Competition between Local Retailer and Offshore Online Retail Shops
Ministry of Trade and IndustrySpeakers
Summary
This question concerns how the government ensures a level playing field between local retailers and offshore online shops regarding GST, fair trading, data protection, and the frequency of online fraud. Minister for Trade and Industry (Trade) Lim Hng Kiang stated that GST applies to all imports, except for a $400 concession on air or postal imports to balance compliance costs. He noted that while the Consumer Protection (Fair Trading) Act and Personal Data Protection Act apply to online retailers, enforcement against offshore entities remains a practical jurisdictional challenge. Consequently, consumers are urged to be cautious as agencies like SPRING Singapore and the Info-Communications Media Development Authority have limited reach over operators without a local presence. Finally, the Minister reported that the Police handled an average of 1,000 online fraud cases per year over the last five years, typically involving non-delivery of goods after advance payments.
Transcript
62 Mr Gan Thiam Poh asked the Minister for Trade and Industry (Trade) (a) how does the Government ensure a level playing field between our local retailers and online shops operated offshore in terms of the goods and services tax due; (b) how does the Ministry regulate such operators and enforce fair trading practices and protection of personal data; and (c) how many cases of online retail fraud have been reported in the past five years.
Mr Lim Hng Kiang: Goods and services tax (GST) is levied on the import of goods into Singapore. All local businesses and individuals, including consumers making purchases from online shops located offshore, are required to pay GST when the goods are imported into Singapore. The only exception is where the goods are imported via air or post and the value of the goods fall below $400. The concession is given in recognition that the compliance cost could outweigh the GST collection if every import, regardless of value, is subject to GST.
The Consumer Protection (Fair Trading) Act, or CPFTA, provides the same protection to consumers who make purchases from online retailers or brick-and-mortar shops. This means that actions can be taken against errant online retailers under CPFTA. SPRING Singapore, as the administering agency for CPFTA, is empowered with investigation and enforcement powers to take action against errant retailers who persist in unfair practices. The collection, use and disclosure of personal data in Singapore comes under the Personal Data Protection Act (PDPA), which is enforced by the Info-Communications Media Development Authority. PDPA is a baseline law that is applicable to all organisations that engage in the collection and processing of personal data in Singapore, regardless of whether they have a physical or online presence.
Enforcement of Singapore legislation against online retailers located offshore with no presence in Singapore is challenging. This is a practical jurisdictional issue which is not unique to Singapore. Hence, consumers need to be aware of the risks of purchasing from online retailers located offshore and take extra steps to protect themselves before making their purchases. This could include checking reviews on the reputation of websites and retailers, refund policy and mechanisms, and conditions regarding the use of consumers' data.
In the past five years, the Police have handled an average of 1,000 cases per annum involving online fraud. These usually involve advance payments made to online retailers which subsequently do not deliver the goods.