Are you shipping goods to Singapore? Be prepared for an upheaval in tax rules coming next year!
Singapore is changing the way it handles the collection of goods and services tax (GST) on low-value imports. Starting from 1 January 2023, GST will be owed on all goods, regardless of their value. Simultaneously, the current GST rate rises from 7% to 8%.
This change should ring a bell with cross-border sellers. In July 2021, the EU introduced similar rules which abolished the Low-Value Item Exemption. With overseas exports surging in Singapore, the new GST rules will affect thousands of UK and EU companies. UK export of goods to Singapore increased by 33.1% to £5.4 billion in the four quarters to the end of Q1 2022. The value of EU goods exports to Singapore in 2021 was €27 billion.
Do you feel overwhelmed by these new rules adding to the already complex cross-border regulatory landscape? Eurora can help you with the new GST requirements in Singapore. Get in touch with us!
How will my business be affected by the new Singapore GST rules?
If your business sends low-value and business-to-consumer (B2C) shipments to Singapore, the new rules will impact you. From 1 January 2023, overseas sellers must register for a Singaporean GST number if:
- They have a global turnover exceeding $1 million (£626,000/€717,500)
- They make B2C supplies of low-value goods and remote services (i.e., digital services and remote non-digital services) to Singapore
- These supplies exceed S$100 000 (£62,100/€71,800).
Businesses exceeding these thresholds could already start registering for GST on 1 October 2022. We recommend that you start preparations as early as possible to get all set with registration and compliance obligations on time.
If you wonder what it will look like in practice for your Singapore customers, let’s take a concrete example. Angie orders a shirt for S$40 from an overseas fashion retailer, Company B. The shirt is shipped from the UK and imported into Singapore via post. As Company B is registered for GST with effect from 1 Jan 2023, Company B will charge Angie with GST on her purchase of the shirt. Company B will be required to pay the GST collected to the Inland Revenue Authority of Singapore (IRAS).
How can Eurora help me ship to Singapore from January 2023?
We know from experience that these new regulations will disrupt the activities of many businesses, forcing them to cut off their sales in Singapore. When similar EU rules came into effect, we saw retailers struggling to understand what was going on. Jeff Seymour, managing director of 2 UK companies, recalls. “Suddenly, goods were not getting to the customers, they were being held up at customs. Or customers were being asked to pay money to have their goods released.” Eurora anticipated these EU rule changes and helps many companies like Jeff’s sell to the EU again. It will be no different with the new Singapore rules.
Eurora is already ready to help you manage your Singapore GST obligations and make sure you are fully compliant with the new legislation through its wholly owned Singapore-based subsidiary GTS Express, a logistics provider. With Eurora, your registration for the scheme takes as little as two hours, and our tax consultants help you navigate the changes in legislation so you can focus on growing your business.
Our AI-based platform helps overseas sellers doing business with Singapore to register for the Overseas Vendor Registration (OVR) regime, calculates the applicable GST and duty amounts, automates the creation of electronic declarations for GST returns, and maintains the necessary accounting records for 5 years via simple API integration. Not only this will make sure you are compliant with the new Singapore regulations but also improve your customers shopping experience. Automating your GST management ensures packages reach your customers faster.
What do all these new tax regulations mean?
Singapore’s move follows a global trend to scrap the VAT or GST exemptions on imported online sales of goods. Countries such as Norway and the UK recently scrapped the VAT exemption for low-value goods, and in July 2021, the EU followed suit. Governments worldwide aim to create a level playing field for national online and high-street retailers and boost tax revenues following the rapid growth of e-commerce during the COVID-19 crisis. According to TechCrunch’s coverage of IBM’s US Retail Index, the COVID-19 pandemic accelerated the shift to e-commerce by five years, with online sales reaching levels in 2020 that weren’t expected until 2025.
Marko Lastik, founder and CEO of Eurora Solutions, commented: “Complying with this new regulation in the high volume, low value-per-package e-commerce market will be a challenge for merchants and logistics operators from the UK, the EU, the United States, China, and the rest of the world. Software-based solutions with a high degree of accuracy, speed, and at a low cost per package are required.” Eurora plans to open a Singapore Central office by December this year to meet the projected surge in demand in the region.
Do you need help navigating the new GST regulations so you can keep your activities running in Singapore? Get in touch with us!