On January 1st 2023, the Singapore Federal Government changed the laws relating to the Goods & Services tax.
What were the changes?
The first change made on the GST laws was a blanket increase of the Goods & Services Tax from 7% to 8%.
In addition, they introduced new laws about how Goods & Services tax would be collected for low value eCommerce parcels entering the country. Prior to the change, the GST was only collected on goods valued over SG$400. With the change, goods valued under SG$400 will now also have GST collected, meaning all goods imported into Singapore will be subject to GST.
Businesses that ship goods to Singapore are also required to register for GST collection and collect GST on low value goods upfront.
Goods that are valued more than SG$400 will be assessed and collected upon entry into Singapore.
What does this mean for my ZenMarket orders?
Due to the law changes mentioned, ZenMarket will now be required to collect 8% GST on all goods bound for Singapore with a value of SG$400 or less (approx. 40,000 yen at time of writing).
As of February 2023, this will be completed automatically so you do not need to worry about filling out any additional forms or completing any additional paperwork, much like the IOSS system for parcels bound for Europe.
Also Read: AUTOMATIC VAT PAYMENTS FOR EUROPEAN PARCELS
IMPORTANT: The rule change applies to the value of the products, not the value of the parcel. In other words, only goods with a declared value of S$400 or less will be pre-collected with GST.
In addition, if products subject to pre-collection of GST and products not subject to pre-collection (over S$400) are mixed, only pre-collection of goods subject to pre-collection of GST will be pre-collected, and GST for non-pre-collected products will be billed to the consignee at the time of delivery.
Let's go through a few examples to help you understand how the system works.
Example 1 - Mixed Products
Let's say you want to ship a package with the following combination of products:
- Product A - SG$300
- Product B - SG$500
- Product C - SG$100
Total parcel value - SG$900
Only Product A and Product C are valued less than SG$400, so tax will be pre-collected by ZenMarket on those products only.
GST pre-collected by ZenMarket = 8% x (Product A - SG$300) + 8% x (Product C - SG$100) = SG$24 + SG$8
SG$32 Total
GST for product B will not be pre-collected by ZenMarket and will instead be billed to the consignee upon arrival in Singapore.
Example 2 - Pre-Collection Only Products
Let's say you were to ship a package with the following product combination:
- Product A - SG$100
- Product B - SG$200
- Product C - SG$300
Total parcel value - SG$600
Products A, B and C are all valued below SG$400 so ZenMarket will pre-collect the GST on all three items.
GST pre-collected by ZenMarket = 8% x (Product A - SG$100) + 8% x (Product B - SG$200) + 8% x (Product C - SG$300) = SG$8 + SG$16 + SG$24
SG$48 Total
Because GST is entirely pre-collected by ZenMarket, no GST will be billed to the consignee upon arrival in Singapore.
Example 3 - Non Pre-Collection Products
Let's say your package were to contain the following combination:
- Product A - SG$400
- Product B - SG$500
- Product C - SG$600
Total parcel value - SG$1,500
Products A, B and C are all valued over the GST pre-collection threshold of SG$400, so ZenMarket will not pre-collect GST for any of these products.
The GST for all three products will be billed to the consignee upon arrival in Singapore.
As usual, if you have any questions about this system, feel free to reach out to our support through the messages tab on your account.
Other things to look out for
The above guide generally applies for parcels and goods that are to be sent to individuals who are not registered to collect or pay GST on their own. Businesses in Singapore that are registered to collect and pay GST may have slightly different arrangements. ZenMarket urges these customers to contact their local taxation office for what to do if they have any concerns.
Also, the Singapore government has indicated that they will increase their GST rate from 8% to 9% in January 2024. It is still unclear what the impacts of this will be and if there are any additional changes that will be made to the way this tax will be collected.
We will make sure to keep you up-to-date on this information and how it will affect your ZenMarket orders as the new information becomes available to us.
We thank you for your understanding in this matter.
