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Budget 2021: GST to be extended to low-value and non-digital imports from 2023

SINGAPORE — From Jan 1 in 2023, low-value goods bought online and imported via air or post will be subject to the Goods and Services Tax (GST), Deputy Prime Minister Heng Swee Keat announced on Tuesday (Feb 16).

Budget 2021: GST to be extended to low-value and non-digital imports from 2023

The extension of the Goods and Services Tax to low-value imported goods and non-digital services follows from an earlier move to impose the same tax on imported digital services.

SINGAPORE — From Jan 1 in 2023, low-value goods bought online and imported via air or post will be subject to the Goods and Services Tax (GST), Deputy Prime Minister Heng Swee Keat announced on Tuesday (Feb 16).

Non-digital services, such as live interaction with overseas providers of educational learning, fitness training, counselling and telemedicine, that are imported by consumers here will also be taxed in the same manner.

Mr Heng, who is also Finance Minister, said during his annual Budget statement in Parliament that this move will “ensure a level playing field for our local businesses to compete effectively”.

“Overseas suppliers of goods and services will be subject to the same GST treatment as local suppliers,” he added.

Right now, low-value goods — defined to be worth up to S$400 — that are imported via air or post are not subject to GST to facilitate clearance at the border, although similar goods bought in Singapore are.

Goods imported via land or sea are already taxed, regardless of its value.

Mr Heng said that building a fair and resilient tax system would require ensuring a level playing field between domestic businesses and their overseas competitors.

“This is especially relevant as e-commerce of goods and sales is growing,” he added.

Other jurisdictions such as Australia, the European Union and New Zealand have either implemented or announced similar plans.

The changes will be effected through the Overseas Vendor Registration regime. This means that overseas suppliers are required to register, charge and account for GST on the goods and services they provide to customers in Singapore.

Mr Richard Mackender, a tax partner and indirect tax leader at Deloitte Singapore for Southeast Asia and Asia Pacific, said that "it is not a surprise" that the Government is changing the GST treatment of low-value imports of goods.

"But businesses will welcome the timeline of 2023 to get ready,” he said.

Tuesday's announcement by Mr Heng follows from an earlier move to impose GST on business-to-business imported services (both digital and non-digital) and business-to-consumer imported digital services from Jan 1 last year.

The imposition of GST on business-to-consumer imported digital services, which was announced in Budget 2018, affected video and music streaming services, applications, software and online subscription fees.

Related topics

Budget 2021 Heng Swee Keat GST online shopping e-commerce

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