Learn how Singapore's OVR changes affect your business.
If you currently import into Singapore, your low-value imports (less than 400 SGD CIF*) are free of import tax. Singapore implemented a taxation system for low-value goods (LVG) on January 1, 2023, but only for larger retailers who exceed the registration thresholds. This guide will explain who is affected by the tax scheme, how the law is changing, how it affects your business, and how to be compliant with Singapore’s OVR GST laws.
*Cost Insurance Freight - the cost of goods plus shipping
Only larger retailers are affected by the low-value tax change. If your business exceeds both of the following thresholds, you will have to register for Singaporean goods and services tax (GST):
You sell, or expect to sell, more than 100k SGD (cost of goods only) worth of low-value goods into Singapore within a 12-month period…
…and you sell, or expect to sell, more than 1M SGD (CIF) globally within a 12-month period.
A 400 SGD tax de minimis applied, meaning goods imported into Singapore were exempt from GST if their CIF value was 400 SGD or less—unless the seller exceeded the OVR registration thresholds.
Businesses exceeding the OVR registration thresholds were required to register, collect, and remit GST on all orders into Singapore, regardless of value.
The GST rate was 8%, applied to all orders for registered sellers.
Only applicable to threshold-exceeding businesses
The guidelines outlined in this document only apply to businesses that exceed the above thresholds. If you do not meet the Singapore OVR GST registration requirements, there is no change to your process—aside from the GST rate increase, which applies to all GST-registered entities.
If you choose to register on your own, you can do it through this online form. This registration process will require a username and password, which you will use to access your account, check deadlines, and remit taxes.
Note: The field to appoint a local agent is optional. Everything else is straightforward and simple.
Before calculating GST, you must first make certain decisions that will affect the calculations, as outlined below.
There are three ways to determine what is considered low-value. Retailers who have or will reach the threshold must choose one option and use that method for all shipments to Singapore. The three options are as follows:
Option 1 (recommended): Use an LVG election form and elect to determine if an item is low-value based on the CIF value of the entire order. Orders with multiple items are assessed as one single consignment.
Option 2: Use an LVG election form and elect to determine if an item is low-value based on the item import (CIF) value. If there are multiple items in an order, each is assessed separately, as an order can have both high and low-value items with this option.
Option 3: Use Singapore’s default valuation method for determining if an item is low-value—using the item cost only (no shipping included). If there are multiple items in an order, each is assessed separately, as an order can have both high and low-value items with this option.
Note: These options are used to assess whether something is low-value and determine when GST needs to be collected for remittance to IRAS. The actual calculation is always done on the CIF value of the low-value goods.
This option means evaluating GST on the CIF value of the entire order (selecting both elections on the election form).
Here’s how to calculate GST with this option:
Use the Singaporean currency (SGD) at the time of checkout.
If the CIF value exceeds 400 SGD, the order does not qualify as low-value goods. You may ship it without pre-collecting GST (Singapore Customs will assess GST at import), unless you choose to pre-collect all duties and taxes as part of your landed cost model. In that case, continue collecting the 9% GST (as of Jan 1, 2024) and have your carrier pay it at the border on your behalf.
If the CIF value is 400 SGD or less, the order qualifies as a low-value good under Singapore’s OVR scheme. In this case, you must collect 9% GST at the time of sale, but you should not send the GST payment with the shipment. Instead, the collected GST must be remitted to IRAS on a quarterly basis. Be sure to include your OVR GST registration number on the commercial invoice and clearly indicate that GST was collected at the point of sale. This documentation allows the carrier to inform Singapore Customs and helps prevent the customer from being charged GST again at import.
If your business chooses this calculation method, abide by this checklist to ensure the smoothest GST collection process possible:
Have a business procedure or process in place that enables them to determine if the goods ordered by the customers would be able to ship as a single consignment at the point of sale.
Have full oversight of the supply and logistics chain to ensure the goods within an order will be grouped together as one consignment and not get separated.
Be able to make the necessary GST adjustments should there be subsequent changes to the customers’ orders (e.g., change in price, quantity, or weight of the goods ordered) that would affect the value of the consignment.
Commit to this method. Once you choose it, you must collect the GST at checkout based on this valuation method and remit it to IRAS quarterly.
With these different options, calculating Singaporean GST can be difficult and tedious to manage on your own, so consider using automated calculation software in your checkout.
Low-value is determined based on the CIF value of each individual item in a shipment (select only the first election on the election form).
How to calculate with this option:
Use the Singaporean currency (SGD) at the time of checkout.
Assess low-value on a per-item basis.
For every order where the cost of the item + the cost of shipping is below 400 SGD, you need to collect GST at checkout for those items and the shipping. See the shipping calculation in example 2 below.
For every order where the cost of the item + the cost of shipping exceeds 400 SGD, GST will be collected for that item and shipping upon import. There can be low-value and high-value items in the same shipment, but you only need to collect GST on the CIF value of the low-value CIF items at checkout to be remitted to IRAS.
Example 1: Determining low-value and calculating GST on the item import value of a single-item order.
Order breakdown:
Item cost: 380 SGD
Shipping cost: 50 SGD
Order total: 430 SGD
The item value + shipping is greater than 400 SGD; therefore, it is not low-value.
There is no GST to remit to IRAS. The GST for this order will be paid to customs upon import.
Example 2: Determining low-value and calculating GST on the item import value of a multi-item order.
Order breakdown:
Item 1 cost: 350 SGD
Item 2 cost: 100 SGD
Shipping cost: 80 SGD
Order total: 600 SGD
Item 1’s value + shipping is greater than 400 SGD; therefore, it is not low-value.
Item 2’s value + shipping is less than 400 SGD; therefore, it is low-value.
GST will be collected on the CIF value of item 2 as follows:
First, the portion of the shipping allocated to the low-value item must be calculated by determining the percentage of the total of the items that item 2 makes up, then applying that same percentage of the shipping cost to item 2.
Item 2 value (100 SGD) / Both items' combined total (450 SGD) = 22.22%
More of the GST collected is remitted to IRAS, rather than paid through customs
Remitted GST is easier to refund
Remitted GST is not subject to carrier fees
Cons
Complicated to calculate
High chance of miscalculations by customs agents
High probability of double taxation
Negative buying experience for consumers
There is likely to be an adjustment period for Singapore Customs, and low and high-value items assessed separately in one order makes matters more confusing
Poor buying experience for consumers because they have to pay twice
When shipping an order without duties and taxes prepaid (DDU- Delivered Duty Unpaid), having your customer pay GST for low-value items at checkout and then requiring a second payment for high-value items upon delivery is inconvenient
If your business chooses this calculation method, abide by this checklist to ensure the smoothest GST collection process possible:
Be able to make the necessary GST adjustments should there be subsequent changes to the customers’ orders (e.g., change in price, quantity, or weight of the goods ordered) that would affect the value of the consignment.
Commit to this method. Once you choose it, you must collect the GST at checkout based on this valuation method and remit it to IRAS quarterly.
To avoid double taxation, ensure you are able to note “GST paid” on items within the order that got GST collected at checkout.
Ensure your system is set up to calculate the percentage of the shipping cost that applies to a single item within an order to reflect the correct CIF/import value of that item.
Low-value is determined based on the cost of each individual item in a shipment (an election form is not needed—this is Singapore’s default option).
How to calculate GST with this option:
Use the Singaporean currency (SGD) at the time of checkout.
Assess each item in the order and only charge GST on low-value items.
Mark each low-value item as “GST paid,” but don’t send the tax payment with the shipment; remit it to the IRAS quarterly. Instead, ensure your OVR tax ID number is on the commercial invoice so the carrier can relay this to customs.
If your business chooses this calculation method, abide by this checklist to ensure the smoothest GST collection process possible:
Commit to this method. Once you choose it, you must collect the GST at checkout based on this valuation method and remit it to IRAS quarterly.
To avoid double taxation, ensure you are able to note “GST paid” on items within the order that got GST collected at checkout.
High-value orders
Whether you are registering or not, if you usually send orders with duties and taxes prepaid, you can continue to do this with your high-value orders (greater than 400 SGD). You will not need to remit the GST collected on these high-value orders to the IRAS. It will be collected from the carrier during customs clearance.
Follow the guidelines for remittance in the IRAS' etax guide.
IRAS OVR GST tax guide
For more details on the OVR regime, view the IRAS' OVR GST tax guide.
GST return filing and payment is due within one month from the end of each quarterly accounting period. For payments via electronic transfer, you should make the remittance at least one week before the due date to ensure on-time payment.
Double taxation is a common and frustrating part of these new taxation schemes, but sometimes, it is unavoidable. However, you can easily correct these errors when they do happen:
Refund your customer.
Refund your own account by reducing your next remittance via your OVR report.
For additional information, see slide 43 of the OVR GST Regime slide deck.
Currency exchange rate
Be aware that if your orders are sold in a different currency than SGD, you will need to convert the cart total into SGD to know if the order is above or below the 400 SGD threshold.
Noncompliance
Penalties for noncompliance
Failure to register and pay GST in Singapore when required is tax evasion for those who meet the requirements. If you fail to comply, you will be subject to the same penalties the IRAS assigns to non-compliant, domestic GST-registered businesses.
Should I collect GST while I’m waiting for my OVR number?
Yes! Here’s why:
Your date of registration will be backdated to the date you were liable for registration.
You will have to account for GST on your past sales starting from the effective date of registration, even if you did not collect any GST from your customers.
Singapore OVR GST
Singapore GST
Learn how Singapore's OVR changes affect your business.If you currently import into Singapore, your low-value imports (less than 400 SGD CIF*) are free of import tax. Singapore implemented a taxation system for low-value goods (LVG) on January 1, 2023, but only for larger retailers who exceed the registration thresholds. This guide will explain who is affected by the tax scheme, how the law is changing, how it affects your business, and how to be compliant with Singapore’s OVR GST laws.
Who the changes affect
Only larger retailers are affected by the low-value tax change. If your business exceeds both of the following thresholds, you will have to register for Singaporean goods and services tax (GST):
Low-value GST changes
The guidelines outlined in this document only apply to businesses that exceed the above thresholds. If you do not meet the Singapore OVR GST registration requirements, there is no change to your process—aside from the GST rate increase, which applies to all GST-registered entities.
How to register for OVR
If you choose to register on your own, you can do it through this online form. This registration process will require a username and password, which you will use to access your account, check deadlines, and remit taxes.
How to handle GST calculations
Before calculating GST, you must first make certain decisions that will affect the calculations, as outlined below.
There are three ways to determine what is considered low-value. Retailers who have or will reach the threshold must choose one option and use that method for all shipments to Singapore. The three options are as follows:
Option 1
Use the consignment value to determine low-value
(Recommended)
This option means evaluating GST on the CIF value of the entire order (selecting both elections on the election form).
Here’s how to calculate GST with this option:
Example calculations:
Example 1: Determining low-value and calculating GST on the consignment value of a single-item order.
Order breakdown:
Item cost + shipping is less than 400 SGD; therefore, it is low-value.
GST will be collected at checkout on the consignment value of the order
Example 2: Determining low-value and calculating GST on the consignment value of a multi-item order.
Order breakdown:
The total of the items + shipping is greater than 400 SGD; therefore, it is not low-value.
There is no GST to remit to IRAS. GST for this order will be paid to customs upon import.
Pros and cons:
Pros
Simple to calculate
Simple for Singapore customs
Less chance of miscalculations by customs agents
Very low probability of double taxation
Cons
More of the GST collected is paid through customs, rather than remitted to IRAS
Tips for using option 1:
If your business chooses this calculation method, abide by this checklist to ensure the smoothest GST collection process possible:
With these different options, calculating Singaporean GST can be difficult and tedious to manage on your own, so consider using automated calculation software in your checkout.
Option 2
Use the item import value to determine low-value
(Not recommended)
Low-value is determined based on the CIF value of each individual item in a shipment (select only the first election on the election form).
How to calculate with this option:
Calculation examples:
Example 1: Determining low-value and calculating GST on the item import value of a single-item order.
Order breakdown:
The item value + shipping is greater than 400 SGD; therefore, it is not low-value.
There is no GST to remit to IRAS. The GST for this order will be paid to customs upon import.
Example 2: Determining low-value and calculating GST on the item import value of a multi-item order.
Order breakdown:
Item 1’s value + shipping is greater than 400 SGD; therefore, it is not low-value.
Item 2’s value + shipping is less than 400 SGD; therefore, it is low-value.
GST will be collected on the CIF value of item 2 as follows:
First, the portion of the shipping allocated to the low-value item must be calculated by determining the percentage of the total of the items that item 2 makes up, then applying that same percentage of the shipping cost to item 2.
Next, calculate the GST to be remitted for item 2.
The remaining GST balance for item 1 will be collected by customs upon import.
Pros and cons:
Pros
More of the GST collected is remitted to IRAS, rather than paid through customs
Cons
Complicated to calculate
High chance of miscalculations by customs agents
High probability of double taxation
There is likely to be an adjustment period for Singapore Customs, and low and high-value items assessed separately in one order makes matters more confusing
Poor buying experience for consumers because they have to pay twice
Tips for using option 2:
If your business chooses this calculation method, abide by this checklist to ensure the smoothest GST collection process possible:
Option 3
Use the item sales value to determine low-value
(Not recommended)
Low-value is determined based on the cost of each individual item in a shipment (an election form is not needed—this is Singapore’s default option).
How to calculate GST with this option:
Calculation examples:
Example 1: Determining low-value and calculating GST on the item sales value of a single-item order.
Order breakdown:
The item value is less than 400 SGD; therefore, it is low-value.
GST will be collected on the CIF value of the item as follows:
Example 2: Determining low-value and calculating GST on the item sales value of a multi-item order.
Order breakdown:
Item 1’s value is greater than 400 SGD; therefore, it is not low-value.
Item 2’s value is less than 400 SGD; therefore, it is low-value.
GST will be collected on the CIF value of item 2 as follows:
The remaining GST balance for item 1 will be collected upon import.
Pros and cons:
Same as option 2
Tips for using option 3:
If your business chooses this calculation method, abide by this checklist to ensure the smoothest GST collection process possible:
Whether you are registering or not, if you usually send orders with duties and taxes prepaid, you can continue to do this with your high-value orders (greater than 400 SGD). You will not need to remit the GST collected on these high-value orders to the IRAS. It will be collected from the carrier during customs clearance.
Reporting and remitting GST to IRAS
For more details on the OVR regime, view the IRAS' OVR GST tax guide.
GST return filing and payment is due within one month from the end of each quarterly accounting period. For payments via electronic transfer, you should make the remittance at least one week before the due date to ensure on-time payment.
Other factors to keep in mind
Double Taxation
Double taxation is a common and frustrating part of these new taxation schemes, but sometimes, it is unavoidable. However, you can easily correct these errors when they do happen:
For additional information, see slide 43 of the OVR GST Regime slide deck.
Currency exchange rate
Be aware that if your orders are sold in a different currency than SGD, you will need to convert the cart total into SGD to know if the order is above or below the 400 SGD threshold.
Noncompliance
Failure to register and pay GST in Singapore when required is tax evasion for those who meet the requirements. If you fail to comply, you will be subject to the same penalties the IRAS assigns to non-compliant, domestic GST-registered businesses.
Frequently asked questions
Should I collect GST while I’m waiting for my OVR number?
Yes! Here’s why:
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