Overview

With effect from 1 Jan 2023, 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
  2. Business-to-consumer1 (“B2C”) imported non-digital services.

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

IRAS is conducting a public consultation from 26 Feb to 19 Mar 2021 before finalising the implementation details. Businesses are invited to give their feedback. 

GST on low-value goods imported via air or post

With this change, GST on low-value goods will be effected as follows:

  1. Overseas Vendor Registration for B2C import of low-value goods; and
  2. Reverse charge for Business-to-Business1 (“B2B”) import of low-value goods.

1 Business-to-Consumer (“B2C”) supplies refer to supplies made to non-GST registered persons, which include individuals and businesses that are not registered for GST. On the other hand, Business-to-Business (“B2B”) supplies refer to supplies made to GST-registered persons, including companies, partnerships and sole-proprietors.  

Overseas Vendor Registration (OVR) for B2C import of low-value goods

Imports of low-value goods

 It is proposed that low-value goods are goods that: 

  1. are not dutiable goods, or are dutiable goods that have been granted GST import relief by Singapore Customs under Item 32 of the Schedule to the GST (Imports Relief) Order;
  2. are not exempt from GST;
  3. are located outside Singapore at the point of sale and are to be delivered to Singapore via air or post; and
  4. have a value not exceeding the GST import relief threshold of S$400.

If you are an overseas supplier

If you are a supplier of low value goods2 who belong outside Singapore, it is proposed that you are required to register for GST in Singapore if you: 

  1. have an annual global turnover exceeding $1 million; and
  2. make B2C supplies of low-value goods to Singapore exceeding $100,000. 

Once registered for GST, you are required to charge and account for GST on B2C supplies of low-value goods made to Singapore.

 

If you are an electronic marketplace operator or redeliverer

Under certain conditions, whether you are a local or an overseas operator of an electronic marketplace, you may be regarded as the supplier of the low-value goods2 supplied by the local and overseas suppliers through your marketplace. 

If you are a local or overseas redeliverer3, you may also be regarded as the supplier of low-value goods which you assist to purchase and/or deliver to a customer in Singapore, under certain conditions. 

In such cases, you are required to include the value of these supplies of low-value goods to determine your GST registration liability. If you are liable for GST registration or are already GST-registered, you are required to charge and account for GST on B2C supplies of low-value goods treated as supplied by you, on behalf of the local and overseas suppliers. 

To ease compliance burden, if you are an overseas supplier, electronic marketplace operator or redeliverer, it is proposed that you will be registered under a simplified regime, with reduced registration and reporting requirements. 

 

2 If you also supply remote services whether directly or on behalf of overseas suppliers via your electronic marketplace, you will be required to aggregate the value of the B2C supplies of remote services and low-value goods to determine your GST registration liability. Once you are liable for GST registration or are already GST registered, you are required to charge and account for GST on both B2C supplies of remote services and low-value goods to Singapore.

 

3 A redeliverer is a person who, under an arrangement with the recipient: 

  1. delivers or facilitates the delivery of goods to Singapore; and
  2. provides or facilitates the use of an address outside of Singapore for delivery of the goods; or
  3. purchases or facilitates the purchase of the goods. 

General freight forwarders who do not facilitate the use of an address nor facilitate the purchase of goods are not treated as redeliverers.

 

If you are a local supplier with low-value goods outside Singapore 

Local GST-registered and non-GST registered suppliers belonging in Singapore  may store their goods outside Singapore for sale to customers. Currently, the sales of such goods warehoused overseas by local suppliers to customers in Singapore are treated as outside the scope of GST, since the goods are located outside Singapore at the time of supply. 

To achieve parity in the tax treatment for local suppliers and overseas ones, it is proposed that direct sales4 of low-value goods by local suppliers to customers who are not GST-registered in Singapore will fall within the scope of GST. 

Consequently, a GST-registered local supplier would be required to charge and account for GST, at the standard-rate, on his direct sales of low-value goods to customers who are not GST-registered in Singapore. 

A non-GST registered local supplier who makes direct sales of low-value goods to customers who are not GST-registered in Singapore could be required to include such supplies in his taxable turnover in determining his GST registration liability. The domestic registration threshold will apply to the local supplier i.e., taxable turnover of $1 million. 

4 Direct sales refer to goods that are supplied directly by local and overseas suppliers to customers who are not GST-registered in Singapore (e.g., through the supplier’s own website), instead of supplying the goods through an electronic marketplace or redeliverer.

 

Reverse charge for B2B import of low-value goods

If applicable, a GST-registered customer who is subject to reverse charge (“RC business”) should perform reverse charge on low-value goods. The requirement to perform reverse charge applies to all low-value goods and includes low-value goods purchased from local and overseas suppliers, electronic marketplace operators and redeliverers, regardless of whether they are GST-registered or not. 

 

For more information on who is subject to reverse charge, you may refer to the IRAS e-Tax Guide “GST: Taxing imported services by way of reverse charge”.

FAQs

  • Mechanics of Overseas Vendor Registration

    • Who will be impacted by the changes?

      Local and overseas suppliers are required to register, charge and account for GST on supplies of low-value goods to customers who are not GST-registered in Singapore. Under certain conditions, local and overseas operators of electronic marketplaces, as well as local and overseas redeliverers, may also be regarded as the supplier of the low-value goods made by suppliers through them. In such cases, the operators or redeliverers are required to register, charge and account for GST on these supplies, instead of the suppliers.

       

      If you are a consumer of low-value goods, please refer to Purchasing Imported Low-Value Goods for more information.

    • Do the electronic marketplace operators need to account for GST on supplies of low-value goods made through the marketplace by local GST-registered suppliers or local non-GST registered suppliers?

      If the local or overseas electronic marketplace operator meet the conditions to be treated as the supplier of the low-value goods, the electronic marketplace operator will be the party responsible for GST collection on the supply of low-value goods made by the local suppliers through the marketplace. 

       

      In other words, as long as the local or overseas electronic marketplace operator is required to register for GST, it would have to charge GST on all supplies of low-value goods made through its marketplace, by local and overseas suppliers, to customers who are not GST-registered in Singapore, regardless of whether these suppliers are GST-registered or liable to register for GST.

       

       

       

  • Overseas Vendor Registration for Businesses

    • How does the change affect e-Commerce businesses?

      Under the Overseas Vendor Registration Regime, local and overseas suppliers, electronic marketplace operators and redeliverers making B2C supplies of low-value goods to Singapore may be required to register, charge and account for GST on these supplies. This will achieve parity in GST treatment for low-value goods consumed in Singapore regardless of whether they are procured locally or from overseas.

       

    • I am an overseas online merchant supplying low-value goods to customers in Singapore. Will I need to register for GST under overseas vendor registration?

      It is proposed that overseas suppliers, with a global annual turnover of at least $1 million, making B2C supplies of low-value goods and remote services to Singapore exceeding $100,000 are required to register, charge and account for GST on these supplies. 

       

    • I am a local business providing platform services to local and overseas vendors. Am I impacted by overseas vendor registration?

      Under certain conditions, local and overseas operators of electronic marketplaces may also be regarded as the supplier of the low-value goods supplied by the local and overseas suppliers through these marketplaces5.
       
      If you fulfil the conditions to be regarded as the supplier of low-value goods supplied   by local and overseas suppliers through your marketplace, you are required to sum up the value of such supplies, in addition to the value of taxable supplies you are currently making to determine your GST registration liability. If you are liable for GST registration or are already GST-registered, you are required to charge and account for GST on taxable supplies made directly by you, as well as on low-value goods supplied by local and overseas suppliers through your marketplace.
       
      [Note: As you belong in Singapore, the domestic registration threshold will apply to you. i.e. taxable turnover of $1 million]

       

      5 If you also supply remote services on behalf of overseas suppliers via your electronic marketplace, you will be required to aggregate the value of the B2C supplies of remote services and low-value goods to determine your GST registration liability, and charge GST on such remote services supplied to Singapore upon your GST registration.

       

    • What changes do I need to make to my accounting system?

      If you are liable for GST registration under the regime, you are required to charge and account for GST on low-value goods supplied to customers who are not GST-registered in Singapore. As such, your accounting systems should be modified to account for GST on supplies of low-value goods, once you have determined that it is a B2C transaction and that the goods fulfil the conditions to be treated as low-value goods.

       

    • Would the current import GST relief for post and air be removed from 1 Jan 2023?

      No. The current import GST relief for goods imported by post or air (excluding intoxicating liquors and tobacco) with a total Cost, Insurance and Freight (CIF) value not exceeding S$400 will remain. 

       

    • Will IRAS give us sufficient time to prepare for the changes to the Overseas Vendor Registration regime?

      Yes, as the implementation date of the extended Overseas Vendor Registration regime is 1 Jan 2023, you will have approximately 22 months to prepare for the implementation of the extended Overseas Vendor Registration regime from the date of announcement.


      If you have further queries about the regime, you may contact us.