As of 1 January 2023, Singapore has introduced an increase in the tax on goods and services (GST). This change breaks a 15-year cycle of consistent GST rates in Singapore. The confirmed increase will follow a phased approach. The first stage includes an increase from 7% to 8% on 1 January 2023. After that, an expected increase from 8% to 9% from 1 January 2024.
However, apart from the standard rate increase, Singapore has introduced new rules concerning the scope for non-established registration for B2C supplies. Here’s what businesses need to know to ensure consistent compliance whilst navigating the most recent changes to VAT in Singapore.
GST levied for import of low-value goods
Under Singapore’s previous Overseas Vendor Registration (OVR) regime, all non-resident suppliers of B2C digital services with a global turnover exceeding S$1 million were subject to GST.
However, as of 1 January 2023, Singapore added two new elements to the GST-registration scope non-resident suppliers:
- Non-digital services
- The import of low-value goods
This includes B2C services such as professional, consultancy, advisory or educational services supplied from outside of Singapore. Essentially, all B2C supplies of imported services—digital or non-digital—that can be provided and received remotely will be subject to GST.
What constitutes low-value goods?
The import of low-value goods, which is now included in the GST registration scope for non-resident companies in Singapore, must meet the following criteria:
- They are classified as non-dutiable goods.
- Are not considered GST-exempt
- Suppliers are non-resident entities
- The value of goods and services exceeds the S$400 GST import relief threshold.
In addition, goods bought from overseas during travel will also be subject to GST as of January 2023. However, for trips longer than 48 hours, travelers will receive a relief up to a $500 threshold and be taxed for the amount thereafter.
Who’s affected by the new GST registration scope?
These new changes make non-registered vendors liable for GST registration on two separate accounts:
Retrospective basis: Non-resident entities are required to register if their global turnover and value of B2C supplies of Low-Value Goods and remote services exceed S$1 million and S$100,000, respectively, at the end of any calendar year. If the supplier is below this threshold and can prove it with substantial documentation, they are not required to register for GST.
Prospective basis: In the event that the value of global turnover and B2C supplies of LVG and remote services is expected to exceed S$1 million and S$SGD 100,000, respectively, for the next 12 months, the non-resident supplier may register under a simplified pay-only regime to ease the compliance burden.
Consistent compliance with VAT IT
With these new changes, affected overseas vendors must assess their processes and systems to ensure that they’re registered and compliant with the new rules regarding the supply of non-digital services and the import of low-value goods.
However, value-added tax compliance can feel increasingly burdensome considering the evolving tax administration. Instead, stay ahead of the compliance curve and conquer all the latest VAT and GST changes with a team of experts by your side. Our fully automated end-to-end, one-stop shop for global VAT compliance takes care of your VAT compliance so you can focus on growing your business.
Claimable countries & VAT rates
VAT potential calculator
Invoice compliance checklist