On 16 February 2021, Deputy Prime Minister and Minister for Finance Heng Swee Keat announced that from 1 Jan 2023, GST will be levied on “imported low-value goods and business-to-consumer (B2C) imported non-digital services”.
The announcement means that from Jan 2023, all goods imported via air or post will be subject to GST. This would include goods purchased from popular online shopping platforms like Lazada, Shopee, Taobao, ezbuy and Amazon.
Currently, GST applies only to imported items valued at S$400 and above, while items below S$400 are exempt from GST in order to facilitate customs clearance.
However, the announcement means that from January 2023, even those goods valued at below $400 will be subject to GST.
What is GST?
Goods and Services Tax or GST is an indirect consumption tax that is levied on the supply of goods and services in Singapore, as well as the import of goods into Singapore.
Businesses which exceed $1 million in taxable turnover must register for GST with the Inland Revenue Authority of Singapore (IRAS). Once a business has registered for GST, it may then charge GST on its supplies (goods and services that it provides to consumers). The current rate of GST in Singapore is 7%, although there are plans to increase the GST rate to 9% by 2025. The GST that is charged and collected from consumers by businesses (output tax) is then paid to IRAS.
Are there any goods and services that are exempted from GST?
Yes. According to the IRAS website, the following supplies are exempt from GST:
- The provision of financial services;
- The supply of digital payment tokens;
- The sale and lease of residential properties; and
- The import and local supply of Investment Precious Metals (e.g. gold, silver, platinum).
GST need not be charged on these supplies.
What are the penalties for not paying GST?
Whenever you pay for a good or service at the counter, the GST is usually added to your tab automatically. GST is an indirect tax that is levied on businesses by the government, hence there is no need for consumers to take any further action.
However, GST-registered businesses must pay the GST they have collected to IRAS within one month after the end of the accounting period. If payment is not received before the due date, a 5% late payment penalty will be imposed. Additional penalties of 2% per month may be imposed if the tax is still not paid 60 days after the imposition of the 5% penalty (not exceeding 50% of the unpaid tax).
If the tax continues to remain unpaid, IRAS might take other actions to recover the monies. This could include appointing agents like a bank or lawyer to pay the money to IRAS, issuing a travel restriction order to prevent the proprietors of the business from leaving Singapore, or taking other legal action.
This article does not constitute legal advice or a legal opinion on any matter discussed and, accordingly, it should not be relied upon. It should not be regarded as a comprehensive statement of the law and practice in this area. If you require any advice or information, please speak to a practicing lawyer in your jurisdiction. No individual who is a member, partner, shareholder or consultant of, in or to any constituent part of Interstellar Group Pte. Ltd. accepts or assumes responsibility, or has any liability, to any person in respect of this article.