Singapore GST set for 2023 extension to low value goods

Singapore's plans for a 2023 extension of its GST regime to the importation of low-value goods is following in a definite global trend.

Mar 2, 2021

Singapore has announced plans to extend its GST regime to the importation of low-value goods from January 1, 2023. The move follows similar moves in tax jurisdictions across the globe. 

The announcement was made in the 2021 Singapore budget speech in mid-February 2021. The low-value goods threshold is SGD400 and, according to this Inland Revenue Authority of Singapore (IRAS) document, the threshold "would apply individually to each item of low value 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). 

A public consultation on the proposed rules ends on Friday, March 19. Information on this public consultation information is available on the helpful IRAS website.

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 (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.

Impact on online marketplaces

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.

Singapore GST: mirroring 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 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 (click on jurisdiction for additional Taxamo articles on this topic): 

The information contained in this publication (“Information”) has been provided to you for general information purposes only and we recommend that you obtain professional advice before acting or refraining from action as a result of the Information. Taxamo accepts no liability for any loss occasioned to any person acting or refraining from action as a result of the Information.