Singapore's Ministry of Finance issued a release on 13 June 2022 announcing the launch of a public consultation on the proposed GST (Amendment) Bill 2022.
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Public Consultation on Draft Goods and Services Tax (GST) (Amendment) Bill 2022
13 Jun 2022
INTRODUCTION
1. The Ministry of Finance is proposing five amendments to the GST Act:
a. Two amendments are to give effect to announcements made in the 2022 Budget Statement on 18 February 2022.
- The first proposed amendment effects the change in GST rate from 7% to 8% from 1 January 2023, and from 8% to 9% from 1 January 2024.
- The second proposed amendment updates the GST treatment of travel arranging services.
b. The other three proposed amendments improve GST administration and the clarity of existing legislation, and arose from regular reviews.
2. The Ministry is seeking public feedback on the draft GST (Amendment) Bill 2022 which provides for these amendments.
SCOPE OF THE CONSULTATION
Budget 2022 amendments
3. The first two proposed amendments relate to the measures announced by the Minister for Finance, Mr Lawrence Wong, in the 2022 Budget Statement. We invite you to comment on the drafting of the proposed legislation.
a. Proposed amendment 1 effects the change in GST rate from 7% to 8% from 1 January 2023, and from 8% to 9% from 1 January 2024.
b. Proposed amendment 2 updates the GST treatment for a supply of travel arranging services. From 1 January 2023, the GST treatment will be based on where the customer (i.e. the contractual customer) and where the direct beneficiary of the service belongs, rather than, for example, for the booking of accommodation, the location of the property. If the customer of the service belongs outside Singapore and the direct beneficiary either belongs outside Singapore or is GST-registered in Singapore, the supply of travel arranging services will be zero-rated. Otherwise, GST will be chargeable at the standard rate.
Other proposed amendments
4. The draft Bill provides for three other proposed amendments that arose from periodic review of Singapore's GST system. They seek to improve GST administration and the clarity of existing legislation. We invite you to comment on the proposed changes and the proposed drafting of the legislation which will give effect to these proposed changes:
a. Proposed amendment 3 clarifies how the existing Transitional Rules in the GST Act are to operate. Such Rules govern the GST treatment and rate applicable for supplies spanning a change in GST treatment or rate.
b. Proposed amendment 4 refines the rules for taxing Low Value Goods (LVG) and imported services by way of the Reverse Charge (RC) and Overseas Vendor Registration (OVR) regimes. The amendments provide tax certainty and ease the compliance burden for businesses, ahead of the introduction of GST on imported LVG and imported non-digital services from overseas suppliers, with effect from 1 January 2023. This introduction was announced in the 2021 Budget Statement.
c. Proposed amendment 5 provides criminal sanctions to counter Missing Trader Fraud (MTF) schemes. MTF is a fraud scheme used by syndicates where the seller absconds with GST he collected on his sales without paying the GST over to IRAS, while businesses further down the MTF chain continue to claim refunds on input GST paid on their purchases from IRAS. To provide strong deterrence against such schemes, criminal sanctions based on a 2-tiered approach will be introduced from 1 January 2023. Tier 1 offences apply to MTF masterminds, co-conspirators and syndicate members who participate in MTF schemes (i.e. those more culpable). Tier 2 offences apply to current or former sole-proprietors, partners or directors of business entities that are eventually used in MTF schemes. These persons typically incorporate entities which are then used by syndicates for fraudulent purposes.
5. The Annex provides a brief description of the proposed amendments to the GST Act. Please refer to the draft GST (Amendment) Bill 2022 and related subsidiary legislation for details.