Online shoppers here may soon find that their purchases from e-commerce sites like Amazon, Taobao, Shopee and Lazada could become more expensive as Singapore slaps the Goods and Services Tax (GST) on imported goods worth $400 and below from Jan 2023.
In his Budget Speech on Feb 16, Singapore Deputy Prime Minister Heng Swee Keat said this will apply to goods imported via air or post that are valued up to and including the current GST import relief threshold of $400.
These goods are currently not subject to GST to facilitate clearance at the border. In contrast, GST is paid on such goods purchased in Singapore.
“The changes will ensure a level playing field for our local businesses to compete effectively,” said Heng, adding that this is especially relevant as ecommerce volume is growing at a much faster pace relative to physical retail sales here in Singapore.
The move comes after GST was extended to imported digital services like movie and music streaming services from 2020, amid a growing digital economy and e-commerce for goods and services.
Heng also pointed out that several jurisdictions, including Australia, New Zealand and the European Union, have implemented or announced plans to implement the equivalent of GST on such goods.
“Overseas suppliers of goods and services will be subject to the same GST treatment as local suppliers,” he added, and IRAS (Inland Revenue Authority of Singapore) will continue to work with the industry to ensure smooth implementation for the change
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Furthermore, GST will also be extended to B2C imported non-digital services, such as training services by a foreign company. These are currently not subjected to GST.
However, from 2023, overseas suppliers who are required to register under the Overseas Vendor Registration regime will now charge GST on such sales to local consumers.
This impending additional tax is part of the government’s bid to fund higher recurring expenditure, such as healthcare.
In response, Allen Tan, principal and head of the tax, trade and wealth management practice at Baker McKenzie Wong & Leow said, "the removal of the relief on import GST for low value goods from 1 January 2023 will be bemoaned by the legions of online shopping fans. However, it will provide a much needed boost to government revenues without detracting from Singapore’s attractiveness to inbound investment. It is also a principled proposal consistent with the policy of tax neutrality, and ensures that local retailers are not unfairly penalised by the GST regime."
But Richard Mackender, who is Tax Partner and Indirect Tax Leader at Deloitte Singapore, thinks that “it is not a surprise that the Government will change the GST treatment of low-value imports of goods so that overseas suppliers will be affected by GST in the same way as local businesses. But businesses will welcome the timeline of 2023 to get ready.”
