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Will Singaporeans Pay High Taxes on the Cross-border Online Transactions

Last modified: October 21, 2021
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E-commerce tax in singapore

There is a lot of concern over the avoidance of taxes by the online shoppers involved in cross-border transactions. The online shopping has created a complex situation for the tax authorities as it is leading to the loss of revenue for the governments. It is especially true when a private buyer buys items from an overseas supplier.


Cross-border Online Transactions and Tax Avoidance

Singaporeans do not have to pay GST (Goods and Services Tax) on the imported goods if they are purchased online and costs less than S$400. So, at the time of buying goods of higher value, some of the buyers simply spread their purchases over multiple orders of smaller values and avoid paying GST.

It is a serious matter leading to base erosion and profit shifting. An agency, the Organization for Economic Co-operation and Development (OECD) has recommended action for collecting the taxes on the cross-border online transactions.

It is true that most of the jurisdictions have failed to come up with the specific tax rules for the online or the E-commerce economy. That is why, OECD has urged the governments to use international VAT (Value Added Tax) or GST principles to address the problem.


Do Overseas Ecommerce Sellers Pose Threats to the Traditional Singapore Retailers?

The tax avoidance on cross-border online transactions has far reaching consequences. It has created a difficult situation for the traditional sellers and retailers operating in the domestic markets, because, they cannot escape from being taxed on every transaction they conduct.

The experts have pointed to the contribution of the retail sector to the Singapore economy. They have also highlighted that the E-commerce is dominated by the foreign retailers. Each transaction with these entities takes the money out of Singapore.

Some of the countries like Norway have taken steps to collect VAT or GST whichever is applicable under their jurisdictions. However, the experts advise to making these e-commerce retailers register for the GST or VAT in the countries they are operational.

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