Second Reading Speech By Mrs Josephine Teo, Minister of State for Finance and Transport On The Goods And Services Tax (Amendment) Bill 2012 at The Parliament, 10 Sep 201210 Sep 2012
Mr Speaker, Sir, I beg to move, “That the Bill now be read a second time”.
2. The Goods and Services Tax (Amendment) Bill 2012, or the GST Bill for short, comprises seven amendments. The first amendment gives legislative effect to a GST initiative announced in Budget 2012. The remaining six amendments arise from our ongoing review of the GST system.
3. The draft Bill was released for public consultation in July 2012. It incorporates relevant feedback and suggestions from the public.
BUDGET 2012 GST CHANGES
4. Let me first touch on the provisions in the Bill that give legislative effect to a GST initiative announced in Budget 2012, namely GST exemption for investment-grade gold & precious metals.
5. Clauses 3, 6 and 14 of the Bill provide for GST exemption on the import and supply of investment-grade gold and precious metals. This move supports IE Singapore to develop a new gold refining and trading cluster in Singapore. The exemption means that actively traded investment–grade gold and other precious metals will enjoy the same GST treatment as other financial instruments that do not attract GST. Clauses 2, 7, 11, 13 and 15 of the Bill are consequential amendments to administer the change.
6. In addition, to facilitate precious metals refining, a new GST scheme will be introduced for qualifying refiners of precious metals and consolidators of scrap materials for refining. The new scheme confers two benefits:
(a) First, it eases cash flow by suspending the payment of GST on the import and purchase of scrap materials for refining;
(b) Second, it allows claiming of input tax incurred for consolidating and refining scrap materials into investment-grade precious metals.
Clauses 4 and 10 of the Bill give effect to the scheme.
NON-BUDGET 2012 GST CHANGES
7. The remaining six amendments to the GST Act arose from our ongoing review of GST policies and administration.
First we will extend the scope of GST zero-rating of prescribed financial services relating to goods for export.
8. Currently, GST zero-rating is applicable to prescribed financial services, such as export credit and trade credit insurance, in relation to goods for export from Singapore. Clause 5(b) of the Bill extends GST zero-rating to the same financial services in relation to supplies involving goods that are located outside Singapore. This is in line with the existing policy of maintaining the competitiveness of our international services.
Second, we will allow the Comptroller and Minister to set conditions when granting remission.
9. Currently, Minister and the Comptroller of GST have powers under the GST Act to grant remission of GST on grounds of poverty or where it is just and equitable to do so. Clause 12 of the Bill provides clarity on the Comptroller’s and Minister’s powers to impose conditions when granting such remissions so as to prevent potential abuse. Clause 12 also provides for the tax remitted to be recoverable in the event of the taxpayer’s failure to comply with the conditions imposed. The provisions in Clause 12 are similar to those in other Acts such as the Income Tax Act and Stamp Duties Act.
Third, we will extend the Temporary Removal Scheme to goods removed temporarily from approved warehouses for repairs.
10. Currently, the Temporary Removal Scheme allows qualifying goods, such as art pieces, to be removed temporarily from approved warehouse under Singapore Customs’ control for auctions and exhibitions without the payment of import GST. This scheme aims to promote auctions and exhibitions and use of specialised storage facilities in Singapore. Clause 8 of the Bill extends the scheme to cover goods removed temporarily for repair, conservation and restoration. This is because it may not be practical for all repairs to be done within the Approved Specialised Warehouses.
Fourth, consistent with the third amendment, we will allow GST zero-rating of repair services performed on qualified goods outside of Approved Specialised Warehouse.
11. Currently, repair services performed inside Approved Specialised Warehouses to restore and conserve the qualifying goods are GST zero-rated. Clause 5(c) of the Bill extends the GST zero-rating to repair services performed on the qualifying goods when they are temporarily outside the Approved Specialised Warehouses.
12. Finally, the Bill makes two technical amendments with no change in policy. The first is to align the general provision on zero-rating of exports and international services with that for the Approved Marine Customers Scheme and Specialised Warehouse Scheme. The second standardises the text used in the different subsections for the Approved Contract Manufacturer & Trader (ACMT) Scheme.
13. Mr. Speaker, Sir, I beg to move.