Do I need to pay GST on the bag I bought overseas? 8 things you need to know

Shoppers at the Shilla Duty Free shop at Changi Airport Terminal 1. ST PHOTO: MARK CHEONG

This story was first published on Jan 14, 2016, and updated on Jan 19, 2018

SINGAPORE - A 25-year-old woman was arrested at Changi Airport on Jan 12 after she failed to declare the branded items she had bought overseas for goods and services tax (GST) payment.

Officers checked her luggage when she tried to exit through the Customs Green Channel without declaring the items, which were worth more than $11,000.

The Singaporean woman had arrived on a flight from Paris with at least two handbags, several wallets and a belt.

Travellers, including Singaporeans returning from overseas, will have to pay GST on the value of the goods that exceeds the GST relief.

GST for goods valued below $150 is not applicable for travellers who are out of Singapore for less than 48 hours. For those who are away for more than 48 hours, GST is exempt for goods valued up to $600.

Still unsure about when you need to pay GST and how much to pay? Here are the answers to some commonly asked questions:

1. Why do Singaporeans have to pay GST on their purchases overseas?

GST is a tax on local consumption. All goods brought into Singapore are subject to 7 per cent GST regardless of whether they are imported through commercial shipments or hand-carried by travellers for their own personal use.

Such goods include new articles, souvenirs, gifts and food preparations purchased overseas and meant for the traveller's personal use.

The policy of GST imposed on goods brought into Singapore has been in force since April 1, 1994,when GST was first implemented in Singapore.

Singapore's GST (known in some countries as Value Added Tax) on imports is consistent in all countries with GST or Value Added Tax systems.

There is no GST relief for liquor, tobacco products, petroleum and goods imported for commercial purposes.

2. If the item was received as a gift, how is the tax calculated since there will be no receipt?

If the receipts are not available, the value of the goods will be assessed based on the values of identical or similar goods when computing the GST payable.

3. How many people have been caught not declaring taxable goods in the past years?

In 2012 and 2013, there were 179 and 398 cases respectively where warnings or composition sums were issued.

4. What happens if a traveller is caught for not declaring goods purchased abroad?

Travellers who are stopped at the checkpoints for not declaring goods purchased abroad with values exceeding their GST relief quantum will be referred to Singapore Customs. The GST due is collected from the travellers, with an advisory to pay GST for goods exceeding their GST relief.

Moreover, failure to declare the value of your purchases is an offence under the Customs Act and the GST Act. Offenders may be prosecuted in court, fined up to $10,000 and jailed for up to three years.

5. If a traveller buys a bag from a duty-free shop in Changi Airport while leaving Singapore, will he/she be taxed on the bag upon arrival back to the country?

The newly purchased bag is subject to GST if it exceeds the traveller's GST relief amount.

6. Is the item still subject to GST if the traveller removes the price tag/packaging and uses the item bought overseas immediately?

These items are considered as new articles and are subject to GST if the traveller's GST relief amount is exceeded when the new items are brought into Singapore.

7. Do travellers still have to pay GST if they have already paid sales tax for an item overseas and did not claim tax rebate?

GST is applicable for items imported into Singapore regardless of whether foreign sales tax was paid for the items overseas as the items will be consumed in Singapore.

8. Are goods shipped back separately (from same trip) also subject to GST?

For goods imported by post, buyers need not pay GST if the value of the shipment is $400 or less. Where the value of the shipment exceeds $400, GST is payable on the total value of the shipment.

Correction note: This article has been edited for clarity.

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