Dropshipping in Singapore: GST on Low-Value Goods and Store Rules

Is dropshipping legal in Singapore?

Yes. There is no licence for dropshipping as a business model. You still run a normal business: register it with ACRA if you trade as a business, keep records, and follow the same tax, consumer protection and product safety rules as any shop. The difference is that your stock sits with an overseas supplier, so you take on responsibility for things you never touch.

From the customer's side, you are the seller. If an order is late, wrong or unsafe, the customer's rights are against you, not your supplier.

GST on low-value goods: what IRAS says

IRAS's page for local businesses supplying low-value goods explains the change. Before 1 January 2023, sales of goods warehoused overseas were out of scope for GST, because the goods were outside Singapore when sold. From that date, sales of low-value goods by local suppliers to customers who are not GST-registered fall within GST.

IRAS defines low-value goods as goods which, at the point of sale:

• are not dutiable (or the duty is waived under section 11 of the Customs Act), so liquor and tobacco are out;
• are not exempt from GST;
• are located outside Singapore and will be delivered to Singapore by air or post; and
• have a value not exceeding the S$400 GST import relief threshold.

For a typical dropshipper selling phone accessories, clothing or homeware under S$400 through their own store, most orders fit this definition. Goods sent by sea, or worth more than S$400, are not low-value goods; they are normal imports, and import GST is collected at the border.

When a dropshipper must register for GST

IRAS sets out two situations for a local supplier making direct sales, meaning sales through your own website rather than through a marketplace.

Marketplaces are different. IRAS's e-commerce page says a GST-registered electronic marketplace operator is regarded as the supplier for low-value goods sold through it. If you sell the same goods on a marketplace, check how that platform handles GST before you also charge it.

Our guide to GST registration for online sellers explains how the S$1 million test works, and Shopify GST set-up for Singapore shows the store settings. In Xero, there is a separate "LVG own supply" tax type for these sales.

Delivery times and product descriptions: CCS and the CPFTA

Long and unreliable shipping is the biggest complaint about dropshipped orders. The Consumer Protection (Fair Trading) Act lists unfair practices in its Second Schedule, and several apply directly.

• Paragraph 24: accepting payment when you know or ought to know you cannot supply within the period you stated, or within a reasonable period if you stated none.
• Paragraph 4: representing that goods are of a particular standard, quality, model or origin if they are not.
• Paragraph 23: omitting a material fact, hiding it in small print, or misleading a customer about it.

The enhanced e-commerce guidelines (TR 76) add good practice on showing prices, fees and real discounts. The Competition and Consumer Commission (CCS) is the agency that enforces the CPFTA.

Products you should not dropship without checks

Some product types need approval before they can be sold in Singapore. The Consumer Product Safety Office says 33 categories of household electrical, electronic and gas appliances and accessories, called Controlled Goods, must be tested, registered and carry the SAFETY Mark before they can be sold. The list includes items such as AC adaptors, and selling unregistered Controlled Goods can mean a fine of up to S$10,000, up to two years' jail, or both.

General consumer goods such as toys, apparel and children's products do not need pre-market approval, but they must meet applicable safety standards and the office acts on unsafe products after sale. Cosmetics and health products fall under HSA, and food under SFA, each with their own rules.

Vetting dropshipping suppliers

Your supplier's mistakes become your customer complaints. A short test before launch saves refunds and chargebacks later.

1. 1

   Order samples to a Singapore address

   Time how long they take, check the packaging and look for invoices or price tags from the supplier inside the parcel.

2. 2

   Get delivery times in writing

   Ask for typical and worst-case times to Singapore and use the worst case on your product pages.

3. 3

   Check the returns process

   Find out whether faulty items can be returned to a local address or must go overseas, and who pays.

4. 4

   Ask for product documentation

   Specifications, materials and, for electrical items, safety certification.

5. 5

   Agree how order data is handled

   Your supplier receives customer names, addresses and phone numbers. Your PDPA obligations still apply, so pick suppliers who limit and protect that data.

Do it yourself or get help?

Many sellers set up a Shopify store with a dropshipping app themselves. The parts that go wrong are the honest delivery wording, GST settings once you register, and keeping sales records that match your bank and payment payouts.

Our Shopify Store package (S$1,890) sets up the store with up to 30 products, PayNow and card payments, shipping zones and policy pages, so delivery times and returns are clear from the start. Once you are GST-registered, our Xero / QuickBooks Integration (S$390) connects Shopify and your payment provider to your accounting software. For GST treatment questions on your specific orders, ask a tax agent or IRAS.