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. 30/2022)
This Bill will effect the increase in GST tax rates announced in Budget 2022, update the GST treatment of travel-arranging services and improve GST administration.
I appreciate the need to increase the revenue raised through GST. It is without a doubt that Singaporeans will have greater social spending needs in the coming years. GST helps pay for those needs.
But we also have to ensure this tax hike does not lead to fraud and profiteering.
I have two sets of clarifications. The first set is on missing trader fraud
Missing trader fraud offence
My first set of clarifications has to do with missing trader fraud.
Under the new Section 62C, it is an offence to participate in a specified arrangement knowing that it is for a fraudulent purpose. The person does not need to know of the specified arrangement or any details of the plan.
In other words, this offence seems to require knowledge of a fraudulent purpose only in the abstract.
Can Minister explain how knowledge of fraudulent purpose should be established if it cannot be shown that the individual knew of the specified arrangement or any details of the plan at all?
Section 62C also makes a sole proprietor, partner or director strictly liable if their entity is used to commit missing trader fraud.
The culpability for this strict-liability offence is lower and this offence attracts lower penalties than the one for participation.
Arguably, the actions of a sole proprietor, partner or director in allowing their entity to be used for missing trader fraud may amount to assisting or receiving instructions to carry out the fraud.
Can Minister explain what the Ministry will consider in deciding which offence to proceed on?
This is significant because the maximum fine and prison term for participation is 10 times as much as that for the strict-liability offence.
Finally, I hope to understand how IRAS will support compliance with the new Section 62C.
Will IRAS publish guidelines, similar to the UK tax agency’s document on “How to spot missing trader VAT fraud”?
Will IRAS offer rewards upon request for those reporting missing trader fraud, as part of its existing whistleblower programme?
These guidelines and assurances will make it easier for businesses to comply in good faith and for whistleblowers to do the right thing.
Committee Against Profiteering
My second set of clarifications relates to the Committee Against Profiteering (CAP). Many residents are concerned that business will use the GST hike as an excuse to raise prices further and result in an increase in the cost of living.
The committee investigates complaints about businesses that use the GST hike as an excuse to raise prices of essential products and services.
It has said that it may “make public” businesses that profiteer by using the GST hike as a pretext.
The last time that CAP convened in 2007, it received 200 pieces of feedback and ended up making public only a single case – a childcare centre. Even then, the business was not named.
Can Minister explain whether CAP has the power to publicly name businesses that were found to have profiteered?
If so, when describing the cases of profiteering, when should the committee name the businesses involved and when should it not?
Profiteers should face the strong deterrent of public scrutiny. Naming these businesses also gives the public the confidence that profiteers will face consequences and encourages good-faith reports, which strengthens the committee’s goal of increasing transparency.
Will CAP consider making it a default practice to publicly name businesses that are found to have profiteered?
This should cover not only reports that CAP has already received but also those it will receive in the coming months, as the GST hike takes effect.
Sir, notwithstanding my clarifications, I stand in support of the Bill.
Watch the speech here.