Singapore Goods and Sales Tax Will Increase to 8% from January 2023
What is GST?
GST is a value-added tax levied on most supplies of goods and services as well as on imported goods.
Overview
With effect from 1 Jan 2023, Minister for Finance announced in Budget 2021 that GST will be extended to:
- GST will increase from 7% to 8% from 1st, Jan 2023(ref:https://www.iras.gov.sg/taxes/goods-services-tax-(gst)/gst-rate-change/gst-rate-change-for-business/overview-of-gst-rate-change)
- Goods imported via air or post that are valued up to (and including) the current GST import relief threshold of S$400;
- Business-to-consumer1 (“B2C”) imported non-digital services.(ref:https://www.iras.gov.sg/taxes/goods-services-tax-(gst)/gst-and-digital-economy/gst-on-imports-of-low-value-goods)
GST on low-value goods imported via air or post
-
With this change, GST on low-value goods will be effected as follows: - Overseas Vendor Registration for B2C import of low-value goods; and
- Reverse charge for Business-to-Business1 (“B2B”) import of low-value goods.
1 Business-to-Consumer (“B2C”) supplies refer to supplies made to non-GST registered persons, which include individuals and businesses that are not registered for GST. On the other hand, Business-to-Business (“B2B”) supplies refer to supplies made to GST-registered persons, including companies, partnerships and sole-proprietors.
Imports of low-value goods
Low-value goods are goods which at the point of sale:
- are not dutiable goods, or are dutiable goods, but payment of the customs duty or excise duty chargeable on the goods is waived under section 11 of the Customs Act;
- are not exempt from GST;
- are located outside Singapore and are to be delivered to Singapore via air or post; and
- have a value not exceeding the GST import relief threshold of S$400.
In the above definition, ‘point of sale’ refers to the time at which an order confirmation is issued by the OVR Vendor or such other time as agreed with the Comptroller, whilst ‘Singapore’ refers to customs territory.
If you are an overseas supplier
If you are a supplier of low value goods2 who belong outside Singapore, you are required to register for GST in Singapore if you:
- have an annual global turnover exceeding $1 million; and
- make B2C supplies of low-value goods to Singapore exceeding $100,000.
Once registered for GST, you are required to charge and account for GST on B2C supplies of low-value goods made to Singapore.
If you are an electronic marketplace operator or redeliverer
Under certain conditions, whether you are a local or an overseas operator of an electronic marketplace, you may be regarded as the supplier of the low-value goods2 supplied by the local and overseas suppliers through your marketplace.
If you are a local or overseas redeliverer3, you may also be regarded as the supplier of low-value goods which you assist to purchase and/or deliver to a customer in Singapore, under certain conditions.
In such cases, you are required to include the value of these supplies of low-value goods to determine your GST registration liability. If you are liable for GST registration or are already GST-registered, you are required to charge and account for GST on B2C supplies of low-value goods treated as supplied by you, on behalf of the local and overseas suppliers.
To ease compliance burden, if you are an overseas supplier, electronic marketplace operator or redeliverer, you will be registered under a simplified regime, with reduced registration and reporting requirements.
2 If you also supply remote services whether directly or on behalf of overseas suppliers via your electronic marketplace, you will be required to aggregate the value of the B2C supplies of remote services and low-value goods to determine your GST registration liability. Once you are liable for GST registration or are already GST registered, you are required to charge and account for GST on both B2C supplies of remote services and low-value goods to Singapore.
3 A redeliverer is a person who, under an arrangement with the customer:
i. delivers or facilitates the delivery of goods to Singapore; and
ii. provides or facilitates the use of an address outside of Singapore for delivery of the goods; or
iii. purchases or facilitates the purchase of the goods.
In the above definition, ‘Singapore’ refers to custom territory. General freight forwarders who do not facilitate the use of an address nor facilitate the purchase of goods are not treated as redeliverers
If you are a local supplier with low-value goods outside Singapore
Local GST-registered and non-GST registered suppliers belonging in Singapore may store their goods outside Singapore for sale to customers. Currently, the sales of such goods warehoused overseas by local suppliers to customers in Singapore are treated as outside the scope of GST, since the goods are located outside Singapore at the time of supply.
To achieve parity in the tax treatment for local suppliers and overseas ones, direct sales4 of low-value goods by local suppliers to customers who are not GST-registered in Singapore will fall within the scope of GST.
Consequently, a GST-registered local supplier would be required to charge and account for GST, at the standard-rate, on his direct sales of low-value goods to customers who are not GST-registered in Singapore.
A non-GST registered local supplier who makes direct sales of low-value goods to customers who are not GST-registered in Singapore would be required to include such supplies in his taxable turnover in determining his GST registration liability. The domestic registration threshold will apply to the local supplier i.e., taxable turnover of $1 million.
4 Direct sales refer to goods that are supplied directly by local and overseas suppliers to customers who are not GST-registered in Singapore (e.g., through the supplier’s own website), instead of supplying the goods through an electronic marketplace or redeliverer.
If you are a Transporter or Declaring Agent for Low-value Goods imported into Singapore
If you are a transporter assisting your client to transport low-value goods (LVG) into Singapore or a declaring agent assisting your client to take up permits for such LVG, you will need to take note of the revised import procedures and permit requirements from 1 Jan 2023. For more details, please refer to the slide and the FAQ for transporters.