A public consultation exercise was held from 28 August 2008 to 19 September 2008 to obtain feedback on the draft Goods and Services Tax (Amendment) Bill 2008.
2. The draft Bill put up for consultation relates to the following tax changes:
a. A tax change announced in Budget 2007. It was announced in the Budget 2007 Statement. that the sale, leasing and servicing of containers used in the international transportation of goods will be zero-rated.
b. Other tax changes. These are tax changes or refinements to existing tax policies and administration resulting from on-going reviews of the GST system. An example is the clarification made to the definition of “unit trust” in the GST Act.
3. The summary table lists all the tax changes and explains the amendments to the Goods and Services Tax Act.
Public Participation In the Consultation Exercise
4. A total of 10 comments were received. The tax changes that received most of the public feedback were on:
a. Zero-rating treatment for the sale, leasing and servicing of containers used in the international transportation of goods; and
b. Clarification made to the definition of “unit trust” in the GST Act.
5. MOF has considered all comments carefully. Of the 10 comments on the draft Bill, 6 of these comments were accepted for implementation. They have been or will be incorporated into Goods and Services Tax (Amendment) Bill, or in IRAS’ e-tax guides. 4 comments were not accepted for implementation as they were inconsistent with the intended objectives of the policy changes.
6. The major comments received and MOF’s responses to them are summarised below:
Zero-rating treatment for the sale, leasing and servicing of containers used in the international transportation of goods
1. To prescribe the qualifying conditions for air and sea containers in the GST (International Serivces) Order.
MOF’s response: Accepted for implementation. To provide clarity to taxpayers, we will prescribe the qualifying conditions for sea and air containers in the GST (International Services) Order.
2. To prescribe the following services stated in the e-Tax guide as they do not seem to fall within the draft GST (International Services) (Amendment) Order 2008:
- Inspection and surveying
- Transportation, storage and monitoring the movements of containers that are rendered as an integral part of the main supply of repairs, maintenance and management services
MOF’s response: Not Accepted for implementation. MOF wishes to clarify that these services would qualify for zero-rating as they fall within the scope of the draft GST (International Services) (Amendment) Order. As the services that may qualify for zero-rating can be wide-ranging, the drafting of the GST (International Services) Order will be kept generic to ease administration. Instead, IRAS will publish an e-tax guide that will provide greater clarity to taxpayers on the list of services, including overhauls, inspection and surveying etc that qualify for zero-rating.
Clarifying the definition of “unit trust” in the GST Act
3. To include business trusts in the definition of “unit trust” in the GST Act will be inconsistent with the Income Tax Act.
MOF’s response: Accepted for implementation. This purpose of this amendment was to provide clarification that the provisions in the GST Act that apply to unit trust are also applicable to business trusts. However, we note that the proposed amendment is inconsistent with the Income Tax Act, which treats unit trusts and registered business trusts as mutually exclusive, as well as the market convention. We have removed this amendment from the draft GST (Amendment) Bill 2008. Instead, we will work on the Schedules to the Act and subsidiary legislations, where references are made to unit trusts, to clarify the definition of unit trusts.
9. MOF thanks all who have responded for their comments. We will continue the practice of consulting the public before finalising future amendments to our Goods and Services Tax laws. We look forward to receiving feedback from the public.