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New GST rule for imported goods won't deter buyers

New GST rule for imported goods won't deter buyers

Source: Straits Times
Article Date: 18 Feb 2021
Author: Prisca Ang & Sue-Ann Tan

The tax changes mean overseas suppliers and electronic marketplace operators will have to register for GST if they supply significant amounts of low-value goods to local consumers.

Goods bought online might be slightly pricier in the future in the wake of Tuesday's Budget announcement, but this alone will not be enough to divert demand towards local shops.

Home-grown retailers told The Straits Times they must continue to differentiate their products from those of overseas sellers if they want to stay competitive.

Mr James Quan, co-founder of personalised notebooks and customised leather goods brand Bynd Artisan, said: "It's really about how unique of a proposition you can offer and what kind of value-added services and advice you can give to customers."

But local firms selling commodities like rice are likely to benefit from the move as these items are price sensitive, Mr Quan added.

Ms Dione Song, chief commercial officer at home-grown fashion label Love, Bonito, said: "The tax is a helpful move to encourage consumers to look at local businesses in the same light as overseas firms, and to let the assortment of products speak for itself.

"There will always be competition, and we see it as healthy.

"At the end of the day, it's about a brand's proposition and its value to the end consumer."

Besides focusing on the local market, home-grown brands also have to expand their horizons overseas, added Ms Song.

"Singapore is not a big enough market and you need economies of scale to be competitive.

"It's about taking the opportunity to ride the post-Covid-19 global e-commerce trend."

Video producer Rennes Lee, 25, spends about $2,000 a year buying anything from clothes to furniture online.

She said: "I don't think it will affect consumers that much as the price difference between a locally made product and one that is imported can be huge, even with the GST."

Experts noted that while the tax will help level the playing field with overseas retailers, local operators still have to raise their game to stay competitive.

Ms Esther Ho, director of the School of Business Management at Nanyang Polytechnic, added: "As the tax is on a smaller amount, it might be perceived as negligible and hence unlikely to alter shopping behaviour."

OCBC Bank head of treasury research and strategy Selena Ling noted: "Local players still have to sharpen their competitive edge over these two years or else they cannot survive in a globalised world where competition is heightened in a digital economy."

The move to impose GST on imported low-value goods has been one that the Association of Small and Medium Enterprises has been calling for since a few years ago.

Its president Kurt Wee noted: "We are glad that this has been announced.

"It will help to level (the field between) Singapore businesses versus foreign online retailers who don't have to charge GST, which has put our companies at a disadvantage."

The tax changes mean overseas suppliers and electronic marketplace operators will have to register for GST if they supply significant amounts of low-value goods to local consumers.

They will collect GST on the sale of these goods and then pay the GST to the Inland Revenue Authority of Singapore (Iras).

GST is already collected by Singapore Customs at the border when goods above $400 are imported by air or post.

Iras added: "In the event of non-compliance, the existing penalty and enforcement regime under the GST Act will apply.

"Iras will raise additional tax assessments, apply penalties and recover the outstanding tax payable directly or through the appointment of agents."

Low-value goods bought online and imported by air or post will be subject to the goods and services tax (GST) from Jan 1, 2023.

Shoppers expect the tax to have little effect on their online spending habits.

Source: Straits Times © Singapore Press Holdings Ltd. Permission required for reproduction.


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