Singapore Budget 2021 – Goods and Services Tax (GST)

NAVIGATION

GST Rate
Imposition of GST on Imported Low-Value Goods
Change of Basis for Determining Zero-Rating Supply of Media Sales

1. GST RATE

Currently, the GST rate remained at 7%.

GST rate is planned to increase from 7% to 9% between year 2022 and 2025, and it will take place “sooner rather than later” depending on Singapore’s economic outlook. In view of this, the government has set aside S$6 billion in Budget 2020 for Assurance Package to help defray the impact of this tax hike on lower- and middle-income households by at least five years when GST rate is raised.

2. IMPOSITION OF GST ON IMPORTED LOW-VALUE GOODS

In view of the growing popularity of online shopping, including from overseas suppliers, from 1 January 2023 GST will be imposed on goods imported via air or post that are valued up to and including the current GST import relief threshold of S$400/-. These goods are currently not subject to GST.

GST will also be imposed on business-to-consumer (B2C) imported non-digital services,
which refer to services supplied over the Internet or other electronic networks that require human intervention. This includes live interactions with overseas providers of educational learning, fitness training, counselling and telemedicine.

Overseas suppliers of imported low-value goods and imported non-digital services will have to register under the extended overseas vendor registration regime to charge GST on such sales to local consumers.

Further details will be provided by IRAS at a later stage.

3. CHANGE OF BASIS FOR DETERMINING ZERO-RATING SUPPLY OF MEDIA SALES

Currently, the basis for determining whether zero-rating applies to a supply of media sales is based on the supply of media sales is based on the place of circulation of the advertisement:-

If the advertisement is intended to be substantially circulated outside Singapore, the
media sales is zero-rated; or
If the advertisement is intended to be substantially circulated in Singapore, the media
sales are standard-rated.

As online advertising has grown and is expected to account for an increasing share of advertising spending in future and developments in digital technologies have also changed, the basis for determining zero-rating supply of media sales will effective from 1 January 2022 be based on the place where the customer (i.e. the contractual customer) and direct beneficiary of the service belong:-

If the customer of the service belongs outside Singapore and the direct beneficiary either belongs outside Singapore or is GST-registered in Singapore, the media sales will be zero-rated; and
If the customer belongs in Singapore, the media sales will be standard-rated.