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Singapore GST 

Learn how the changes in Singapore’s Extended Overseas Vendor Registration (OVR) Simplified Pay-Only Regime for GST will affect your business 

If you currently import into Singapore, your low-value imports (less than 400 SGD CIF*) are free of import tax. Singapore implemented a taxation system for low-value goods (LVG) on January 1, 2023, but only for larger retailers who exceed the registration thresholds. This guide will explain who is affected by the tax scheme, how the law is changing, how it affects your business, and how to be compliant with Singapore’s OVR GST laws.

*Cost Insurance Freight - the cost of goods plus shipping

Who is affected by Singapore’s OVR updates? 

Only larger retailers are affected by the low-value tax change. If your business exceeds both of the following thresholds, you will have to register for Singaporean goods and services tax (GST):

  • You sell, or expect to sell, more than 100k SGD (cost of goods only) worth of low-value goods into Singapore within a 12-month period…
  • …and you sell, or expect to sell, more than 1M SGD (CIF) globally within a 12-month period.

What is Singapore changing about low-value GST collection for imports? 

Prior to January 1, 2023

  • There was a 400 SGD tax de minimis, meaning that goods imported into Singapore were exempt from GST if their CIF value was 400 SGD or less.
  • The GST rate was 7% and was only applied to goods valued at greater than 400 SGD.

After January 1, 2023

  • The 400 SGD de minimis is being removed, but only for retailers who exceed the thresholds above. The de minimis remains for retailers who do not meet the registration thresholds.
  • Qualifying retailers must voluntarily** register, collect, and remit GST** on all orders into Singapore.
  • The GST rate will increase to 8% for everyone, not just retailers that exceed the aforementioned thresholds.

How do I register for Singapore OVR GST? 

If you choose to register on your own, you can do it through this online form. This registration process will require a username and password, which you will use to access your account, check deadlines, and remit taxes.

How should I handle Singapore OVR GST calculations? 

There are three ways to determine what is considered low-value. Retailers who have or will reach the threshold must choose one option and use that method for all shipments to Singapore. The three options are as follows:

  • Option 1 (recommended): Use an LVG election form and elect to determine if an item is low-value based on the CIF value of the entire order. Orders with multiple items are assessed as one single consignment.
  • Option 2: Use an LVG election form and elect to determine if an item is low-value based on the item import (CIF) value. If there are multiple items in an order, each is assessed separately, as an order can have both high and low-value items with this option.
  • Option 3: Use Singapore’s default valuation method for determining if an item is low-value—using the item cost only (no shipping included). If there are multiple items in an order, each is assessed separately, as an order can have both high and low-value items with this option.

Option 1 - Use the consignment value to determine low-value 

(Recommended)

This option means evaluating GST on the CIF value of the entire order (selecting both elections on the election form).

Here’s how to calculate GST with this option:

  1. Use the Singaporean currency (SGD) at the time of checkout.
  2. If the order’s CIF total is greater than 400 SGD, you may ship it without pre-collecting. However, if you pre-collect the landed cost on all orders anyway, continue to pre-collect the duties, taxes (8%), and fees as you usually do and have the carrier pay it on your behalf at the border.
  3. If the order's CIF total is less than 400 SGD, then add 8% tax to the CIF value of the order, but don’t send the tax payment with the shipment; remit it to the IRAS quarterly. Ensure your OVR tax ID number is on the commercial invoice and document that GST was already paid so the carrier can relay this to customs.

Example calculations:

Example 1:* Determining low-value and calculating GST on the consignment value of a single-item order.*

  • Order breakdown:

    • Item cost: 320 SGD
    • Shipping cost: 50 SGD
    • Order total: 370 SGD
  • Item cost + shipping is less than 400 SGD; therefore, it is low-value.

  • GST will be collected at checkout on the consignment value of the order

    • (Item cost (320 SGD) + Shipping cost (50 SGD)) x GST rate (8%) = Amount remitted to IRAS (29.60 SGD)

Example 2:* Determining low-value and calculating GST on the consignment value of a multi-item order.*

  • Order breakdown:

    • Item 1 cost: 350 SGD
    • Item 2 cost: 100 SGD
    • Shipping cost: 80 SGD
    • Order total: 530 SGD
  • The total of the items + shipping is greater than 400 SGD; therefore, it is not low-value.

There is no GST to remit to IRAS. GST for this order will be paid to customs upon import.

Pros and cons:

Pros

  • Simple to calculate

    • GST is either all paid at checkout or all paid upon import
  • Simple for Singapore customs

    • Less chance of miscalculations by customs agents

      • Very low probability of double taxation

        • Better buying experience for consumers

Cons

  • More of the GST collected is paid through customs, rather than remitted to IRAS

    • More orders are subject to carrier fees

Tips for using option 1:

If your business chooses this calculation method, abide by this checklist to ensure the smoothest GST collection process possible:

  1. Have a business procedure or process in place that enables them to determine if the goods ordered by the customers would be able to ship as a single consignment at the point of sale.
  2. Have full oversight of the supply and logistics chain to ensure the goods within an order will be grouped together as one consignment and not get separated.
  3. Be able to make the necessary GST adjustments should there be subsequent changes to the customers’ orders (e.g., change in price, quantity, or weight of the goods ordered) that would affect the value of the consignment.
  4. Commit to this method. Once you choose it, you must collect the GST at checkout based on this valuation method and remit it to IRAS quarterly.

With these different options, calculating Singaporean GST can be difficult and tedious to manage on your own, so consider using automated calculation software in your checkout.

Option 2 - Use the item import value to determine low-value 

(Not recommended)

Low-value is determined based on the CIF value of each individual item in a shipment (select only the first election on the election form).

How to calculate with this option:

  1. Use the Singaporean currency (SGD) at the time of checkout.
  2. Assess low-value on a per-item basis.
  3. For every order where the cost of the item + the cost of shipping is below 400 SGD, you need to collect GST at checkout for those items and the shipping. See the shipping calculation in example 2 below.
  4. For every order where the cost of the item + the cost of shipping exceeds 400 SGD, GST will be collected for that item and shipping upon import. There can be low-value and high-value items in the same shipment, but you only need to collect GST on the CIF value of the low-value CIF items at checkout to be remitted to IRAS.

Calculation examples:

Example 1: Determining low-value and calculating GST on the item import value of a single-item order.

  • Order breakdown:

    • Item cost: 380 SGD
    • Shipping cost: 50 SGD
    • Order total: 430 SGD
  • The item value + shipping is greater than 400 SGD; therefore, it is not low-value.

There is no GST to remit to IRAS. The GST for this order will be paid to customs upon import.

Example 2:* Determining low-value and calculating GST on the item import value of a multi-item order.*

  • Order breakdown:

    • Item 1 cost: 350 SGD
    • Item 2 cost: 100 SGD
    • Shipping cost: 80 SGD
    • Order total: 600 SGD
  • Item 1’s value + shipping is greater than 400 SGD; therefore, it is not low-value.

  • Item 2’s value + shipping is less than 400 SGD; therefore, it is low-value.

  • GST will be collected on the CIF value of item 2 as follows:

    • First, the portion of the shipping allocated to the low-value item must be calculated by determining the percentage of the total of the items that item 2 makes up, then applying that same percentage of the shipping cost to item 2.

      • Item 2 value (100 SGD) / Both items' combined total (450 SGD) = 22.22%
      • Shipping cost (80 SGD) x Percentage calculated above (22.22%) = Item 2’s shipping cost (17.76 SGD)
    • Next, calculate the GST to be remitted for item 2.

      • (Item cost (100 SGD) + Shipping cost (17.76 SGD)) x GST rate (8%) = Amount remitted to IRAS (9.42 SGD)

    The remaining GST balance for item 1 will be collected by customs upon import.

Pros and cons:

Pros

  • More of the GST collected is remitted to IRAS, rather than paid through customs

    • Remitted GST is easier to refund
    • Remitted GST is not subject to carrier fees

Cons

  • Complicated to calculate

  • High chance of miscalculations by customs agents

    • High probability of double taxation

      • Negative buying experience for consumers
    • There is likely to be an adjustment period for Singapore Customs, and low and high-value items assessed separately in one order makes matters more confusing

  • Poor buying experience for consumers because they have to pay twice

    • When shipping an order without duties and taxes prepaid (DDU- Delivered Duty Unpaid), having your customer pay GST for low-value items at checkout and then requiring a second payment for high-value items upon delivery is inconvenient

Tips for using option 2:

If your business chooses this calculation method, abide by this checklist to ensure the smoothest GST collection process possible:

  • Be able to make the necessary GST adjustments should there be subsequent changes to the customers’ orders (e.g., change in price, quantity, or weight of the goods ordered) that would affect the value of the consignment.
  • Commit to this method. Once you choose it, you must collect the GST at checkout based on this valuation method and remit it to IRAS quarterly.
  • To avoid double taxation, ensure you are able to note “GST paid” on items within the order that got GST collected at checkout.
  • Ensure your system is set up to calculate the percentage of the shipping cost that applies to a single item within an order to reflect the correct CIF/import value of that item.

Option 3 - Use the item sales value to determine low-value 

(Not recommended)

Low-value is determined based on the cost of each individual item in a shipment (an election form is not needed—this is Singapore’s default option).

How to calculate GST with this option:

  1. Use the Singaporean currency (SGD) at the time of checkout.
  2. Assess each item in the order and only charge GST on low-value items.
  3. Mark each low-value item as “GST paid,” but don’t send the tax payment with the shipment; remit it to the IRAS quarterly. Instead, ensure your OVR tax ID number is on the commercial invoice so the carrier can relay this to customs.

Calculation examples:

Example 1: Determining low-value and calculating GST on the item sales value of a single-item order.

  • Order breakdown:

    • Item cost: 380 SGD
    • Shipping cost: 50 SGD
    • Order total: 430 SGD
  • The item value is less than 400 SGD; therefore, it is low-value.

  • GST will be collected on the CIF value of the item as follows:

    • (Item cost (380 SGD) + Shipping cost (50 SGD)) x GST rate (8%) = Amount remitted to IRAS (34.40 SGD)

Example 2:* Determining low-value and calculating GST on the item sales value of a multi-item order.*

  • Order breakdown:

    • Item 1 cost: 420 SGD
    • Item 2 cost: 100 SGD
    • Shipping cost: 80 SGD
    • Order total: 600 SGD
  • Item 1’s value is greater than 400 SGD; therefore, it is not low-value.

  • Item 2’s value is less than 400 SGD; therefore, it is low-value.

  • GST will be collected on the CIF value of item 2 as follows:

    • For the shipping cost, use the shipping calculation explained In option 2 - example 1.
    • (Item cost (100 SGD) + Shipping cost (15.38 SGD)) x GST rate (8%) = Amount remitted to IRAS (9.23 SGD)

The remaining GST balance for item 1 will be collected upon import.

Pros and cons:

Same as option 2

Tips for using option 3:

If your business chooses this calculation method, abide by this checklist to ensure the smoothest GST collection process possible:

  • Commit to this method. Once you choose it, you must collect the GST at checkout based on this valuation method and remit it to IRAS quarterly.
  • To avoid double taxation, ensure you are able to note “GST paid” on items within the order that got GST collected at checkout.

Reporting and remitting GST to the IRAS 

  1. Log in to mytax Portal.
  2. Follow the guidelines for remittance in the IRAS' etax guide.

GST return filing and payment is due within one month from the end of each quarterly accounting period. For payments via electronic transfer, you should make the remittance at least one week before the due date to ensure on-time payment.

Other Singapore GST factors to keep in mind 

Double Taxation

Double taxation is a common and frustrating part of these new taxation schemes, but sometimes, it is unavoidable. However, you can easily correct these errors when they do happen:

  1. Refund your customer.
  2. Refund your own account by reducing your next remittance via your OVR report.

For additional information, see slide 43 of the OVR GST Regime slide deck.

Currency exchange rate

Be aware that if your orders are sold in a different currency than SGD, you will need to convert the cart total into SGD to know if the order is above or below the 400 SGD threshold.

Noncompliance

Next steps

References