The Goods and Services Tax (GST) will be extended to all imported low-value goods beginning 2023, said Deputy Prime Minister Heng Swee Keat during his budget speech on Tuesday (16 February).
Before this, the GST import relief threshold was S$400, meaning goods imported which are valued under that amount that are not subject to GST. This is to facilitate customs clearance at borders.
Additionally, imported non-digital business-to-consumer (B2C) services will also now be charged GST. This refers to services provided over the internet and other electronic networks and requires human intervention, such as education services, fitness training, telemedicine and counselling.
Mr Heng, who is also the Finance Minister, noted that these changes will “ensure a level playing field for our local businesses to complete effectively, noting that this is a feature of a fair and resilient tax system.
“Overseas suppliers of goods and services will be subject to the same GST treatment as local suppliers,” he explained.
“IRAS (Inland Revenue Authority of Singapore) will continue to work with the industry to ensure smooth implementation for the change,” he added.
Last year, GST was extended to cover imported digital services such as music and movie streaming services amid a growing digital and e-commerce economy.
For this expansion of GST coverage to be implemented, suppliers from aboard offering low-value goods and non-digital services will be required to register under the extended overseas vendor registration programme in order to charge GST on sales to local customers.
The Ministry of Finance (MOF) explained on Tuesday, “Overseas suppliers, electronic marketplace operators and redeliverers will be required to register for GST if they make significant supplies of low-value goods to local consumers.”
“They will collect GST on the sale of low-value goods imported by local consumers, and then pay the GST to IRAS.”
The MOF added that it will consult the industry before finalising details on implementation, noting that the changes will take effect on 1 January 2023 to allow businesses time to prepare.
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. From 1 Jan 2023, overseas suppliers of goods and services will be subject to the same GST treatment as local suppliers. #SGBudget2021 pic.twitter.com/VrYhHyrp2e
— MOFsg (@MOFsg) February 16, 2021
