GST chargeable on imported goods below S$400 from 1 January 2023

Last updated on 15 January 2022

The Singapore government recently introduced new legislation to impose Goods and Services Tax (GST) on all imported goods from 1 January 2023 as an extension of the Overseas Vendors Registration (OVR) and Reverse Charge (RC) regimes.

Under OVR rules, imported digital services such as mobile games and online streaming services are GST-chargeable. The RC scheme taxes services imported by locally GST-registered persons. The OVR and RC regimes were introduced on 1 January 2020.

Under the current rules, imported low-value goods (LVGs) valued below S$400 are exempted from GST. However, with the new regulations, local or overseas suppliers must collect GST on all goods imported by air or post, regardless of value.

The new legislation also covers business-to-consumer (B2C) non-digital remote services such as live educational courses from overseas providers, which only covers digital services under the current rules.

The purpose of the new GST regime is to level the playing field for GST-registered local suppliers who are subject to GST for supplying goods and services under S$400. In short, all goods and services in Singapore will be GST chargeable whether they are procured locally or from overseas.

Local companies that supply LVGs overseas are required to charge GST and may be liable for GST registration. Similarly, companies that re-delivers LVGs to Singapore consumers may be treated as suppliers of LVGs. Electronic marketplaces such as Amazon and Lazada will also be affected by these changes.

There are many important areas that should be taken into consideration in making an assessment on how the recent new rules impact your businesses. These would include:

  • Whether supplies fit the definition of remote services or LVG
  • Whether your supplies are B2C in nature and if your business is considered the electronic  marketplace operator or redeliverer
  • Whether your business is liable for GST registration
  • How to update your processes to capture the necessary information for compliance and impact assessment

With the new rules being less than one year away, businesses should prepare themselves early so as not to be caught unaware. Penalties for non-compliance, incorrect or incomplete declaration include fines or imprisonment.

New rules tend to be fraught with uncertainties. Hiring a company providing accounting services in Singapore with GST compilation services will facilitate the adherence to rules and enable your operations and businesses to understand and fulfil compliance obligations.