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A public consultation exercise on the draft Goods and
Services Tax (GST) (Amendment) Bill 2005 was held from
8 July to 5 August 2005 to obtain feedback on areas
of the draft legislation that required greater clarity
or could be amended to facilitate compliance by businesses.
2. The draft GST (Amendment) Bill 2005 put up for consultation
covered tax changes or refinements to existing tax policies
and administration resulting from on-going review of
the GST system.
3. The summary
table lists all the tax changes and explains the
amendments to the GST Act.
4. A total of 25 comments were received, most of the
feedback being from professional bodies and companies.
The responses were very helpful for improving the GST
legislation.
5. 13 of the 25 comments received (52%) related to
the drafting of the GST (Amendment) Bill 2005. The other
comments were to seek clarification or requests to review
the tax policies and tax administration. The tax changes
that received the most comments on the drafting of the
legislation were related to the amendments for:
| a. |
the repayment of input tax
by the customer (debtor) who claimed input tax but
failed to pay his supplier the relevant consideration
by a certain date; |
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| b. |
the zero-rating of maintenance,
repair and broking services of ships and aircraft;
and |
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c. |
compulsory electronic filing
of GST returns. |
6. MOF has considered all comments carefully. Of the
13 comments on the drafting of the legislation, 8 have
been accepted as they help clarify the policy intentions
and would facilitate compliance by businesses. Where
appropriate, changes have been made to the Bill to take
in the accepted suggestions. Comments not accepted were
mainly those where the suggested changes to the legislation
do not meet the policy intentions. Others went beyond
the purpose of the exercise. They covered changes in
tax policy and administration.
7. The major comments received and MOF’s responses
to them are summarised below:
1. Repayment of input
tax by the customer (debtor) who has claimed input
tax but fails to pay his supplier the consideration
by a certain date |
Respondents
were concerned that the use of the date of supply
may give rise to compliance difficulty as the customer
may not know the exact date of supply.
MOF’s response: Accepted. Section 19(12)
will be revised such that the specified period shall
be 12 months from the due date of payment of the
consideration by the taxable person to his supplier.
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2. Zero-rating of maintenance,
repair and broking services of ships and aircraft |
Respondents
suggested prescribing the services that can be zero-rated
under section 21(3)(p). One respondent highlighted
that the prescribed services should include services
carried out on parts and components of ships and
aircraft.
MOF’s response: Accepted. The services
under section 21(3)(p) will be prescribed in a separate
order when the amendment is enacted.
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3. Compulsory electronic
filing of GST returns |
Respondents
suggested that the legislation provides for a transitional
period for manual filing of GST returns as they
were concerned that some small businesses may not
be ready for compulsory electronic filing of GST
returns.
MOF’s response:
Rejected. We note the concern that some small businesses
may not be ready for compulsory electronic filing.
However, introducing a transitional period for all
businesses is not the best approach. IRAS will consider
the needs of different groups of businesses and
implement compulsory electronic filing in a judicious
manner e.g. introducing it in phases. |
8. MOF thanks all who have responded for their comments.
We will continue the practice of consulting the public
before finalising the amendments to our tax laws.
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