Before the Internet became a thing, we used to shop in physical stores until we dropped.
Now, we drop to the floor, couch, or bed, and then shop.
Much like right-swiping rampages on dating apps, many of us routinely go on online shopping sprees.
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It’s easy, quick, and can be done while on the toilet.
However, if you do most of your shopping online, I have some bad news for you, and it involves those three dreaded letters: GST.
Everything You Need To Know About The Online Shopping Tax in 60 Secs
On Tuesday (16 Feb), Finance Minister and Deputy Prime Minister (DPM) Heng Swee Keat delivered his Budget speech.
Some things in his speech made us smile, others made our wallets cry.
One of them was the announcement that the Goods and Services Tax (GST) will be imposed on all imported goods purchased online.
At the moment, only goods that cost $400 and above are subject to GST to facilitate clearance at the border.
But from 1 Jan, 2023, GST will be charged on imports under $400 as well.
According to CNA, GST will also be imposed on services provided over the internet that require human interaction.
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This includes counselling and online education from overseas providers, to name a few.
Why the Change?
So, why is the gahmen imposing a tax on low-value goods as well?
Well, according to Mr Heng, the changes will “ensure a level playing field for our local businesses to compete effectively”.
Online shopping has also skyrocketed thanks to the pandemic.
According to Mr Heng, other countries such as Australia and New Zealand are planning to do the same.
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Overseas Suppliers Need to Register For GST Scheme
Overseas suppliers, electronic marketplace operators, and re-deliverers will be required to register for GST if they make significant supplies of low-value goods to local consumers, Mr Heng said.
“They will collect GST on the sale of low-value goods imported by local consumers, and then pay the GST to IRAS.”
These changes will only take place in two years, so there’s plenty of time for businesses to prepare for the change.
GST on Digital Services Started Last Year
You may not know this, but you’re actually paying taxes on your Netflix subscription.
The import of digital services became taxable from last year, and is unofficially referred to as the “Netflix tax”.
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Music streaming services like Spotify was also subject to the tax, as the demand for online entertainment grew.
For more information, click here.
Feature Image: Siew Chui / Shutterstock.com
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