Singapore eCommerce Customs Clearance - Changes to Singapore’s GST from 1st January 2023

Benedict Leong

Sea, Air or Land, we've got the freight that takes you forward

Starting from 1 Jan 2023, Singapore international eCommerce sales and deliveries will need to adhere to new GST rules and higher GST charges on low-value-goods imported into Singapore by companies with significant annual revenue and sales to non-GST registered customers based in Singapore.

 

Executive Summary:

  • Eligible companies must display on their online check out and charge 8% GST in 2023 and 9% GST in 2024 for each item sold to Singapore-based consignees a.k.a Non-GST registered entities in Singapore
  • Eligible companies refers to Singapore GST registered companies and foreign companies who meet certain criteria:
    • The total value of your annual global turnover for a 12-month period exceeds S$1 million or is expected to reach this amount in the next 12-months
    • Make B2C supplies of digital services, non-digital services and low-value-goods (below SGD400) to customers in Singapore exceeding S$100,000
  • Those who are liable to collect GST at check out must also provide their carriers (e.g. Janio) with their GST or OVR registration number along with the GST payment status on an item level for the items being shipped in your order for customs clearance purposes.

Details and Sources

In Singapore’s Budget 2021 discussion, Singapore’s Minister for Finance announced the following:1

“With effect from 1 Jan 2023, (Singapore’s) Minister for Finance announced in Budget 2021 that GST will be extended to:

  1. Goods imported via air or post that are valued up to (and including) the current GST import relief threshold of S$400; and
    1. This value is inclusive of the insurance and freight costs for the shipment as well for eCommerce imports into Singapore.

B2C imported non-digital services.2

Singapore Extended OVR Regime - Scope of Extended OVR Regime slide section 2

IRAS Extended OVR Regime – Slide 5

 

The change will ensure a level playing field for our (Singapore’s) local businesses to compete effectively. The change also ensures that our (Singapore’s) GST system remains fair and resilient as the digital economy grows.”

In addition to this, Singapore is also planning to increase GST by 1% each in 2023 and 2024:3

  • GST will rise from 7% to 8% with effect from 1 Jan 2023
  • GST will rise from 8% to 9% with effect from 1 Jan 2024

This document summarises information from the following documents from IRAS

How does it Work and Who is Required to Register?

Those who are liable to collect GST at check out must also provide their carriers (e.g. Janio) with their GST or OVR registration number along with the GST payment status on an item level for the items being shipped in your order for customs clearance purposes.

If the above GST collection information does not flow to your shipping partner, such as Janio, on time at the point of customs clearance it is likely that GST will be collected again at Singapore Customs. Below is a sample shipping manifest with the required information required by Singapore Customs to adhere to this ruling.

IRAS Air Courier Webinar - Extended Overseas Vendor Registration Regime - Slide 22

Source: IRAS Air Courier Webinar – Extended Overseas Vendor Registration Regime – Slide 22

This current GST regime works in a comparatively similar way to how VAT is collected in Australia. You must register for GST, show GST in your check out page and charge GST to Singapore-based non-gst registered customers whether or not you are Singapore-based if your business meets certain criteria.

Extended OVR Regime - Brief recap of ovr regime slide section 1

IRAS Extended OVR Regime – Slide 3

Different types of overseas businesses have different requirements, which can be found in the following slide numbers below in IRAS’s regime slides. You can also find the definitions of digital services, non-digital services and more in IRAS’s official extended Overseas Vendor Registration regime slides.

  • Overseas Vendors
    • Overseas Suppliers – Slide 20 and Slide 23
    • Overseas Electronic Marketplace Operators – Slide 15, 21, and 22
    • Overseas Redeliverers – Slide 17, 18, and 24

Overseas suppliers and overseas electronic marketplace operators will register under a simplified registration regime, with reduced registration and reporting requirements. GST reporting will be done via electronic-filing.

Local businesses who are GST registered also need to charge GST for any LVG sold to non-GST registered people in Singapore. You can refer to the following slides numbers in IRAS’s official extended Overseas Vendor Registration regime slides for more information:

  • Local Vendors
    • Local Suppliers – Slide 30
    • Local Electronic Marketplace Operators – Slide 31
    • Local Redeliverers – Slide 32

When you have registered for GST or OVR in Singapore, please provide your GST registration number along with information on whether the items you need to ship have GST paid on them to shipping providers like Janio for customs clearance purposes.

For local vendors who keep LVG warehoused overseas to ship to customers in Singapore, these goods will fall within the scope of GST once this comes into force in January 2023. Prior to its implementation, this arrangement was “treated as outside the scope of GST since the goods are located outside Singapore at the time of supply.”4

Businesses that don’t meet the requirements for registering for GST or the Overseas Vendor Registration (OVR) must include such supplies in your taxable turnover to determine GST registration liability.5 IRAS provides a GST Registration Calculator to help with monitoring your taxable turnover.

Note: What to Do When GST is Double Collected

Shipments that are classified as High Value Goods (HVG) are those whose total value of product value, insurance, and freight costs are S$400 and above. Goods that are valued above S$400 require duties and taxes to be paid at customs. For shipments like these, your shipping partner assisting you with customs will usually pay duties and taxes on your behalf while managing permit matters.

There could be cases where your shipment is valued close to S$400 before it arrives in Singapore but could be valued above that, such as due to foreign exchange fluctuations. In these cases, if you had paid GST on it as a low value good (before it breached S$400), your shipping partner may pay GST again at customs once it breaches S$400 when it arrives in Singapore. To help you, please take note of the following:

  1. LVGs are determined at an item level. Please refer to this guide for more information
    1. GST: Taxing imported low-value goods by way of the overseas vendor registration regime (First Edition) – accurate as at 28th October 2022 
  2. GST is payable on the value of supply which includes the value of insurance and freight (CIF valuation)
  3. If GST collection information does not flow to your shipping partner, such as Janio, on time at the point of customs clearance it is likely that GST will be collected again at Singapore Customs.
    1. GST collection information involves letting the shipping partner know that this shipment already had LVG GST collected at the point of sale (e.g. at the online store’s checkout).

This GST will be charged back to your company by your shipping partner. In rare cases like these, you will need to submit a GST refund claim to the Inland Revenue Authority of Singapore (IRAS) with the proof of double payment.

 

Janio offers both international air freight into Singapore and customs clearance services into Singapore from Malaysia. To find out more about our services and rates or to receive more updates on customs clearance, reach out to us today.

Sea, Air or Land, we've got the freight that takes you forward

 

Disclaimer: Please note that the information contained in this document is general in nature and should not be considered to be legal, tax, accounting, consulting, customs clearance or any professional advice. 
In all cases you should consult with authorities such as Singapore’ Inland Revenue Authority of Singapore. The information contained in this document is provided on an “as is” basis with no guarantees of completeness, accuracy, usefulness or timeliness.
Janio Asia assumes no responsibility or liability for any errors or omissions in the content of this document, or for the results obtained from the use of this information.
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