This article is generally informing Singaporeans the importance and the need to declare and pay the taxes of their goods or souvenirs purchased overseas when they return home from their holidays. The items are subjected to a 7 percent Goods and Services (GST) tax regardless whether the goods purchased are for their own use or not. However, the government has implemented a form of GST relief for Singaporeans to allow them to bring a certain combined total value of goods purchased to be brought back home without having to pay tax. The GST relief is granted to Singaporeans for goods valuing up to $600, provided they spend more than 48 hours overseas. Any lesser than 48 hours spent overseas would only allow them to receive a relief of up to $150 for their purchases. In addition, tobacco products and liquor are exempted from the relief. Total value of goods exceeding the relief amount would be taxable for GST under the Customs and GST Act. Singaporeans who fail to declare purchases on arrival and pay taxes where it is due is punishable by law and may be fined and/or jailed.
Law and Legal Issues Raised
Goods and Services Tax Act (Chapter 117a)
Section 8(4) – Tax shall be charged, levied and payable on any importation of goods (other than an exempt import) as if it were customs duty or excise duty and as if all goods imported into Singapore are dutiable and liable to customs duty or excise duty.
Section 24 of the GST Act; GST (imports relief) Order
Commentary on the Law and Legal Issues Raise
The main focus of analysing this article in accordance to the relevant law issues raised is the implementation of the GST relief by the government. It is initially established that all Singaporean travellers are to declare and pay tax on all goods purchased overseas upon arriving in Singapore. This is supported by section 8(4) of the GST Act whereby “GST tax shall be charged, levied and payable on any importation of goods as if it were customs duty and as if all goods imported into Singapore are dutiable and liable to customs duty.”
To offset the hefty taxable amount that Singaporean travellers may have to pay for their purchases, the government has initially implemented a form of GST relief which is limited up to just $300 depending on their age and the time spent outside Singapore. This is represented in section 24 of the GST Act; GST (imports relief) Order. However from 1 April 2012 onwards following the 2012 Budget Statement, the GST relief for taxable purchases from overseas have been increased to double the amount which is $600 (if 48 hours or more spent overseas) and that the age of travellers no longer affects the grant of the relief. The relief excludes liquor, tobacco products and petroleum purchases.
The basis of this relief is to reduce the inconvenience of travellers who are only bringing back home small amount of purchases for personal use such as souvenirs. In addition, over the months and years, it has been observed that the cost of expenditures (most probably due to inflation) have been increasing steadily thus the relief has been revised upwards to match the expenditure globally. At the same time, the increase in relief will help to reduce the queue and hassle due to declaration, checking of receipts as well as payment of taxable goods at the customs in the airport. This is due to the fact that most travellers will return back home with a substantial amount of purchases. This will ease the traffic flow of travellers who have touched down, coming in through the customs and cut down congestion thus reducing the manpower needed to handle the crowd of travellers. With the increase in GST relief, travellers are now able to spend and bring back home more souvenirs, gifts and goods for their own consumption from other foreign countries and retain more memories through bringing back home these tangible items. Lastly, with the removal of the age requirement allows children below 18 years of age to buy and bring in more value of purchases which can be combined along with their parents or family members’ expenses.
On the other hand, with the GST relief amount capped at $600, it prevents travellers from being greedy and exploiting the relief by purchasing a bulk of luxury goods overseas at a much cheaper price and re-selling them locally to gain profits. There have been many of such cases and the government aims to create deterrence and put a stop to such acts as far as possible without being unfair to the general public.
Ultimately, the government has allowed a lax in the tax payable for importation of goods through this relief to help both Singaporeans and the customs department. This creates a balance and fair system and as a result, it is imperative that travellers keep records of their purchases, stick to the relief amount given and declare when necessary (purchases exceeding $600). Failure to do so would be taking advantage of the given relief and it is an offence under the Customs Act and the GST Act, resulting in a fine and/or jail term.
Singapore Master Tax Guide Handbook 2012/13