20 Feb 2012
We refer to the article by Mr Manmohan Singh on “The Case for a GST Ombudsman”, (Business Times, 15 Feb 2012). It contains factual inaccuracies and misleading views which require clarification.
The writer suggested having a GST Ombudsman to conduct an independent review of a taxpayer’s appeal and to suspend any enforcement action by the Comptroller of GST to collect the tax pending the review. We already have an independent appeal process via the Board of Review which is easily accessible to businesses. It is also not common for businesses to have their bank accounts frozen by the Comptroller in the first place, which according to the writer, prevents businesses from making an appeal to the Board.
The writer expressed concerns about the Board of Review process being a costly process for businesses. To file the appeal, the appellant only needs to complete a simple form that is available on the Ministry of Finance’s website and make payment of $50 (for an individual) or $200 (for a company). The business can represent itself at the Board’s hearing and is not required to engage any lawyer or GST specialist to appeal to the Board.
The writer is also of the opinion that enforcement actions taken by the Comptroller to recover the GST may cause the business to become financially incapable of bringing its case to the Board. We wish to inform that GST is a tax that the business collects from its customers on behalf of the Government and it is important for the Comptroller to take swift actions to recover any tax unpaid. However, the Comptroller does not readily resort to appointing the banks as agents in tax recovery actions. IRAS will first contact the businesses for payment, arrange a suitable instalment payment plan if they face financial difficulties. Appointment of banks as agents to recover tax due is only necessary in a small fraction of cases where the taxpayers are unresponsive or un-cooperative.
The writer has erroneously stated that the Comptroller exercises its power under Section 62 of the GST Act to appoint agents for the tax owing by a business. Section 62 is a provision in the GST Act concerning criminal fraud, not the recovery of taxes. The relevant provision that empowers the Comptroller to appoint any person (including a bank) as an agent to pay any tax due by a person is Section 79 of the Act.
The writer believed that a sole-proprietor cannot initiate an appeal to the Board unless he has sufficient cash balance to pay the tax assessments that are the subject of his appeal. This understanding is incorrect. The sole-proprietor may initiate an appeal to the Board even if the tax is outstanding and unpaid. While the tax should generally be paid or deposited with the Comptroller before an appeal is heard, this requirement can be waived if the Comptroller or the Board believes that the appellant would otherwise suffer hardship.
If the writer or any member of the public wishes to have further clarification of the appeal procedures or tax payment arrangements, please contact the Inland Revenue Authority of Singapore (IRAS) on 1800-356 8633.
Claire Chua (Mrs)
Director (Corporate Communications)
Inland Revenue Authority of Singapore