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Second Reading Speech By Mrs Josephine Teo, Minister of State for Finance and Transport On The Goods and Services Tax (Amendment) Bill 2011

22 Nov 2011

Mr Speaker, Sir, I beg to move, “That the Bill now be read a second time”.

2. The Goods and Services Tax (Amendment) Bill 2011, or the GST Bill for short, comprises five amendments. The first three amendments give legislative effect to the GST initiatives announced in Budget 2011, while the remaining two amendments have arisen from our ongoing review of the GST system.

3. The draft Bill was released for public consultation in July 2011 and has been revised to incorporate feedback from the public.


4. Let me first touch on the provisions in the Bill that give legislative effect to the measures announced in the Budget 2011.

(a) GST measures for the marine industry

5. Clause 4 of the Bill gives effect to the new GST scheme for approved marine customers to buy or rent goods at zero-rate GST automatically, so long as the goods are for use or installation on a commercial ship that is wholly for international travel. Previously, suppliers of such goods needed to maintain documentary proof of the export of the goods for GST zero-rating. With the new scheme, suppliers can zero-rate the supply of goods to these pre-approved customers without the need to maintain export documentation. This simplifies GST compliance for businesses supporting the marine industry.

(b) GST measures for the biomedical industry

6. The Approved Contract Manufacturer and Trader (ACMT) scheme is an existing scheme that allows local contract manufacturers to disregard services rendered to their overseas clients for the purpose of GST, even if the treated or processed goods are delivered locally in Singapore. To promote the competiveness of the biomedical sector in Singapore, the ACMT scheme is extended to qualifying biomedical contract manufacturers.

7. The scheme has also been enhanced to further reduce GST compliance cost by enabling local contract manufacturers (including those in the biomedical sector) to:

(a) Disregard the services rendered on failed or excess production; and
(b) Recover GST on local purchases of goods used in the contract manufacturing process.

Clause 8 of the Bill gives effect to the changes in the scheme.

(c) Zero-rating relief for specified services made to overseas persons in relation to goods kept in ‘approved warehouses’

8. A new zero-rating relief is also introduced for specified services made to overseas persons and performed on specified goods kept in approved warehouses in Singapore. The new relief aims to encourage overseas persons to store high value goods such as art, antiques and gold in specialised storage facilities in Singapore, and purchase related services such as auction, insurance and valuation in respect of the stored goods. The GST zero-rating also covers the renting of storage units used to store such high value goods. Clauses 3 and 4 of the Bill provide for this initiative.


9. The remaining two amendments to the GST Act have arisen from our ongoing review of GST policies and administration.

(d) Expand scope of GST recovery on goods imported on behalf of overseas persons

10. The first change reduces the GST compliance burden of local agents who frequently import goods for overseas persons. Currently, local agents are not able to claim input GST on the goods imported for the overseas persons if the goods have undergone a treatment or process that changes the nature or form of the goods, before being supplied in Singapore. Given that any further value-add to the imported goods would have been priced into the subsequent supply and accounted for eventually, the Act will be amended to enable local agents to recover GST on such goods. In addition, local agents who are approved under GST suspension or deferment scheme would be able to use the scheme to also suspend or defer payment of import GST on goods imported for overseas persons for subsequent re-export. Clauses 5, 6 and 7 of the Bill provide for the changes.

(e) Clarify the GST accounting rules for specified transactions

11. The final change is a technical clarification of the GST rules for determining when a supply is made and thus when GST needs to be accounted for. We simplified the rules for accounting of GST to be at the earlier of the tax invoice date or payment date in Budget 2010. This amendment clarifies that the alternative rules, that existed before the simplification in Budget 2010, will continue to apply for certain specialised transactions, such as the assignment of rights over land. This is provided under Clause 2 of the Bill.

12. Mr. Speaker, Sir, I beg to move.