Since 1 Jan 2020, Singapore had implemented the Overseas Vendor Registration (“OVR”) Regime to impose GST on supplies of digital services to non-GST registered customers in Singapore. From 1 Jan 2023, the OVR regime will be extended to imported low-value goods and non-digital services. Digital and non-digital services are collectively known as remote services under the extended OVR regime.
What are low-value goods?
Low-value goods are goods that:
- Are non-dutiable goods, or dutiable goods that are granted GST import relief by Singapore Customs,
- Are not exempt from GST,
- Are located outside Singapore at the point of sale and will be imported via air or post, and
- Have a value not more than $400.
What are imported non-digital services?
Some examples of imported non-digital services are:
- Distant learning classes or educational services
- Fitness training over video platforms
- Professional services (e.g., investment advisory, tax and accounting services)
What happens when I buy low-value goods or remote services?
As a GST-registered business, if you are purchasing low-value goods or remote services for the purposes of your business, you should provide your GST registration number to the suppliers, so that you will not be charged GST at the point of sale.
Buying low-value goods or remote services
ABC Pte Ltd is GST-registered in Singapore. It wishes to purchase office supplies that do not exceed the total cost of $400 and will be imported by air or post via an e-commerce platform that is registered for GST in Singapore. At the checkout page or at the point of creating its account, ABC Pte Ltd should provide its GST registration number to the e-commerce platform so that it would not be charged GST on its purchases.
If ABC Pte Ltd was charged GST on its purchases, it should contact the e-commerce platform for refund or clarification.
If you fall within the scope of reverse charge, you will need to apply reverse charge on the purchase of LVG or remote services. For more information, please refer to the e-tax Guide GST: Reverse Charge (Fourth Edition).
Who can be the supplier of low-value goods or remote services?
The supplier of low-value goods can be a local or overseas supplier, or an electronic marketplace operator or redeliverer. The supplier of remote services can be an overseas supplier or an electronic marketplace operator.
For more details of who can be regarded as a supplier of low-value goods, please refer to paragraph 6 of our e-tax Guide GST: Taxing imported low-value goods by way of the overseas vendor registration regime (First Edition).
If you would like to check whether your supplier of low-value goods or remote services is GST-registered, you may refer to the GST Registered Business Search. However, please note that some of the suppliers may only be reflected in the GST Registered Business Search on or after 1 Jan 2023.
What if I have been charged GST by the supplier of low-value goods or remote service?
As a GST-registered business, if you have been wrongly charged GST on the purchase of low-value goods or remote service by the supplier, you should not claim the GST as your input tax. Instead, you should contact the supplier to seek a refund.
For local GST-registered suppliers that store goods overseas
If you are a local GST-registered supplier that stores goods overseas, refer to the illustration below to see whether you are required to account for GST on the sale of low-value goods.
What happens when I sell low-value goods to non-GST registered customers?
As a local GST-registered supplier, you may have stored your goods outside Singapore for sale to customers in Singapore.
Currently, sales of goods that are warehoused overseas to customers in Singapore are treated as outside the scope of GST, as the goods are located outside Singapore at the time of supply.
From 1 Jan 2023, you are required to charge and account for GST, at the prevailing tax rate, on your direct sales of low-value goods to customers who are not registered for GST in Singapore. At the same time, you should include the relevant GST information (i.e. your GST registration number and the amount of GST paid or an indication to show whether GST has been charged for each item of goods) in the shipping document which will be passed through the logistics chain.
Selling low-value goods to non-GST registered customers
ABC Pte Ltd is GST-registered in Singapore. It sells clothes in Singapore via an online retail store. Currently, the clothes are stored in the China manufacturer’s warehouse.
Customers will place order for the clothes via its online retail store. After customers place the order, the clothes will be sent via post to the customers in Singapore.
Before 1 Jan 2023, ABC Pte Ltd need not charge GST on clothes sold to Singapore customers, as they are outside the scope of GST. From 1 Jan 2023, ABC Pte Ltd will have to charge and account for GST on the sale of such clothes, if they are low-value goods.
Once ABC Pte Ltd charges its customers GST, it will include its GST registration number and the words “GST-paid” for each clothing item for which GST was charged and collected at the point of sale in the “address field” of the CN22 or CN23 and/or the invoice or commercial document affixed to the exterior of the parcel. This information will be passed down the logistics chain. The importation will not be subject to GST at the border.
For more information on the various modes of delivery for low-value goods and how the supplier may pass the relevant GST information down the logistics chain, please refer to paragraph 8.3 of our e-tax guide GST: Taxing imported low-value goods by way of the overseas vendor registration regime (First Edition).
What happens when I sell low-value goods to GST-registered customers?
From 1 Jan 2023, you need not charge GST on sales of low-value goods to GST-registered customers. However, you are required to collect and maintain the GST registration numbers of the GST-registered customers for five years.
For compliance ease, you may wish to consider modifying your checkout page to collect the GST registration numbers of the GST-registered customers.
If you have wrongly charged GST to GST-registered customers on the sales of low-value goods, you must provide a refund to the customer if the customer is able to provide documentary evidence to substantiate that they had paid import GST to Singapore Customs. For more information, please refer to paragraph 8.4 of GST: Taxing imported low-value goods by way of the overseas vendor registration regime (First Edition).
How do I determine if the goods that I am selling are low-value goods? How much GST do I need to charge?
You should refer to the sales value of each item of the goods to determine whether the goods you are selling fall within the threshold of low-value goods. This is the selling price of each item of the goods, excluding any amounts charged for:
- Fees for transport and/ or insurance
- Any GST chargeable
- Any duties payable to Singapore Customs
However, please note that GST is charged on the sum of the selling price of the goods plus amounts charged for services such as transportation and insurance related to the purchase of the goods.
How much GST is accountable based on the value of supply
ABC Pte Ltd charges S$200 for a dress and an additional S$30 for air transportation and insurance to deliver the goods to Singapore. These amounts are before GST.
As the sales value of the dress is S$200 and the dress is imported by air, it is considered LVG and is subject to GST. ABC Pte Ltd will collect GST at the prevailing rate on S$230, the sum of the sales value of the dress and amounts charged for transportation and insurance.
Overview of impact on Local GST-registered businesses
|Sale of goods located in Singapore|
|Sales to customers in Singapore||To charge GST|
|Export of goods||Zero-rated|
|Sale of goods located outside Singapore|
|Direct sales of low-value goods to non-GST registered customers in Singapore||[NEW!] To charge GST|
|Direct sales of low-value goods to GST-registered customers in Singapore||[NEW!] Not required to charge GST, if customers provide their GST registration numbers|
Sales of low-value goods through electronic marketplaces (EMO)/redeliverers to customers in Singapore
[NEW!] Not required to charge GST
The GST-registered EMO/redeliverer will charge GST at the point of sale* instead
|Sales of non-low-value goods||Not required to charge GST. GST will be payable to Customs at the point of importation|
|Low-value goods||[NEW!] No GST charged if GST registration number is provided to GST-registered suppliers|
|Remote services||[NEW!] No GST charged if GST registration number is provided to GST-registered suppliers|
*If you ship the low-value goods sold via the marketplace yourself, the marketplace operator would require you to indicate the GST registration number of the EMO and whether GST has been charged for each item at the point of sale on the shipping documents and pass the information down the logistics chain to prevent double taxation, i.e., collection of GST at point of importation.
What do I need to do?
Assess whether you will be regarded as the supplier of low-value goods or remote services under the OVR regime. If yes, you will need to make changes to your systems and business processes to:
- Capture and account for GST on low-value goods in your GST return
- Collect your customers’ GST registration numbers, so that GST is not charged on the sale of low-value goods to a GST-registered customer;
- For direct sales of low-value goods with GST charged, indicate the two pieces of relevant GST information (i.e. your GST registration number and whether GST was paid at the point of sale) on shipping documents and pass them down the logistics chain, to prevent double taxation; and
- If double taxation occurs, you should process a refund of GST that you collected at the point of sales to your customers.
Check out the following resources for more information: