Jul 22, 2012

Posted by in Featured, Shopping | 0 Comments

What you need to know about Singapore’s import duty and 7% GST when shopping from abroad

Singapore is a country with probably the most open economy. This is possible due to both push and pull factor of us being a tiny island nation. With no land for agricultural farming, there is no domestic agriculture industry to protect. This is unlike in many other countries (even U.S.) where crop industry is huge and there is reason for the existence of trade barrier to protect the domestic industry. I remember how we used to be thought in our history lesson about Entrepot trade. Today’s Singapore economy is still pretty much based on this model where the economy thrives on the flow of good in and out of the country. Because of this reason, Singapore has been an active champion of free trade economy and has been signing off Free Trade Agreement (FTA) with many countries the world over.

While it is too complex to see how the FTAs directly benefit individuals like us, one advantage that we can derive out of it is probably the low level of import duty that we have to pay when we shop overseas. With the local retail market in Singapore dominated by few big players, we are often left with little to choose from. Prices are ridiculously high (see 3 Reasons why Singaporeans should Shop from Amazon) and the options being offered are narrow and limited. Fortunately, the simple custom procedure and transparent custom duty in Singapore allows us to shop from anywhere in the world, without having to pay high amount of taxes. At least this presents us with alternative options provided that we are willing to study and understand how the import duty works.

Singapore’s import duty is probably one of the simplest and most transparent in the world. It is easy to compute the amount of tax you have to pay when you want to ship something from overseas (like Amazon) and trust me, you don’t have to have a degree in taxation to decode the GST code. Here is how it works.

When you do online shopping at Amazon, the good news is you may not need to pay any GST for those items you have just purchased. However, you have to make sure that the value of your total purchase does not exceed the amount to qualify for GST relief. As stated in ICA’s website, GST relief applies to non-dutiable items worth less than $400. Dutiable items are items such as tobacco, alcohol and liquors (for a list of dutiable goods, click here). So, since we are talking about Amazon, most of us would shop for items such as gadgets that are mostly non-dutiable.

One commonly overlooked item when computing the worth of your purchase is the formula used by Singapore’s custom to determine their worth of your item.  Most of us would think that the value as simply the purchase value converted to Singapore dollar. It turns out to be not the case. The Customs value is referred to as CIF which includes 3 components: Value of your purchase + Freight + Insurance. So, don’t forget to take shipping into consideration the next time you checkout your purchases from Amazon.

For simple illustration, say your purchase totals is US$200 and Borderlinx charge you a total of US$75 for shipping. Then the total CIF of your purchase is S$357.50 which is still within the GST relief limit. Note that I’ve used 1.3 as the exchange rate between US$ to S$. You need to adjust the value accordingly.

CIF = (US$200 + US$75) x 1.3 = S$357.50

Over the past few years, I have shipped tonnes of items. While not all of them are not from Amazon, I can say that 80% of them are from there. I have shipped wide ranging items, big and small, cheap and expensive. The bulkiest item that I’ve shipped is this Disney iPad case that I’ve bought for my nephew’s birthday. The cheapest item hat I’ve ever purchased is this wall sticker that I had to discard when it was delivered separately from my other purchases and comGateway insisted on charging me $4 consolidation charge. Based on my experience, the shipping rate can range from as low as 30% to as high as 100% of your purchase price. It really depends the items that you bought and how well you can ensure that all your items get delivered in minimum number of separate packages. My rule of thumb is not to exceed US$200 for each purchase and you are most likely to be in the safe zone.

For more cost saving tips when shopping from Amazon, read also Cost Saving Tips when Shopping from Amazon

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