customers who placed their orders are abroad. In situations where E-Commerce company hosts its website in a foreign country, if the company operates primarily in Singapore (eg. Manufacturing of goods or the delivery of goods), the business income is deemed to be sourced in Singapore and is similarly subject to taxation.
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