MOF Invites Feedback On Proposed Changes To The Goods And Services Tax (“GST”) Act
1. The Ministry of Finance invites interested parties to provide feedback on the draft GST (Amendment) Bill 2019, from 5 July to 26 July 2019.
Proposed Amendments Relating to GST on Imported Services
2. Two of the proposed amendments relate to the planned introduction of GST on imported services from 1 January 2020. The Minister for Finance announced this introduction in Budget 2018, and it was passed in the GST (Amendment) Bill 2018. The introduction of GST on imported services will ensure that our GST system remains fair and resilient in a digital economy.
3. The two proposed amendments are:
a) Refine the design parameters for GST on imported services
This proposed amendment seeks to clarify or improve GST administration for imported services, such as by clarifying the scope of Reverse Charge1 and allowing GST group registration for overseas businesses under the Overseas Vendor Registration (“OVR”) regime2.
b) Introduce an offence for misrepresentation of information
Unlike the GST regime currently in place for local GST-registered suppliers, suppliers under the OVR regime operate overseas, and rely on declarations made by customers to determine if GST is applicable. Hence, the proposed amendment is required in order for the Inland Revenue Authority of Singapore to enforce GST on imported services effectively if a customer were to provide false information, where such information may be used by the supplier to determine whether GST is chargeable.
Other Proposed Amendments
4. The draft GST (Amendment) Bill 2019 provides for three other proposed changes to existing tax policies and administration, arising from our periodic review of Singapore’s GST system.
a) Update the GST treatment for digital payment tokens3
Under the proposed amendment, we will (i) exempt from GST the exchange of digital payment tokens for fiat currency or other digital payment tokens, as financial services, and (ii) not subject to GST the use of digital payment tokens as a means of payment for goods and services. Currently, the sale and transfer of digital payment tokens are regarded as supplies of services, and are subject to GST. The proposed amendment more accurately reflects the characteristics of digital payment tokens, and is an update of GST rules to ensure that they remain relevant in the digital economy. Our proposed treatment is similar to that of other jurisdictions such as Australia, the European Union, Japan and Switzerland, which have also updated their Value-Added Tax/GST rules for digital payment tokens in recent years.
b) Make changes to the reporting of proceedings and decisions of tax cases by the High Court and Court of Appeal (“the Courts”)
To align with the principle of open justice and in keeping with international trends in Canada, Hong Kong, New Zealand and the United Kingdom, tax proceedings in the Courts will no longer be heard in private by default. The redaction of taxpayers’ names in published decisions of such judicial proceedings will also be discontinued. The proposed amendment will place tax proceedings in the Courts in the same position as other judicial proceedings where private hearings and confidentiality orders may still be granted at the discretion of the Courts.
Similar amendments will be incorporated in the Income Tax (Amendment) Bill 2019.
c) Introduce definitions of “accountant” and “advocate and solicitor” for purposes of appeals to the GST Board of Review (“GSTBR”)
With the proposed amendment, only a “public accountant” within the meaning of the Accountants Act; or an “advocate and solicitor” within the meaning of the Legal Profession Act, is allowed to represent a taxpayer before the GSTBR. This amendment safeguards the interests of taxpayers who lodge appeals to the GSTBR, by ensuring that the representatives handling their appeals meet certain professional qualifications. These definitions are consistent with those in the Income Tax Act, for the purposes of appeals heard before the Income Tax Board of Review.
5. The public can access the detailed consultation documents for the draft GST (Amendment) Bill 2019 on the Ministry of Finance's website and the REACH consultation portal.
6. We encourage all interested parties to submit your comments, using the prescribed template, through:
a. email to firstname.lastname@example.org (preferred mode); or
b. fax to 6337 4134; or
c. post to:
Ministry of Finance
100 High Street, #10-01
Attention: Tax Policy Directorate
Issued by Ministry of Finance
5 July 2019
1 GST on business-to-business (“B2B”) imported services will apply by way of a Reverse Charge mechanism. Reverse Charge is a GST collection mechanism where the local business customer pays GST to the tax authority directly, on the services it imports. This is in contrast to the conventional GST mechanism domestically where the onus is on the supplier to collect GST from the customer, and pay it to the tax authority.
2 Under the OVR regime, overseas suppliers that make B2C digital services to customers in Singapore are required to register, charge and account for GST on such sales, notwithstanding that these suppliers do not have a physical presence in Singapore.
3 A digital payment token is a cryptographically-secured digital representation of value, that is used or intended to be used as a medium of exchange.