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. Meanwhile, items below S$400 are exempt 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 the tax.
What is GST?
Goods and Services Tax 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, it may then charge GST on its supplies (goods and services that it provides consumers). The current rate of GST in Singapore is 7%. However, there are plans to increase the GST rate to 9% by 2025. The tax 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:
- 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).
These supplies will not be subject to GST charges.
What are the penalties for not paying GST?
Businesses usually add GST to your tab automatically whenever you pay for a good or service at the counter. 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 tax they have collected to IRAS. They must do this within one month after the end of the accounting period. The IRAS imposes a 5% late payment penalty if businesses do not make payment before the due date. They may impose additional penalties of 2% per month. This is only if a business still does not pay the tax 60 days after 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. It could also include 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.