Indirect Tax News - June 2021

Potential GST registration obligation may arise on importation of goods

Overseas businesses importing goods into Singapore potentially could be subject to GST registration obligations.

All goods (dutiable or non-dutiable) imported into Singapore are subject to goods and services tax (GST), currently at a rate of 7% on the value of the goods. Import GST is payable to Singapore Customs unless the goods qualify for import relief or the import is made under an approved GST suspension scheme.

An overseas business shipping goods into Singapore for the purpose of making a sale to customers in Singapore under “DDP” (delivery duty paid) incoterm may appoint a local agent to assist with the importation and delivery of the goods to Singapore customers. The local agent will recover the import GST paid to Singapore Customs from the overseas business.

While it appears that there should not be any GST implications for the overseas business since the 7% GST has been paid to Singapore Customs, the overseas business may be liable for compulsory Singapore GST registration if certain turnover thresholds are exceeded (i.e., before 1 January 2019, if taxable turnover at the end of the calendar quarter and the past three quarters exceeds SGD 1 million and after 1 January 2019, if taxable turnover at the end of the calendar year exceeds SGD 1 million).

Overseas businesses carrying out such arrangements should review past transactions to determine whether there is a liability for GST registration in Singapore. A high-level review of the prior imports into Singapore (value retrievable from the local agent) can provide a reasonable indication whether the liability for GST registration could have been triggered earlier.

Apart from applying for GST registration as an offshore business, an overseas business entering into such business arrangement (i.e., shipping goods into Singapore for sales) may consider appointing a GST agent pursuant to section 33(2) of the Singapore GST Act to fulfil its GST obligations (where circumstances permit).

Chin Sien Eu

Derek Chua