Second Reading Speech By Senior Minister of State for Finance and Law Indranee Rajah on The Goods and Services Tax (Amendment) Bill 2016
29 Feb 2016Mdm Speaker, I beg to move, “That the Bill be now read a second time”.
2. The Goods and Services Tax (Amendment) Bill 2016, or the GST Bill in short, was released for public consultation in July last year. The Bill provides three amendments, which arose from our ongoing review of the GST regime. The Ministry of Finance has evaluated the feedback received from the public consultation and where appropriate, adopted the suggestions. Let me now explain the three amendments in turn.
Allowing the Comptroller of GST to impose Travel Restriction Orders in relation to erroneous tourist refunds
3. First, allowing the Comptroller of GST to impose Travel Restriction Orders on persons who wrongly claimed tourist refunds.
4. The Comptroller of GST currently already has the power to impose Travel Restriction Orders on persons who fail to pay GST owed to the Government. Once such an order is imposed, the relevant person owing the GST generally will not be allowed to leave Singapore unless he pays the GST owed.
5. This amendment expands this power to cover cases of persons who make wrongful GST tourist refund claims.
6. Under the GST Tourist Refund Scheme, only eligible tourists are allowed to claim a refund of the GST paid on goods purchased in and brought out of Singapore. To be eligible for tourist refunds, the individual must meet certain conditions, such as he or she must not be a Singaporean citizen or Permanent Resident, nor a crew member of an aircraft or ship, and is not employed in Singapore.
7. Where a tourist refund is wrongly claimed by a person and not repaid to the Comptroller, Clause 3 of the Bill now allows the Comptroller to impose Travel Restrictions on the person.
8. This change will not affect the local tourism industry, as genuine tourists remain eligible to claim the GST refunds and will not be affected by the change.
Rationalizing the definition of “aircraft” for the purpose of zero-rating supplies relating to international flights
9. Second, Clause 2 rationalises the definition of aircraft to make it clear when zero-rating of specified supplies relating to aircrafts will apply. Under the current legislation, supplies relating to an aircraft qualify for GST zero-rating if the aircraft is not used or not intended to be used for recreation or pleasure. If the aircraft is used or intended to be used for recreation or pleasure, then it must be wholly used, or intended to be wholly used, for international travel. The Bill removes the reference to whether the aircraft is used for recreation or pleasure.
10. This amendment makes clear the policy intent of zero-rating supplies relating to international travel on the basis that they are not for domestic consumption. The revised definition will refer to all aircraft that is wholly used or intended to be wholly used for international travel, or any military aircraft.
11. Clause 2 also extends the GST zero-rating to supplies relating to international flights. Currently, supplies such as fuel and aircraft handling services are zero-rated, for GST purposes, only if they were supplied in relation to aircraft that is wholly used for international travel.
12. The amendment will extend zero-rating of GST to specific supplies made in relation to any aircraft that is not wholly used or not intended to be wholly used for international travel, as long as the supplies can be specifically attributable to international flights. In essence, for such an aircraft, the relevant question will be whether the particular flight for which the specified supplies relate to is an international flight.
Making clear the GST zero-rating provision for the purchase of merchandise for onboard sale
13. The final amendment is a technical amendment to make it clear that zero-rating of GST applies to the supply of the goods which are for use as merchandise for retail sale on board an aircraft or ship. Clause 2 of the Bill gives effect to this change.
14. Mdm Speaker, I beg to move.
2. The Goods and Services Tax (Amendment) Bill 2016, or the GST Bill in short, was released for public consultation in July last year. The Bill provides three amendments, which arose from our ongoing review of the GST regime. The Ministry of Finance has evaluated the feedback received from the public consultation and where appropriate, adopted the suggestions. Let me now explain the three amendments in turn.
Allowing the Comptroller of GST to impose Travel Restriction Orders in relation to erroneous tourist refunds
3. First, allowing the Comptroller of GST to impose Travel Restriction Orders on persons who wrongly claimed tourist refunds.
4. The Comptroller of GST currently already has the power to impose Travel Restriction Orders on persons who fail to pay GST owed to the Government. Once such an order is imposed, the relevant person owing the GST generally will not be allowed to leave Singapore unless he pays the GST owed.
5. This amendment expands this power to cover cases of persons who make wrongful GST tourist refund claims.
6. Under the GST Tourist Refund Scheme, only eligible tourists are allowed to claim a refund of the GST paid on goods purchased in and brought out of Singapore. To be eligible for tourist refunds, the individual must meet certain conditions, such as he or she must not be a Singaporean citizen or Permanent Resident, nor a crew member of an aircraft or ship, and is not employed in Singapore.
7. Where a tourist refund is wrongly claimed by a person and not repaid to the Comptroller, Clause 3 of the Bill now allows the Comptroller to impose Travel Restrictions on the person.
8. This change will not affect the local tourism industry, as genuine tourists remain eligible to claim the GST refunds and will not be affected by the change.
Rationalizing the definition of “aircraft” for the purpose of zero-rating supplies relating to international flights
9. Second, Clause 2 rationalises the definition of aircraft to make it clear when zero-rating of specified supplies relating to aircrafts will apply. Under the current legislation, supplies relating to an aircraft qualify for GST zero-rating if the aircraft is not used or not intended to be used for recreation or pleasure. If the aircraft is used or intended to be used for recreation or pleasure, then it must be wholly used, or intended to be wholly used, for international travel. The Bill removes the reference to whether the aircraft is used for recreation or pleasure.
10. This amendment makes clear the policy intent of zero-rating supplies relating to international travel on the basis that they are not for domestic consumption. The revised definition will refer to all aircraft that is wholly used or intended to be wholly used for international travel, or any military aircraft.
11. Clause 2 also extends the GST zero-rating to supplies relating to international flights. Currently, supplies such as fuel and aircraft handling services are zero-rated, for GST purposes, only if they were supplied in relation to aircraft that is wholly used for international travel.
12. The amendment will extend zero-rating of GST to specific supplies made in relation to any aircraft that is not wholly used or not intended to be wholly used for international travel, as long as the supplies can be specifically attributable to international flights. In essence, for such an aircraft, the relevant question will be whether the particular flight for which the specified supplies relate to is an international flight.
Making clear the GST zero-rating provision for the purchase of merchandise for onboard sale
13. The final amendment is a technical amendment to make it clear that zero-rating of GST applies to the supply of the goods which are for use as merchandise for retail sale on board an aircraft or ship. Clause 2 of the Bill gives effect to this change.
14. Mdm Speaker, I beg to move.