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Second Reading Speech by Mrs Lim Hwee Hua, Minister In Prime Minister's Office, Second Minister For Finance And Transport On The Goods And Services Tax (Amendment) Bill 2009 in Parliament, 18 Aug 09

18 Aug 2009

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

2. The Goods and Services Tax (Amendment) Bill 2009, or the GST Bill for short, comprises five amendments. The first two amendments give legislative effect to the GST initiatives announced in the 2009 Budget Statement, while the other three amendments arose from our ongoing review of the GST system.

3. The draft GST Bill was released for public consultation in June 2009, and has been revised to incorporate a number of suggestions from businesses and members of the public.


4. Let me first touch on the provisions in the GST Bill that give legislative effect to the GST changes announced in the 2009 Budget Statement.

(a) Zero-rating of aircrafts used wholly for international travel as well as the sale and lease of aircraft parts forming part of a qualifying aircraft

5. First, to support the growth of the aircraft Maintenance, Repair and Overhaul (MRO) industry in Singapore, the Government will expand the scope of qualifying aircraft that can enjoy GST zero-rating to include all aircraft, including private aircraft, used wholly for international transportation of goods and passengers. To ease GST compliance costs for the MRO industry, zero-rating is also extended to cover the sale and lease of aircraft parts that form part of a qualifying aircraft. These changes are in line with the zero-rating of international transportation. Clause 2 of the Bill reflects these GST changes.

(b) Suspending GST on goods temporarily removed from Zero-GST or Licensed Warehouses

6. Second, it was also announced in Budget 2009 that GST will be suspended on goods that are temporarily removed from a Zero-GST or Licensed Warehouse for auctions or exhibitions, provided that the goods, whether sold, but not brought into the domestic market, or unsold during the auctions or exhibitions, are returned to a Zero-GST or Licensed Warehouse subsequently. This is to encourage the growth of the auction and exhibition industry as well as specialised storage facilities in Singapore. This initiative is provided under Clause 5 of the Bill.


7. I shall now deal with the other three tax changes which require amendments to the GST Act. These changes arose from our periodic review of the GST system.

(c) GST registration to be in the name of the trust

8. The first pertains to the GST registration of a trust. As a trust is not a legal entity, GST registration is currently done in the name of the trustee carrying on the business of the trust. This can inadvertently be confusing as a trustee can act for multiple trusts at any point in time. The GST Act will thus be amended to allow GST registration to be effected in the name of the trust, while the trustee continues to be liable for the GST matters of the trust. This is similar to how the GST Act presently allows partnerships and limited partnerships to be registered in the name of the partnership, while holding their partners liable for the GST matters of the partnerships. This enhancement is provided under Clause 3 of the Bill.

(d) Extending the current GST treatment for physical vouchers to new forms of vouchers

9. The next change concerns the GST treatment of vouchers. Currently, physical vouchers that entitle the holder to redeem goods or services up to a monetary value as stated on the vouchers do not attract GST at the point of sale of these vouchers. Instead, GST is payable only when the vouchers are subsequently redeemed for goods or services.

10. Vouchers have evolved over time to include electronic, bar-coded or magnetic strip vouchers. We also need to take into account vouchers where the value is stated in non-monetary terms (for example, phone cards with 100 minutes of talk time). The GST Act will be amended to expand and specify the scope of qualifying vouchers for which GST is due only when the vouchers are redeemed, and not at the point of sale of the vouchers. Clauses 4 and 7 of the Bill provide for this change.

(e) Requiring taxpayers to state precisely their grounds of objection to a decision made by the Comptroller of GST

11. Lastly, the GST Bill includes a provision requiring any person applying for a revision of decisions made by the Comptroller of GST to state explicitly their grounds of objection. This requirement is already provided for in the Income Tax Act and Property Tax Act, and should be extended to the GST Act. This change is provided for under Clause 6 of the Bill.


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