Budget 2021: GST hike plan unchanged; GST applies to low-value imports from 2023

THE upcoming goods and services tax (GST) hike must still happen "sometime during 2022 to 2025, and sooner rather than later", subject to economic conditions, said Deputy Prime Minister and Finance Minister Heng Swee Keat in Tuesday's Budget speech.

Meanwhile, with effect from Jan 1, 2023, GST will be extended to low-value goods imported via air or post. This will affect purchases from overseas e-commerce sellers, for example.

The upcoming GST hike was first announced in Budget 2018, to be implemented some time from 2021 to 2025. In February last year, Mr Heng said that in view of economic conditions the hike would not take effect in 2021.

But the rate increase cannot be put off too long if Singapore is to meet its rising recurring spending needs, said Mr Heng. He reiterated that the S$6 billion Assurance Package introduced in Budget 2020 will help to cushion the impact.

Budget 2018 also included the announcement that the GST would be extended to imported services from Jan 1, 2020.

In Tuesday's speech, Mr Heng announced that this would now also be extended to low-value goods - those valued up to the current import relief threshold of S$400 - imported via air or post, as well as to business-to-consumer imported non-digital services. This takes effect from Jan 1, 2023.

With this change "overseas suppliers of goods and services will be subject to the same GST treatment as local suppliers", ensuring a level playing field for local businesses to compete effectively, said Mr Heng.

Digital services are delivered over networks with minimal or no human intervention, and include video and music streaming. Such services have been subject to GST since 2020.

Non-digital services include all other services such as live interaction with overseas providers of education, fitness training, counselling, and telemedicine. Such services have been subject to GST since 2020 at the business-to-business level, and will be subject to GST at the business-to-consumer level from 2023.