Summary of responses to public consultation on the draft Goods and Services Tax (Amendment) Bill 202101 Oct 2021
1. The Ministry of Finance (MOF) invited the public to provide feedback on the draft Goods and Services Tax (Amendment) Bill 2021 (“GST Bill”) from 6 to 27 July 20211 . The draft GST Bill proposes amendments to give legislative effect to the GST measures which were announced in Budget 2021. The draft GST Bill also proposes changes arising from the periodic review of the GST regime, and technical amendments.
2. The key feedback received pertained to the following tax changes:
- Introduction of GST on low-value goods2 and business-to-consumer (“B2C”) imported non-digital services3 from 1 January 2023;
- Updating of the GST treatment for a supply of media sales4; and
- Amendment to the existing Overseas Vendor Registration5 (“OVR”) and Reverse Charge6 (“RC”) regimes.
3. The proposed legislative changes will be incorporated into the Goods and Services Tax (Amendment) Bill 2021 to be presented to Parliament in the last quarter of 2021. MOF thanks all individuals and organisations who have taken the time and effort to provide their input.
Annex A: MOF’s responses to key feedback on the draft Goods and Services Tax (Amendment) Bill 2021
Introduction of GST on low-value goods and B2C imported non-digital services from 1 January 2023
Feedback: To prescribe the information that RC businesses should rely on under section 14(1B) of the draft GST Bill for the purposes of determining whether a supply of goods are distantly taxable goods that fall within the scope of GST.
MOF’s response: Not accepted, to reduce compliance burden. Under the draft GST Bill, RC businesses may rely on the best available information to determine whether a supply of goods are distantly taxable goods if the location of the goods at the point of sale or the mode of transport by which the goods will be delivered cannot be verified.
Prescribing specific information could impose compliance difficulties on RC businesses. The information that is available to RC businesses on the location of the goods or the mode of transport is generally limited to the information provided by overseas suppliers and electronic marketplace operators (“EMOs”) on their website or mobile apps. Given that RC businesses do not have control over this information, for ease of compliance, it could be more onerous to businesses if it were prescribed by legislation the specific information that RC businesses should rely on to determine whether a supply of goods are distantly taxable goods.
To guide RC businesses, the Inland Revenue Authority of Singapore (“IRAS”) will instead provide examples of information which can be used by RC businesses to determine whether a supply of goods are distantly taxable goods in its RC e-Tax guide.
Feedback: To provide for only one valuation method (e.g. sale value including insurance and freight charges, or “customs value”) to determine whether the value of a supply of goods falls within or exceeds the low value goods threshold of $400 and the value on which GST should be charged. This will simplify the rules and prevent potential double taxation of imported goods.
MOF’s response: Not accepted, to take into account industry feedback to have alternatives. Based on the draft GST Bill, overseas suppliers and EMOs under the OVR regime (collectively, “OVR Vendors”) can use either of the 2 methods to determine whether the entry value of a supply of goods falls within or exceeds the low value goods threshold:
- sale value, which is the selling price of the goods excluding insurance and freight charges (“sale value”); or
the customs value used by Singapore Customs.
Allowing OVR Vendors to use either of the 2 methods considers the different business models that exist today and takes into account feedback from the industry. Some OVR Vendors may know the value of insurance and freight charges at the point of sale, and will prefer to rely on the customs value. Others may not know the value of insurance and freight charges at the point of sale, or have already adjusted their systems to comply with similar OVR regimes in other jurisdictions that have adopted the use of sales value excluding insurance and freight charges.
Regarding double taxation concerns highlighted for OVR supplies, where GST has been charged and collected by the OVR Vendor on the low value goods, irrespective of the valuation method used, import GST will not be payable at the border if the OVR Vendor includes the relevant information on the GST it collected in the commercial document which is passed through the logistics chain, and the information is furnished to Singapore Customs7.
- Feedback: To prescribe the information that RC businesses should rely on under section 14(1B) of the draft GST Bill for the purposes of determining whether a supply of goods are distantly taxable goods that fall within the scope of GST.
Updating of the GST treatment for a supply of media sales
Feedback: To retain the existing circulation rule for media sales involving hardcopy print advertisement, as the movement of hardcopy print media can be traced via export documentation.
MOF’s response: Not accepted, to reduce compliance burden. Retaining the circulation rule for hardcopy print would increase the compliance cost for businesses as they have to apply different GST rules depending on the advertising mode. For example, a media sales supplier would have to track the belonging status of the customer and direct beneficiaries (“belonging status rule”) for web advertising, and the place of circulation of the advertisement for hardcopy print media.
Based on a consultation conducted by IRAS on the GST rules for supplies of media sales, most industry players are in favour of applying the belonging status rules for all supplies of media sales. This keeps the compliance burden low and recognises the increasingly digital nature of media sales such that it is not tenable to determine the place of circulation of the advertisement.
- Feedback: To retain the existing circulation rule for media sales involving hardcopy print advertisement, as the movement of hardcopy print media can be traced via export documentation.
Amendment to the existing Overseas Vendor Registration and Reverse Charge regimes
Feedback: To require OVR Vendors to take extra steps to check whether their customers are GST-registered persons before charging GST. This will reduce the instances of GST-registered businesses incorrectly claiming the GST charged by OVR Vendors as input GST in their GST returns.
MOF’s response: Not accepted, to reduce compliance burden. To reduce the compliance burden on OVR Vendors given that they may be collecting GST/VAT for many other jurisdictions with a similar OVR regime, OVR Vendors are not required to track and verify the GST registration status of their customers. Instead, OVR Vendors may rely on the GST registration number provided by their customers as proof of their customers’ GST registration status.
Feedback: For imported services under the OVR and RC regimes, in cases where the person with whom the contract for the supply is entered into (X) and the person who directly benefits from the supply (Y) are different persons, section 14(1AA) provides for the supply to be treated as made to Y, to the extent of any consideration paid by Y for the supply.
Amendments are proposed to:
- Clarify that X will not be required to treat any consideration paid by Y as consideration for a supply from X to Y; and
Cover a situation where Y is making payment to the Overseas Vendors not because it directly benefits from the goods or services, but because X does not have the funds to make payment (e.g. where X is under liquidation).
MOF’s response: Not accepted. Whether there is a supply between X and Y would depend on the facts of the business arrangement between the relevant parties. However, section 14(1AA) covers scenarios where a supply is made contractually to X, when it in fact directly benefits Y. In such cases, for GST purposes, Y will be deemed as the recipient of the supply to the extent of consideration paid by Y for that supply. Hence, there should not be any onward supply between X and Y to the extent of consideration paid by Y.
Section 14(1AA) is meant to cover scenarios where Y is the direct beneficiary instead of X. Where X is both the contractual party and the direct beneficiary of the services, X should apply RC instead of Y according to the default rules, regardless of X's business circumstances. IRAS will provide examples of the envisaged scenarios involving section 14(1AA) in its RC e-Tax guide.
 Please refer to the press release issued on 6 July 2021 for the public consultation documents on the draft Goods and Services Tax (Amendment) Bill 2021.
 Goods that are valued up to the current GST import relief threshold of S$400, and are imported via air or post.
 Examples include services such as live interaction with overseas providers of educational learning and telemedicine.
 Media sales refer to the sale of advertising space for hardcopy print and outdoor advertisements, the sale of advertising airtime for broadcasting via TV and radio, and the sale of media space for web advertising via email, internet or mobile devices.
 Under the existing Overseas Vendor Registration regime, overseas suppliers and electronic marketplace operators which make significant sales of digital services to local consumers are required to register with IRAS for GST. Under the existing Reverse Charge regime, GST-registered persons that make non-taxable supplies of goods or services such as exempt supplies (e.g. provision of certain financial services, and the sale and lease of residential properties) are required to account for GST to IRAS on their imports of services. Such GST-registered persons are referred to as Reverse Charge businesses in this press release.
 For example, for goods delivered via air couriers, the GST registration number of the OVR Vendor should be included in the summary list of parcels/items to be imported or in the permit declared via Singapore Customs TradeNet portal.
- Feedback: To require OVR Vendors to take extra steps to check whether their customers are GST-registered persons before charging GST. This will reduce the instances of GST-registered businesses incorrectly claiming the GST charged by OVR Vendors as input GST in their GST returns.