GST to be imposed on online goods worth $400 and below from 2023

From Jan 1, 2023, the Goods and Service Tax (GST) will be imposed on all online goods worth up to $400 that are imported via air or post.

This change was made after the GST (Amendment) Bill was passed in Parliament on Nov 2.

Currently, GST only applies to imported goods brought in via sea or land, and items valued above $400 that are brought in via air or post.

Under the Bill, GST will also be introduced for business-to-consumer imported non-digital services, such as live interaction with overseas providers of educational learning and telemedicine. 

While the GST hike was announced by Deputy Prime Minister Mr Heng Swee Keat earlier this year during the Budget speech, many Singaporeans are “still reeling”, according to Member of Parliament Mr Saktiandi Supaat.

Mr Saktiandi noted that this change will definitely affect lower-income households in Singapore.

He said: “Some Singaporeans buy products from overseas that they cannot find locally. They will now have to contend with significantly higher costs as a result of increasing shipping costs and GST costs.

“For the lower-income households, every cent in savings counts. Being driven towards local options that are initially more expensive than its foreign counterpart may be a win for the local retailer, but for the low-income consumer, it would feel like a loss.”

In response to Mr Saktiandi’s concern, Second Minister for Finance Ms Indranee Rajah shared that the bulk of consumption by individuals such as food, utilities, transport, education and healthcare will not be affected by the change as these goods and services have always been typically bought from local suppliers.

Furthermore, the Government will continue to absorb GST on publicly subsidised healthcare and education. With other financial assistance schemes such as the Workfare Income Supplement, Silver Support and ComCare, lower-income Singaporeans can rest assured that they will have more than enough support.

“This Government will always make sure that whoever is in need, in genuine need, will have support,” said Ms Indranee.

Regarding the reason behind this extension of GST to low-value goods, Ms Indranee highlighted that it was to address a “gap” which puts local businesses at a disadvantage.

The introduction of GST for low-value goods will “ensure a level playing field for our local businesses and allow them to compete effectively”.

The government will enforce this new measure by “widening the scope” of Singapore’s existing overseas vendor registration and reverse charge regimes. When consumers check out their purchases, GST-registered overseas vendors will charge and collect GST on the low-value goods at the point of purchase when the order is confirmed. 

“In the event of non-compliance, the existing penalty and enforcement regime under the GST Act will apply,” said Ms Indranee.