subpage banner


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 (Amendment) Bill 2010

16 Aug 2010

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

2.            The Goods and Services Tax (Amendment) Bill 2010, or the GST Bill for short, comprises nine amendments. The first three amendments give legislative effect to the GST initiatives announced in the 2010 Budget Statement, while the other six amendments have arisen from our ongoing review of the GST system.

3.            The draft Bill was released for public consultation in June 2010 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 GST changes announced in the 2010 Budget Statement, which collectively serve to reduce compliance costs for businesses.

(a) Simplification of GST accounting rules

5.            First, with the amendment, businesses only need to account for GST upon the issuance of invoice or receipt of payment, whichever is earlier, and will no longer need to track the delivery of goods and services for most transactions. This simplifies GST accounting for businesses. Clause 3 of the Bill provides for this change. Clauses 11, 12 and 13(a) and (b) of the Bill are consequential amendments.

(b) Zero-rating for marine and aerospace industry

6.            Second, to simplify GST compliance for businesses supporting the marine industry, GST zero-rating is extended to:

(i) Pleasure and recreational ships wholly used for international travel;
(ii) Goods supplied for use, installation or for retail sale on all ships qualifying for the zero-rating treatment; and
(iii) Transportation of goods or passengers via a ship to or from international waters even if the ship does not call on a port outside Singapore (for example, cruise-to-nowhere packages).

In tandem with the new zero-rating treatment for the marine industry, GST zero-rating is also extended to stores and fuel supplied to and merchandises for retail sale on an aircraft qualifying for zero-rating treatment. Clause 6 of the Bill provides for these GST changes.

(c) Import GST Deferment Scheme

7.            Third, the Government will introduce a new scheme to allow approved businesses to defer import GST, currently payable on their goods at the point of entry into Singapore, to the point of submission of their GST returns. Approved businesses will in effect enjoy a credit period on their import GST of up to two months, similar to what businesses can enjoy for their local purchases. The scheme will be open to GST-registered businesses with a good track record and operating on the monthly reporting system. Clause 7 of the Bill provides for this initiative.Clauses 5, 13(c), 15 and 16 of the Bill are consequential amendments.


8.            As I mentioned earlier, the remaining six amendments to the GST Act have arisen from our ongoing review of GST policies and administration. Let me highlight three of these amendments for the benefit of Members.

(d)Approved Contract Manufacturer and Trader Scheme

9.            The first change concerns the Approved Contract Manufacturer and Trader (ACMT) scheme which enhances the international competitiveness of qualifying businesses by allowing them to disregard GST on value added services performed for their overseas clients even if the goods are treated or processed in Singapore.

10.         Refinements have been made to the scheme to allow approved businesses to self-assess the eligibility of their transactions under the scheme instead of having to seek approval from IRAS. To support the refinements, the legislative amendments allow the Minister to make regulations to:

(i) Empower the Comptroller of GST to publish the names of approved businesses and impose penalties should goods imported under the scheme be delivered by these businesses to non-approved persons[1]; and

(ii) Require approved businesses to account for GST on behalf of the overseas principal when the finished goods are delivered to the customers of the overseas principal.

Clause 10 of the Bill reflects these changes.

(e) Widening scope of electronic services

11.         The second change relates to electronic services. Currently, the GST Act allows the Comptroller of GST to provide  electronic services only for the filing or submission of any return, declaration or document. The Act will be amended to broaden the scope of electronic services that can be provided by the Comptroller of GST. This enhancement is provided uder Clause 14 of the Bill.

(f) Exemption of residential properties

12.         The third change pertains to the exemption of residential property. Currently, the GST Act provides that properties approved exclusively for residential purposes under the Planning Act are exempt from GST. While this allows for GST exemption for most residential properties, it may not be clear if the same treatment can be applied to other places of residences such as homes for the aged, workers' dormitories and students' hostels. The GST Act will thus be amended to clarify that the policy intent is to exempt from GST these properties that are used principally as a place of residence. The GST Act will also be amended to empower the Minister to gazette an Order on the list of residential properties that can qualify for GST exemption. Clauses 17 and 18 of the Bill provide for this change.

Mr. Speaker, Sir, I beg to move.

[1] Businesses approved under the scheme are only allowed to deliver the imported goods to other approved businesses or the customers of their overseas principals.