Amazon Seller Tax FAQ
6 minute read
Overview
- For overseas sellers who are selling on Amazon.sg (Singapore marketplace)
- For Singapore-based sellers who are selling on Amazon.sg (Singapore marketplace)
- For Singapore-based sellers who are selling on Amazon.com (USA marketplace)
- GST (General)
- GST for overseas sellers who are selling on Amazon.sg
- GST for for Singapore-based sellers who are selling on Amazon.sg (Singapore marketplace)
- GST for Singapore-based sellers who are selling on Amazon.com (USA marketplace)
Tax implications
For overseas sellers who are selling on Amazon.sg (Singapore marketplace)
Will I be taxed in Singapore on income earned from selling physical goods to customers on Amazon.sg –
If I do not have a branch office registered in Singapore?
As Amazon.sg merely facilitates the conduct of the e-commerce transactions and the substantial part of the business operations are situated outside Singapore, the income earned from selling physical goods to Singapore customers will not be taxable in Singapore.
If I have a branch office registered in Singapore?
If a branch office is registered in Singapore, the income earned from selling physical goods to Singapore customers on Amazon.sg will be taxable in Singapore.
Will I be taxed twice in my home country on the same income earned?
Double taxation implications may arise if the income earned from selling physical goods to Singapore customers on Amazon.sg is taxable in your home country. Double taxation can potentially be mitigated through the double taxation agreement between Singapore and the foreign country. You may wish to contact your tax, legal or other professional adviser in your home country to ensure that you are fully compliant.
For Singapore-based sellers who are selling on Amazon.sg (Singapore marketplace)
Will I be taxed in Singapore on income earned from selling physical goods to customers on Amazon.sg –
As an individual?
You are considered a self-employed person if you have received full-time or part-time income from trade, business, vocation or profession. This includes the income earned through selling goods in Amazon.sg. You have to report this income in your tax return.
Generally, sole-proprietors and partners registered with the Accounting and Corporate Regulatory Authority (ACRA) are self-employed.
All self-employed persons must report the income earned from their business operations as business income, and not as salary. The business income is part of the total personal income which is taxed at individual income tax rates.
Is this considered as an investment income?
No, it is not an investment income. All self-employed persons must report the income earned from their business operations as business income, and not as salary. The business income is part of the total personal income which is taxed at individual income tax rates.
Do I need to submit a separate IR8A form to IRAS?
It is not required to submit a separate IR8A form to IRAS. There are two ways to file Form B to IRAS:
- e-File via myTax Portal (recommended)
- Paper filing
As a company registered in Singapore?
As a company registered in Singapore, any business income derived from sales through Amazon.sg will be liable to tax in Singapore.
Are there any government schemes to minimize Singapore income tax for e-commerce and/or overseas sales?
While there is no specific government scheme to minimize Singapore income tax for e-commerce businesses, Singapore tax resident companies are able to enjoy the tax incentives and benefits such as the following:
- tax benefits provided under Avoidance of Double Taxation Agreements (DTAs) Singapore has concluded with other jurisdictions
- tax exemption on foreign-sourced dividends, foreign branch profits, and foreign-sourced service income under section 13(8) of the Income Tax Act; and
- tax exemption for new start-up companies.
Do I need to register a Singapore business entity in order to sell on Amazon.sg?
(Info from Amazon.sg FAQs)
You are not required to register a Singapore business entity.
What are the advantages of setting up a Singapore private limited company?
When you create a private limited company, you are creating a separate legal entity from yourself. It limits your liabilities as an individual – meaning that if your company has a huge downfall (eg. debts or losses) in your business, it will not impact any personal assets that you own.
A private limited company is the most scalable, advanced and flexible business structure in Singapore. It is the most common type of business structure in Singapore compared to a sole proprietorship. The shareholders of a private limited company can either be individuals or corporate entities or both.
A private limited company can be 100% foreign or locally owned. There are no foreign shareholding restrictions. A private limited company has to appoint at least one resident director, he/she can either be a Singapore citizen, a Singaporean permanent resident or an EntrePass holder – with a residential address in Singapore. They have to be at least 18 years of age.
If you do not qualify to be a local director and do not have anyone else you can use, we can provide you with nominee services. Click here to find out more.
What are the advantages and disadvantages of setting up a private limited company as compared to a sole-proprietorship? (Info in this section are extracted from Sleek SG)
When starting a business in Singapore, you want to be 100% sure that you choose the correct type of legal structure. Your decision will affect a variety of things including the amount of tax you pay, liability and more. Here’s a quick guide to explain the 2 main business structures for small business owners in Singapore – A private limited company and sole proprietorship –
1) Private limited company
Owning a private limited company can be worthwhile for one, in terms of tax benefits.
Advantages –
- Not personally liable for any debts or losses
- Profits taxed at corporate tax rates (17%)
- New companies are entitled to tax incentives and tax exemptions
- The company is a separate legal entity from its shareholders and directors
- Ownership can be transferred
- Ease of raising capital
- Attractive to outside investors
Disadvantages –
- More compliance requirements set out by the Companies Act and enforced by ACRA and IRAS
- Operating costs are higher (administrative requirements etc)
- Directors must disclose their company’s information (interest in company shares, contracts etc)
2) Sole-proprietorship
A sole proprietorship is the simplest way of doing business in Singapore if you’re a local (foreigners cannot operate sole proprietorships in Singapore). It does not constitute a separate legal entity, which makes the business owner accountable for all liabilities that occur during the course of the business.
This means that the personal assets of the owner are not protected from the liabilities and business risks of the company. In a case where the business is unable to pay its debts, the creditors can go after the owner’s assets as well as those of the company.
In terms of requirements, a sole proprietorship needs to be renewed annually through ACRA – click here to find out the steps. Only Singapore citizens, Singapore permanent residents or EntrePass holders can apply for a sole proprietorship. The owner has to be at least 18 years of age.
A foreigner who is not residing in Singapore can also register for a sole proprietorship but he/she has to appoint an authorised representative who is residing in Singapore. This authorised representative will then have full legal capacity to ensure the company is staying compliant with regulatory requirements.
Advantages –
Depending on your circumstances, a sole proprietorship could be a solid option when you’re starting out, but could also be a stepping stone you can skip over in order to start a company instead. Here are some advantages of choosing the path of sole proprietorship:
- It is the easiest to set up
- Cheapest business structure
- Minimal compliance requirements: e.g. you do not have to audit your accounts or file annual returns
- There is no profit sharing (you have no shareholders)
- You can easily terminate your sole proprietorship
Disadvantages –
Even where you do qualify for a sole proprietorship, sometimes choosing a sole prop isn’t the right option for you. Here are the disadvantages of running a sole proprietorship instead of a company:
- No separate legal entity
- Unlimited liability
- Do not qualify for corporate tax benefits
- Limited capital
- Low public perception
- Any profits made in the business is treated as the owner’s income, thus subjected to personal tax rate with the highest income tax rate of up to 22%
For Singapore-based sellers who are selling on Amazon.com (USA marketplace)
Will my income earned from selling physical goods to international customers on Amazon.com be taxable –
In Singapore as a private limited company?
The income earned from selling physical goods to international customers through Amazon.com (USA marketplace) is taxable in Singapore. Even though Amazon.com facilitates the conduct of the e-commerce transactions, the substantial part of the business operations are situated in Singapore and therefore it is considered as income sourced in Singapore.
In Singapore as an individual taxpayer?
Generally, overseas income received in Singapore by an individual is not taxable and need not be declared in your income tax return. This includes overseas income paid into your Singapore bank account.
In the US: If I am not a US taxpayer?
The IRS regulations require non-US taxpayers to provide Form W-8BEN to Amazon.com in order to be exempt from US tax reporting requirements. Amazon.com may obtain identification information from you, such as a tax ID from certain sellers on Amazon’s non-US websites. In general, the IRS regulations require Amazon to collect identifying information from sellers who have a US address, US banking information, or other identifying information connecting the seller to the US.
(Information extracted from Amazon US FAQ, view more here)
If I am a US taxpayer?
As there is no double taxation agreement between Singapore and the US, you may be eligible for a unilateral tax credit on the foreign-sourced income that is remitted back to Singapore. This is only applicable if you have an overseas branch of a Singapore resident company in the US and if IRAS views that the foreign branch constitutes a permanent establishment (PE) in the US.
GST FOR SALE OF PHYSICAL GOODS
General
What is Goods and Services Tax (GST)?
GST is an indirect tax that applies to sales and purchases, in other words, it is a transaction based tax. GST operates at each level of the supply chain from producer, manufacturer, wholesaler, and retailer; this ultimately ensures that GST is accounted for at each stage of the supply chain until it finally rests with the end user.
GST rates
The rate of GST that applies to most supplies of goods and services in Singapore is 7%.
How is GST charged?
In order to charge GST you must first be registered for GST and obtain a GST registration number. Once you are GST registered in Singapore, you are bound by the GST rules and it normally means that you must charge GST (where applicable) on your sales and show this GST on a tax invoice (consult your tax advisor for specific advice regarding invoicing requirements).
Why is Amazon collecting Singapore GST on certain fees?
Under Singapore GST Laws, Amazon is required to calculate and collect Singapore GST on its fees related to transactions made by sellers, such as monthly subscription and Selling on Amazon fees. 7% or 0% GST will apply depending on the type of fee being charged and is not necessarily dependent on the GST registration status of the Seller. All fees payable by you to Amazon pursuant to the Agreement entered into are exclusive of GST and similar taxes and you will be required to pay any taxes that Amazon is legally obligated to charge on such amounts.
How does Amazon calculate the Singapore GST on monthly subscription fees and Selling on Amazon fees?
Amazon will charge the standard GST rate of 7% or 0% (as applicable) on any monthly subscription fees and Selling on Amazon fees in accordance with the nature of the supply.
Will Amazon provide me with a GST invoice for any GST charged on my monthly subscription fees and Selling on Amazon fees?
If you are GST-registered in Singapore, Amazon shall provide you with a Tax Invoice for all fees and applicable GST payable by you. You can also view your monthly invoices by going to Seller Central Reports Tax Document Library Seller Fee Tax Invoice.
For overseas sellers who are selling on Amazon.sg (Singapore marketplace)
Do I need to register for GST?
GST registration is applicable for foreign corporate entities whose taxable turnover at the end of any calendar year is more than SGD 1 million, or if it is reasonably expected in the next 12 months to be more than SGD 1 million.
GST registration is not applicable to individuals.
Am I required to charge GST?
If you are a foreign corporate entity whose taxable turnover meets the above thresholds, you must appoint a local agent in Singapore, known as the Section 33(1) agent, to act on your behalf for GST matters.
For Singapore-based sellers who are selling on Amazon.sg (Singapore marketplace)
Am I required to charge Singapore GST on my sales of goods through Amazon.sg?
The obligation to charge GST on sales of goods through Amazon only extends to persons who are registered or are required to register for GST in Singapore. If you have a requirement to register for GST, then you will need to consider the requirement to charge GST on your sales of goods and services to customers in Singapore, file GST returns and pay the GST you collected from your customers to the tax authorities. Both individuals and companies carrying on business activities must determine their requirement to be registered for GST.
Note also that in addition to the requirement to charge GST on sales, as a GST registered person you may also be entitled to recover GST incurred on business related expenses. This ensures that in the majority of situations, GST is not a cost to registered businesses. If you are GST registered in Singapore and have received a GST registration number issued by the Inland Revenue Authority of Singapore (IRAS), you can enter your information relating to GST on the selling centre here.
Do I need to register for GST?
It is not a requirement to be GST-registered in Singapore before you can sell on Amazon. However, pay attention to Singapore GST law that may apply on your sales to customers. Under Singapore GST Laws, you may either be required to register compulsorily or may do so voluntarily. If you are GST registered, you should provide Amazon with your GST registration number. GST registration is only for corporate entities and it is not applicable to individuals.
Compulsory Registration
If the total value of your supplies of goods and services made in Singapore exceeds the registration threshold of SGD 1 million at the end of the calendar year or you anticipate that the total value of your supplies will exceed SGD 1 million in the next 12 months, then you must register for GST. If you are not already registered for GST in Singapore, then you must monitor the value of your sales to determine if they result in a requirement to register for Singapore GST.
Voluntary Registration
Voluntary registration is an option available to businesses which do not have a turnover in excess of SGD 1 million, but would still like to be registered for GST. Do note that under the voluntary GST registration, you must remain registered for the next 2 years.
What if I already have an income tax number in Singapore?
The GST registration application is a standalone process and you will be issued with a GST Registration Number that may be different to the number obtained in relation to other taxes. It must be used for the purposes of conducting your GST related business activities only.
How can I apply for GST registration and obtain a Singapore GST registration number?
You can register online on the tax authority’s website – www.iras.gov.sg. Registering for Singapore GST may lead to a number of associated compliance requirements, including the requirement to file returns and to issue Singapore Tax Invoices to your customers.
How should I charge GST for goods sold on Amazon.sg?
Only Singapore GST registered entities are allowed to charge GST. For goods delivered to a delivery address in Singapore, you are required to charge 7% GST (i.e. standard-rated supply of goods).
For goods sold on Amazon.sg delivered from a location in Singapore to a delivery address overseas, you are required to charge 0% GST (i.e. zero-rated supply of goods).
Individual sellers are not allowed to charge GST.
Pricing
All prices published on the amazon.sg webpage must include the amount of any applicable GST.
What happens if my goods are shipped from overseas to a delivery location in Singapore?
As a GST registered entity, you will have to pay an amount related to import GST or duties, unless the value of the shipment is below SGD 400. You will also have to charge 7% GST on the sales value to the customer.
As an individual seller who is not GST registered, the recipient of the product may be required to pay, upon delivery, an amount related to assessed import GST or duties, unless the value of shipment is below SGD 400.
Such taxes and duties are in addition to the sales proceeds collected by Amazon.
Who will be responsible for issuing a Tax Invoice for my sales on Amazon?
As a seller on Amazon, it is your responsibility to comply with the Singapore GST Law at all times. This includes issuing valid tax invoices for sales made to customers, collecting GST (if applicable) and payment of GST to the IRAS. It is your sole responsibility to comply with all legal and GST requirements for issuing Tax Invoices to buyers in respect of your sales transactions.
What are my Singapore GST obligations relating to return orders?
In case of return orders for which a refund is authorised to the customer, you are required to provide the customer with a valid Tax credit note.
Singapore GST on shipping revenue
For any Amazon FBA (Fulfilment by Amazon), Amazon will determine the amounts charged to the customer for shipping services through the FBA Programme. These charges will be tax inclusive to the customer and Amazon will report them to you. Amazon shall issue you with a Tax Invoice for all fees and applicable Taxes payable by you. You shall be responsible to account for any applicable GST on the shipping charges to customers.
For Singapore-based sellers who are selling on Amazon.com (USA marketplace)
How should I charge GST for goods sold on Amazon.com?
Only GST registered entities are allowed to charge GST. For goods sold on Amazon.com and exported from Singapore to a delivery location internationally, you are required to charge 0% GST (i.e. zero-rated supply of goods). For exports through sea and air freight, you are required to maintain the necessary export documents, such as the bill of lading / air waybill / subsidiary export certificate stating details of goods exported and bearing your name as the exporter. These documentation records must be kept for 5 years.
What happens if my goods are shipped from an overseas warehouse to an overseas delivery location outside of Singapore?
For goods that are shipped from an overseas warehouse to an overseas customer whose delivery location is outside of Singapore, this is an out-of-scope supply and therefore you do not need to charge GST.
What expenses related to selling on Amazon.com US marketplace incur GST?
The Amazon entity operating Amazon.com is registered for GST in Singapore and charges 7% GST on digital services (referral, advertising) to all non GST-registered customers in Singapore. This info can be found on Amazon.com Help Page.
Guides/Sources:
The contents of this publication have not been reviewed or endorsed by Amazon Asia-Pacific Holdings Private Limited or any of its affiliates. Amazon cannot accept responsibility for any loss incurred by any person acting or refraining from action as a result of the material in this publication. Amazon makes no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability or suitability with respect to the contents of this publication, and accepts no liability arising as a result of reliance on the information published herein.
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