Singapore has introduced in its Parliament a new Bill with guidance on how the extension of GST to the importation of low-value goods from January 1, 2023, will operate. The move follows similar actions in tax jurisdictions across the globe.
A new Bill was introduced in Singapore’s Parliament in early October 2021 outlining the city-state’s specific plans. In addition, Singapore’s Ministry of Finance has published the responses to its public consultation on the proposed GST changes. This public consultation closed in late July 2021.
The original plan was announced in the 2021 Singapore budget speech in mid-February 2021. In late July 2021 the low-value goods threshold was SGD400 and, according to this Inland Revenue Authority of Singapore (IRAS) document, the threshold "would apply individually to each item of goods supplied." At the time of publication, SGD400 was circa USD300 or EUR250. Here is a useful Singapore GST factsheet on the plans (note the link is to a Google Drive provided by the Singapore Government).
Impact on online marketplaces
Interestingly, the Singapore GST rules apply not only to low-value goods but also to the services provided via online marketplaces. This is a global first for online marketplaces to be liable for GST on services such as providing legal services to an individual.
These moves also follow the collection mechanism recommendation in the OECD report on the role of digital platforms on collection of VAT published in 2019.
The proposed Singapore GST obligation on online marketplaces is not only in terms of collecting and reporting GST but also knowing more about their seller and the nature of the goods sold on their platform. Clearly the rules are significant for marketplaces with customers in Singapore. What we see proposed here has already been implemented in numerous jurisdictions and will most likely be replicated in many more.
Growth of eCommerce for sales of goods and services
Under a budget speech section titled ‘Updating our Tax Regime as the Digital Economy Grows’ Singapore Deputy Prime Minister, and Coordinating Minister for Economic Policies and Minister for Finance, Mr. Heng Swee Keat read the following:
"One aspect of a fair and resilient tax system is ensuring a level playing field for our local businesses vis-à-vis their overseas counterparts. This is especially relevant as ecommerce for sales of goods and services is growing. “Several jurisdictions, including Australia, New Zealand, and the European Union, have implemented or announced plans to implement the equivalent of GST on such goods. I will hence extend GST to imported low-value goods with effect from 1 January 2023.
“Overseas suppliers of goods and services will be subject to the same GST treatment as local suppliers
Ahead of the intended January 1, 2023, extension of Singapore GST to imported low-value goods, Singapore’s tax authority, the Inland Revenue Authority of Singapore (IRAS), will conduct a consultation with affected stakeholders in the near future.
Affected digital businesses will appreciate the near two-year advance notice as it will enable them to prepare internally for the changes as well as communicate with their customers of the impending GST rule change in Singapore.
Singapore GST: mirroring other global implementations
As also mentioned in Mr. Heng Swee Keat’s budget speech, this proposed Singapore rule change mirrors similar tax changes made on VAT/GST collection on the cross-border sale of low-value goods worldwide.
Jurisdictions that have introduced or revealed plans include Australia (since July 1, 2018); New ZeaJurisdictions that have introduced or revealed plans include Australia (since July 1, 2018); New Zealand (since December 2019), Norway (since April 2020); the United Kingdom (UK) - since January 2021 - and (from July 1, 2021) the European Union (EU).
The relevant thresholds for low-value goods in these jurisdictions are as follows:
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