Singapore: Expanding the scope of application of GST

To ensure that Singapore’s Goods and Services Tax (‘GST’) system remains fair and resilient as the digital economy grows, Singapore’s tax authority (‘IRAS’) will extend the application of GST to: (i) low value goods worth S$ 400 or less (approximately US$ 295 or EUR 250) imported into Singapore by air or post, and (ii) imported B2C non-digital services from 1 January 2023.

Extended OVR regime for B2C imported low-value goods and B2C non-digital services

Under the extended overseas vendor registration (‘OVR’) regime for low-value goods and non-digital services, the following suppliers will be required to register for GST in Singapore if they meet the specified thresholds:

1. overseas suppliers,
2. electronic marketplace operators,
3. re-deliverers of low-value goods; and
4. remote service providers (e.g. providers of remote telemedical services, consulting services provided over the phone, etc.).
    

The threshold requirements are as follows:

1. an annual global turnover exceeding S$ 1 million (approximately US$ 730,000 or EUR 650,000); and
2. supplying low-value goods/remote services on a B2C basis exceeding S$ 100,000 (approximately US$ 73,000 or EUR 65,000).
    

Registrations will be under the simplified GST registration regime. Once registered for GST, the overseas suppliers will need to charge and account for GST on B2C supplies of low-value goods made to Singapore.

Crucially, this change imposes the GST registration liability on electronic marketplace operators, re-deliverers as well as remote service providers who fulfil certain criteria. The import of low-value goods into Singapore by a GST-registered customer would also be subject to GST under the reverse charge regime.

Overall, overseas businesses who have customers in Singapore should take note of this potential GST registration requirement, and carefully evaluate whether they would need to register for GST in Singapore.

Read the WTS Global VAT Newsletter here.