Speech by Mr. Louis Ng Kok Kwang, MP for Nee Soon GRC at the Second Reading of the Goods and Services Tax (Amendment) Bill [Bill No. 34/2017]
Sir, I recognise the efforts in this Bill to improve our tax system, particularly to ease burdens on all fronts – for business compliance, for administration by IRAS officers and for the experience of taxpayers.
The move towards further digitalisation is also a laudable one, in line with our SMART nation initiative.
The changes are also great examples of how the government should take the lead in going paperless for the environment. I am in support of the “opt-out” system for digital tax notices in the proposed amendments to Sections 42 and 87, and the move towards electronic record keeping in the proposed amendments to Sections 41 and 46.
I believe and hope that we will do the same for other government services and functions.
Sir, I have a few clarifications to seek.
Removal of leniency period for $200 penalty
Firstly, the Bill seeks to remove the “grace” period of one-month before the $200 penalty is imposed. This can be a hefty amount for SMEs, particularly as companies may require time to get used to digital notices reminding them to file their taxes.
More importantly, I would like to ask for the reasons behind this change, given that tax compliance in Singapore remains high.
According to IRAS, tax arrears in 2016 were kept at 0.68% of net tax assessed, and that this was due to a focus on maximising voluntary compliance.
Sweeping changes to the industry
Secondly, on the amendment to deter GST fraud schemes involving the supply of mobile phones and other goods. While I understand the importance of deterring fraudsters, these black sheep may represent only a small percentage of the entire industry.
These sweeping changes proposed by the Bill may cause disruptions to the majority of businesses – which are largely compliant. I would like to ask if the Ministry if they received suggestions about this during the public consultations and whether other alternatives were considered.
Will GST extend to e-commerce?
Lastly, I understand that with the rise of e-commerce, some countries – such as South Korea, Japan and Australia – have amended legislation to collect GST on goods purchased online from foreign companies.
Most recently in Sept 2017, Malaysia also announced plans to tax foreign digital service providers such as online shopping sites.
As we propose this round of amendments to the GST Act, I would like to ask if the Ministry is considering making similar changes in Singapore.
A report by Temasek Holdings and Google showed that e-commerce in Singapore was valued at S$1.4 billion in 2015, with a projected hike to S$7.6 billion by 2020. This means that a tax on cross-border goods could represent a sizeable revenue stream for the government.
Industry-watchers have proposed changes such as requiring foreign e-commerce companies to register and charge GST for these cross-border transactions, or reducing the current GST exemption on the import of goods worth $400 or less.
Members of the public have been talking about this and imposing this tax may not sit well with consumers. However, a tax on discretionary spending may be less painful than alternative measures to collect additional tax, such as a blanket increase in GST.
Sir, Singapore’s tax system has always been well-regarded. IRAS has been operating efficiently with the cost of collecting taxes remaining at a steady low, and tax compliance in our country remains high. I believe our tax regime will only be further strengthened through this variety of changes, and I stand in support of this bill.