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Second Reading Speech by Lim Hng Kiang, Second Minister For Finance on The Goods And Services Tax (Amendment) Bill 2003

17 Oct 2003

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

2. The Bill will amend the Goods and Services Tax Act to give legislative effect to the following measures:

a) To zero-rate trust administration services provided by a trust company to a foreign trust of which it is not the trustee;

b) To provide for the Approved Third Party Logistics Company Scheme;

c) To make government goods and non-regulatory services, which can be potentially provided by the private sector, taxable; and

d) To remove the requirement for GST-registered businesses to seek the Comptroller's prior approval for electronic invoicing.

3. Sir, I shall now explain the amendments in the Bill that relate to changes announced in Budget 2003.

Zero-rating of Trust Administration Services

4. The zero-rating provision in respect of trustee services shall be extended to services provided by a Singapore trust company to a foreign trust of which it is not the trustee. This will increase the competitiveness of Singapore trust companies serving as management and administration hubs for offshore trusts. Clause 4 amends Section 21 of the Act such that trust administration services provided to a foreign trust by a person other than the actual trustee can be zero-rated.

Approved Third Party Logistics Company Scheme

5. Third party logistics companies generally undertake vendor-managed inventory operations where they import and hold goods belonging to foreign principals for local delivery.

6. A new scheme whereby qualifying companies can import goods belonging to them or foreign principals without payment of GST shall be introduced. Under the scheme, qualifying companies can also move goods to their customers who are under the Major Exporter Scheme or other qualifying companies under the same scheme, without charging GST. Clause 5 re-enacts Section 27 of the Act to allow Minister to make regulations to give effect to the Approved Third Party Logistics Company Scheme.

7. I will now explain the more technical points in the Bill.

Making Government Goods and Non-Regulatory Services Taxable

8. Under the current legislation, supplies provided by the Government are only subject to GST if there are similar supplies made by the private sector. However, the taxability of supplies should be based on the nature of supplies rather than the legal identity of the suppliers. To rationalise the treatment, GST will be levied on all government goods and non-regulatory services that can be potentially provided by the private sector, whether or not it is actually already being provided by the private sector.

9. Hence, Clause 6 amends Section 28 of the Act to levy GST on all non-regulatory government supplies, except supplies the Minister may prescribe. The Government will not increase any fees and charges on account of the change in GST treatment of government supplies. Instead, the price of the services provided at the time this amendment comes into effect will be deemed as being inclusive of the GST.

Removal of the Requirement to Seek Comptroller's Approval for Electronic Invoicing

10. Currently, GST-registered businesses that wish to issue, transmit or receive tax invoices electronically are required under the Act to seek prior approval from the Comptroller. Clause 7 amends Section 43 of the Act to remove the requirement to seek the Comptroller's prior approval for electronic invoicing. This will ease compliance for businesses.


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