MOF Invites Feedback on Proposed Changes to the Goods And Services Tax (“GST”) Act
28 Jun 2018
The Ministry of Finance is inviting interested parties to provide feedback on the draft GST (Amendment) Bill 2018 from 27 June to 18 July 2018.
Proposed Amendments
arising from Budget 2018
The
proposed amendments to the GST Act include the introduction of GST on imported
services, which was announced in the 2018 Budget Statement. The Minister for
Finance, Mr Heng Swee Keat, announced that GST will be introduced on imported
services from 1 January 2020. This will ensure that our GST system remains fair
and resilient in a digital economy. GST on imported services will take effect
through:
a. a
Reverse Charge mechanism for business-to-business (“B2B”) imported services,
where the local GST-registered business customer is required to account and pay
GST to the Inland Revenue Authority of Singapore (“IRAS”) directly, on the
services that it imports.
Most GST-registered businesses will not be affected, as they can claim full
refund of the GST they incur on their purchases, including imported services.
Businesses affected are primarily financial institutions and residential
property developers, which do not get such full refund as they make GST-exempt
supplies.
b.
an
Overseas Vendor Registration (“OVR”) mode for business-to-consumer (“B2C”)
imported services.
Overseas suppliers and electronic marketplace operators which make significant
supplies of digital services to local consumers are required to register with
IRAS. Once GST-registered, they will collect GST on their B2C supplies of
digital services and pay it to IRAS.
The draft bill also incorporates
feedback received from public consultation on IRAS’ draft e-Tax Guides on Reverse
Charge and OVR, which was conducted from 20 February to 20 March 2018.
Other Proposed
Amendments
The draft GST (Amendment) Bill 2018
provides for five other changes to existing tax policies and administration,
arising from periodic review of Singapore’s GST system as well as to strengthen
Whole-of-Government law enforcement. The changes are:
-
(a) Enhance
IRAS’ powers to investigate tax crimes
The activities of criminals
including syndicates are often multi-faceted. For instance, their
criminal activity may not be limited to tax evasion only, but other forms
of illegal activities such as drug dealing and corruption. A Whole-of-Government approach
is needed to better fight such serious crimes.
-
Currently, IRAS is allowed to
provide information to LEAs under limited circumstances (e.g.
pursuant to a Court Order). The proposed amendment will allow IRAS to share
with LEAs information that IRAS assesses as critical for investigation or
prosecution of serious crimes. Serious crimes are offences listed in the First
and Second Schedules of the Corruption, Drug Trafficking and Other Serious
Crimes (Confiscation of Benefits) Act.
- Information shared with LEAs
is to be disclosed only to prescribed officers in the LEAs. Further disclosure
of such information which is not for the purpose of investigation or prosecution
will be an offence.
(c) Counter
unauthorised GST collection
Currently, an offence is
committed if a non-GST registered person issues an invoice or receipt with an
amount purported to be GST. Such an offence is punishable by a penalty and a
fine.
To protect customers and strengthen
deterrence against unauthorised collection of GST, the proposed amendment will:
(i) allow
the use of alternative evidence besides invoice or receipt, to prove
unauthorised collection of GST;
- (ii) introduce
a custodial sentence where the offence is committed without reasonable excuse
or through negligence; and
- (iii) introduce
a new offence where a GST-registered business, without reasonable excuse or
through negligence, collects more GST than allowed under the GST Act.
- (d) Extend
customer accounting to transactions with the Government
The GST (Amendment) Act 2017
made legislative changes to extend customer accounting to prescribed supplies
of goods commonly used in GST fraud from 1 January 2019 (i.e. mobile phones
sold without mobile subscription plans, memory cards and off-the-shelf
software). Under customer accounting, the GST-registered supplier will not
collect GST from a GST-registered customer. Instead, the customer will
self-account for the GST to IRAS directly. This prevents fraud caused by the
supplier absconding after collecting GST from customers.
The GST (Amendment) Bill 2018
proposes to extend customer accounting to transactions with the Government.
This will help ease business compliance as GST-registered suppliers will not
need to differentiate their transactions with the Government and with GST-registered
customers.
(e) Provide
for the disposal of documents or things seized under the GST Act
Where a matter has not
proceeded to prosecution, this amendment will allow the disposal of documents or
things seized during investigation if the owner of the seized items fails to
collect the items upon the end of investigation.
Consultation Details
The public can access the detailed consultation documents for the draft GST (Amendment) Bill 2018 on the Ministry of Finance's website (http://www.mof.gov.sg/) and the REACH consultation portal (http://www.reach.gov.sg/).
We encourage all interested parties to submit your comments using the prescribed template available on Ministry of Finance's website, through:
a) email to pc_gstabill@mof.gov.sg (preferred mode); or
b) fax to 6337 4134; or
c) post to:
Ministry of Finance
100 High Street
#10-01
The Treasury
Singapore 179434
Attention: Tax Policy Directorate
Ministry of Finance