GST on low-value goods imported into S'pore needed to ensure level playing field for local businesses: Indranee Rajah

The bill was passed in Parliament on Nov. 2.

Jason Fan | November 04, 2021, 03:15 AM

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All imported goods will soon have Goods and Services Tax (GST) imposed on them, after a bill was passed in Parliament on Tuesday (Nov. 2).

Currently, imported goods brought in via sea or land, as well as items above S$400 that are imported in via air or post are already subject to GST.

The new changes will take effect from Jan. 1, 2023, and will be extended to low-value goods worth up to S$400 that are imported via air or post.

GST to be introduced for B2C imported non-digital services

Under the Goods and Service Tax (Amendment) Bill, GST will also be introduced for business-to-consumer (B2C) imported non-digital services, such as live interaction with overseas providers of educational learning and tele medicine.

These imported goods and services are currently not subject to GST. These changes were announced in the Feb. 2021 Budget Statement and has taken into account feedback from the July 2021 public consultation.

According to Second Minister for Finance Indranee Rajah, the changes are necessary to ensure a level playing field for local businesses, and to allow them to compete effectively.

She also added that the amendments will keep Singapore's GST system resilient in a growing digital economy.

Update in GST treatment for supplies of media sales

In addition, the amended bill also updates the GST treatment for supplies of media sales.

Media sales refer to the sale of advertising space for hardcopy print and outdoor advertisements, advertising airtime for broadcasting via TV and radio, and web advertising via email, internet or mobile devices.

Currently, the basis for whether GST will be imposed on a supply of media sales depends on where the advertisement is circulated.

For example, if the media sales are circulated in Singapore, GST applies, while if such media sales are circulated abroad, then no GST will be imposed.

From Jan. 1, 2022, the GST treatment will be based on where the customer and where the direct beneficiary belongs.

This means that if the contractual customer of the media sales service belongs in Singapore, GST will be charged.

According to Indranee, the change is necessary as developments in digital technologies have changed the way that media sales are supplied, and made it more difficult for suppliers of digital media sales to determine the place of circulation of the advertisement.

Updates made to transitional rules

There will also be updates made to the transitional rules for changes in GST treatment.

The transitional rules under the GST Act and Regulations help taxpayers determine whether the old or new GST treatment applies, and were last amended in 2011.

According to Indranee, the proposed updated transitional rules will help prevent revenue risks, provide tax certainty and ease the compliance burden of taxpayers whenever there is a change in GST treatment.

These updated transitional rules will apply to changes such as the proposed change of GST treatment for supplies of media sales from Jan. 2, 2022.

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