Declaring and paying alcohol duty: When and how you should do it

Most Singaporeans purchase alcohol at the Duty-Free Shop (DFS) to make the most of their duty-free alcohol allowance.

That's because it is cheap-- buying alcohol at DFS allows you to save up to about 2 times the price of alcohol.

It's also convenient since DFS is located right at the airport as you get off the plane.

The lesser-known option is to bring alcohol in from your overseas trips. But, is it ever worth the hassle of lugging your alcohol back and calculating your payable duties? And, how do we go about it?

Let's look at what goes into the cost of paying your own alcohol duty.

1. CURRENCY OF COUNTRY OF ORIGIN

The currency that you buy your alcohol in can eat into the cost-effectiveness of bringing your own alcohol back. The cost of a pint of beer in the UK and Germany for instance, are about the same in their respective currencies. However, the prices start to vary once you factor in the conversion rates:

• Cost of 1 Pint of Beer in the UK: 3.60 British Pounds - $6.26
• Cost of 1 Pint of Beer in Germany: 3.50 Euros - $5.25

A quick calculation reveals that cost differences add up to about 20 per cent if you buy a case of beer (24 pints):

• A Case of Beer from the UK - $150.24
• A Case of Beer from Germany -  $126

This example shows that alcohol is not necessarily cheap because of its low price. You have to consider if the currency of the country of origin is stronger than the local currency as the little differences add up when you purchase in bulk.

2. DUTY IS PAYABLE ACCORDING TO ALCOHOL STRENGTH

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Did you know that the strength of the alcohol affects the amount of duty payable?

Custom regulations consider a beverage to be dutiable when it exceeds 0.5 per cent alcoholic strength by volume. Examples of intoxicating liquors include spirits, wine, beer, ale, stout, port and even alcohol that is consumed for health reasons or used only for cooking purposes such as D.O.M., Yomeishu, and cooking wine. The duty payable applies even to alcohol that is opened.

You can use the following formula to know the amount of duty payable for wine and liquor:

• Total Duty Payable For Wine & Liquor = Total quantity in litres x Customs and/or excise duty rate x Percentage of an alcoholic strength

And the following duty payable for beer:

• Customs Duty = Total Quantity in litres x Customs Duty Rate x Percentage ( per cent) of Alcohol strength
• Excise Duty = Total Quantity in litres x Excise Duty Rate x Percentage ( per cent) of Alcohol strength
• Total Duty Payable For Beer = Customs Duty + Excise Duty

3. GST RELIEF ONLY IF GOODS UNDER $500

If you spent fewer than 48 hours outside of Singapore, GST is payable when the value of purchased goods exceeds $100.

However, GST relief is increased to $500 if you were abroad for 48 hours and more. The calculations for GST differ for beer, and wine and liquor. For goods over $500, the GST payable for wine and liquor is:

• GST Payable For Wine & Liquor = 7 per cent of [Total Duty + Value of the Wines and Liquor (per litre)]
• And the following GST payable for beer:
• GST Payable For Beer = 7 per cent of [Total duty + Value of beer]

4. DUTY-FREE CONCESSION STANDS AT 2 LITRES

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The duty-free concession each traveller is entitled to (assuming that they are not returning from Malaysia), is 2 litres. The maximum duty-free allowance for spirits is 1 litre.

Taxes only have to be paid on liquor products once you exceed your travellers' duty-free concession.

However, if the quantity in excess of duty-free concession is over 10 litres, you have to make arrangements with a local freight forwarding agent to declare a Customs In-Payment "Duty and GST" permit to pay for the duty and GST on your behalf.

5. PAY AT AIRPORT OR THROUGH AN APP

Figure out how much alcohol you want to bring back and then do the math. It only makes sense to pay the duty and taxes over buying from onshore retail stores if is cheaper after factoring in taxes, duty and currency conversion costs.

To pay for your alcohol duty, look for the Red channel systems or the Customs Tax Payment Office at traveller entry checkpoints at the airport. Keep your receipt, and note down the volume and the alcohol strength to calculate the duty and GST payable. A customs officer will guide you and once payment is made, you're through.

Alternatively, you can make an advanced declaration and payment of duties and GST prior to your arrival through the Customs@SG App. Once payment is successful, you'll receive an e-receipt in your mobile device which will serve as proof of payment to officers. There is no need to go through the red channel upon arrival.

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PAY YOUR DUES (AND DUTIES)

Paying duty and taxes are obligations that shouldn't be ignored. Don't ever try to sneak your booze past the customs staff without declaring and paying the required duties.

Under the Customs Act, any person found guilty can be jailed up to a year or fined up to $10,000, or the taxable amount payable, whichever is higher.

This article was first published in Dollars and Sense.