What you need to know about how GST applies to your holiday shopping

On Tuesday, a Straits Times story which reminded Singaporeans to pay Goods and Services Tax on their overseas shopping went viral.

Singapore Customs explains that the policy of imposing GST on goods brought into Singapore is not new. It has been in force since April 1, 1994 when GST was first implemented in Singapore.

According to the rules, if a traveller is out of Singapore for less than 48 hours, he does not have to pay GST for goods valued below $150. If you are out of the country for more than 48 hours, GST is exempt for goods valued up to $600.

Here is a detailed FAQ on what you need to know about how GST applies to your shopping spoils from overseas holidays.

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

GST is a tax on local consumption. As such, 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 practice of imposing GST (known in some countries as Value Added Tax) on imports is consistent in all countries with GST or Value Added Tax systems.

To minimise inconvenience to international travellers and returning residents who bring a small amount of goods into Singapore for their personal use or consumption, GST relief is granted and the amount is based on the value of goods they bring in and the period that they are away from Singapore. Travellers will have to pay GST on the value of the goods which is in excess of the GST relief granted to them.

2. If a traveller receives a gift, how is the tax calculated since he/she will not have a receipt and will not be able to estimate the value of the gift? What if the gift is a vintage object? What if you say you have no receipts at all for the items?

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 year? If I'm caught but I say I will pay the GST there and then, will I still be charged? What is the process if I'm charged? Do I go to court or can it be settled with a fine? Will I have a criminal record?

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. For repeat offenders and persons carrying commercial goods, warnings or composition sums may be issued. In 2012 and 2013, there were 179 and 398 cases respectively where warnings or composition sums were issued.

4. What if I buy a $1,000 bag from one of the shops at Changi Airport's duty free while leaving Singapore - will I be taxed on the bag when I come back together with the bag?

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

5. If a traveller removes the price tag/packaging and uses the item bought overseas immediately, is the item still subject to GST?

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.

6. If I have already paid sales tax for an item overseas and did not claim tax rebate, do I still have to pay GST?

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.

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

For goods imported by post, a GST relief amount of up to $400 per shipment is granted. Where the value of the shipment exceeds $400, GST is payable on the total value of the shipment.

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