According to the OEC, Australia exported A$7.1 billion in goods and services to Singapore in 2020, which is a 4% increase since 1995. Because Singapore is an important market for Australian businesses, it’s important to be aware of two major changes coming in 2023 from the Singaporean government to their goods and services tax (GST).

Major change #1

The first major change is that beginning January 1, 2023, Singapore’s GST rate will increase from 7% to 8%. Then in January 2024, it will increase again from 8% to 9%. The duty de minimis, however, will not be changing.

Major change #2

The second, and more complex, is related to low-value import tax schemes. Just like changes that have been made in other countries like the United Kingdom, Australia, and countries in the European Union, Singapore will now collect GST on all imported goods, regardless of their value.

  • Before January 1, 2023, businesses that sold goods valued at less than or equal to S$400 (~A$414) to Singapore were considered below de minimis and GST free.
  • Starting January 1, 2023, low-value goods will not receive special consideration and will be taxed.
    • The duty de minimis will stay the same; that is, sold goods valued at less than or equal to S$400 (~A$414) to Singapore will remain duty-free.

There is an important distinction between goods sold that are above or below S$400 (~A$414).

  • Low-value sales (below or equal to S$400) will incur GST but may require remittance directly to the Inland Revenue Authority of Singapore (IRAS) if your business meets the criteria for this. See the section below entitled If my business is affected, what should I do?
  • High-value item sales above S$400 will continue to have GST collected at customs.

Much like Australia did several years ago, Singapore will introduce GST on low-value imports to ensure foreign businesses are taxed the same as local vendors. Both domestic and international shipments will now be taxed the same, so foreign retailers won’t have what’s considered to be an unfair tax exemption advantage over Singaporean vendors.

As a result, Australian retailers selling to Singapore will either have to register for Singaporean GST or handle GST the way they currently handle their taxable shipments into Singapore, depending on their annual sales into Singapore and global turnover. 

Do these changes apply to your business?

It’s important to stress that these changes do not apply to everyone, only to businesses:

  1. Whose annual sales in Singapore are above S$100,000
  2. And whose global annual sales are expected to exceed S$1 million
  3. Both high and low-value orders are taken into account to determine whether someone qualifies. Only low-value orders require separate remittance to IRAS.

Of course, if your business in Singapore does not exceed the thresholds outlined above, you should handle GST the same way you have:

  1. For orders with duties, taxes, and fees prepaid (sent DDP), continue as normal.
    1. If you pre-collect that amount from your customers, begin to also collect tax on low-value orders that were previously GST exempt.
  2. For orders where duties, taxes, and fees are not prepaid, find a way to educate your Singaporean customers that their entire order, regardless of the value, will be charged GST upon delivery effective 2023. Surprising your customers with a GST bill they are not expecting is bad for business.

If my business is affected, what should I do?

While the changes don’t come into effect until 2023, I would recommend starting the process of becoming compliant as soon as you can. You should do the following:

  1. Register with the Overseas Vendor Registration (OVR) for a Singaporean GST number.
  2. Make sure your website is able to collect GST on all Singapore orders
    1. Adding support for total landed cost will give your customers the best experience. You can add the ability to calculate, collect, and remit with APIs or plugins for your international orders.
  3. Once per quarter, the GST you’ve collected will need to be remitted to the Inland Revenue Authority of Singapore (IRAS)

What if I choose not to register my business?

If you meet the requirements of registration but decide not to register, you have two choices:

  1. Cease low-value orders to Singapore.
  2. Set up with a retail platform such as Zonos that offers a Landed Cost Guarantee (LCG) and international tax management, eliminating the hassle of GST registration, as well as duty and tax calculation and reconciliation.

It’s important that Australian retailers take these changes seriously. If you meet the requirements for Singapore’s OVR GST registration but don’t collect and remit, failure to register and pay GST is tax evasion. Singapore has passed legislation that allows the Inland Revenue Authority of Singapore (IRAS) to hold foreign sellers liable for unpaid GST; so if you don’t get registered in time you could be risking trouble.

Tyson Hackwood is general manager for Asia Pacific at Zonos.