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. 39/2020)
Sir, this Bill will strengthen safeguards of public monies and Singapore’s national interests.
It is more crucial now than ever in the existing financial climate to ensure that tax revenue is protected from fraud or loopholes. In doing so, this Bill draws lessons and references from similar provisions in other jurisdictions, such as the UK and Australia.
I support this Bill, which will improve GST administration and enhance the Comptroller’s powers to safeguard public monies, investigate tax offences and counter GST fraud.
That said, I have four points of clarification on this Bill.
Support for compliance with due diligence requirements
First, I would like to clarify how we are supporting SMEs’ compliance with due diligence requirements.
The amendments to Section 20 require businesses to undertake due diligence checks to avoid being involved in a fraud that they “should have known”.
I understand the need for businesses to step up and take reasonable steps against fraud.
However, big businesses and small businesses have different resources and capacity to conduct checks. What is a reasonable step for a big business and a small business may not be the same.
Can Minister clarify how it will ensure such requirements do not constitute an onerous burden for our SMEs?
I am aware that Minister plans to provide guidance for businesses on what constitutes “reasonable steps” in Section 20.
Beyond that, can the Ministry share whether it will offer training and industry-specific resources to ensure smaller businesses can still effectively conduct their due diligence checks?
Key considerations in review process
My second point of clarification is on the Comptroller’s review process when investigating fraudulent arrangements.
A company involved in fraudulent arrangements could face the severe penalty of deregistration.
Can Minister clarify the key considerations the Comptroller will take into account when evaluating a company’s involvement in fraud?
For example, in the UK, adequate and timely checks by the company to ensure the integrity of its supply chain will be viewed favourably.
Providing these key considerations will be useful in guiding honest businesses in their due diligence checks so as to mitigate risks of an unwitting involvement in fraud.
Because the level of checks expected for business sectors that are commercially risky or vulnerable to fraud and other criminality is higher, can I propose the Minister identify these sectors so businesses know to step up their due diligence checks and share a separate set of key considerations businesses in these sectors can align to?
Given that we also expect more intensive checks for industries more susceptible to fraud and criminal activity, can Minister identify such industries and share additional guidelines specific to these industries?
After all, if we are going to ask more of certain businesses, it will help if we can also provide more support for their compliance.
Can I also request the Minister to then share and incorporate these guidelines in IRAS e-Tax Guide so businesses are able to access this information easily?
My third point of clarification is on the documentation businesses are expected to maintain as part of their due diligence checks.
Can Minister clarify in regulations or codes the methods and level of detail of documentation businesses are expected to maintain to be deemed to have taken “reasonable steps to ascertain whether the supply was part of a fraudulent arrangement”?
Can Minister also clarify for how long businesses are expected to retain these documentations, given that the timeframe for the Comptroller to determine if a supply is part of Missing Trader Fraud is open-ended?
We want to avoid the situation where honest businesses do their due diligence checks but cannot back it up because they discarded or deleted supporting documents after a period of time.
We also want to avoid the situation where fraudulent businesses can realistically claim to have discarded supporting documents even when no such checks were done.
Channel for whistleblowers
My final point is a proposal for an anonymous reporting channel for whistleblowers.
The Association of Certified Fraud Examiners (ACFE) 2018 report revealed that tips are consistently and, by far, the most common detection method for fraud. 50% of the cases are detected through tips.
Businesses or individuals may, in the course of their due diligence checks, come across potentially fraudulent suppliers or entities. We must make sure businesses or individuals feel safe coming forward.
Currently, it is unclear the parties who will be privy to the tip beyond the generic email provided (firstname.lastname@example.org) on IRAS “Report Tax Evasion” website.
This should be made clear to whistleblowers. And if these parties are the very target of the tip, there should be an alternate reporting channel whistleblowers can turn to.
Can the Minister clarify the parties that are privy to tips sent to the IRAS email mentioned and whether there are alternate reporting channels for whistleblowers to report suspicious or fraudulent arrangements that are potentially related to these very officers?
Can Minister confirm that this information will also be reflected on IRAS’s “Report Tax Evasion” website so whistleblowers are aware of their options?
Sir, notwithstanding these clarifications, I stand in support of the Bill.
Watch the speech here
Watch the response here