BACKGROUND
A public consultation exercise on the draft Goods and Services Tax (GST) (Amendment) Bill 2005 was held from 8 July to 5 August 2005 to obtain feedback on areas of the draft legislation that required greater clarity or could be amended to facilitate compliance by businesses.
2. The draft GST (Amendment) Bill 2005 put up for consultation covered tax changes or refinements to existing tax policies and administration resulting from on-going review of the GST system.
3. The summary table lists all the tax changes and explains the amendments to the GST Act.
PARTICIPANTS OF THE CONSULTATION EXERCISE
4. A total of 25 comments were received, most of the feedback being from professional bodies and companies. The responses were very helpful for improving the GST legislation.
SUMMARY OF COMMENTS
5. 13 of the 25 comments received (52%) related to the drafting of the GST (Amendment) Bill 2005. The other comments were to seek clarification or requests to review the tax policies and tax administration. The tax changes that received the most comments on the drafting of the legislation were related to the amendments for:
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the repayment of input tax by the customer (debtor) who claimed input tax but failed to pay his supplier the relevant consideration by a certain date; |
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the zero-rating of maintenance, repair and broking services of ships and aircraft; and |
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compulsory electronic filing of GST returns. |
6. MOF has considered all comments carefully. Of the 13 comments on the drafting of the legislation, 8 have been accepted as they help clarify the policy intentions and would facilitate compliance by businesses. Where appropriate, changes have been made to the Bill to take in the accepted suggestions. Comments not accepted were mainly those where the suggested changes to the legislation do not meet the policy intentions. Others went beyond the purpose of the exercise. They covered changes in tax policy and administration.
7. The major comments received and MOF’s responses to them are summarised below:
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1. Repayment of input tax by the customer (debtor) who has claimed input tax but fails to pay his supplier the consideration by a certain date |
Respondents were concerned that the use of the date of supply may give rise to compliance difficulty as the customer may not know the exact date of supply.
MOF’s response: Accepted. Section 19(12) will be revised such that the specified period shall be 12 months from the due date of payment of the consideration by the taxable person to his supplier. |
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2. Zero-rating of maintenance, repair and broking services of ships and aircraft |
Respondents suggested prescribing the services that can be zero-rated under section 21(3)(p). One respondent highlighted that the prescribed services should include services carried out on parts and components of ships and aircraft.
MOF’s response: Accepted. The services under section 21(3)(p) will be prescribed in a separate order when the amendment is enacted.
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3. Compulsory electronic filing of GST returns |
Respondents suggested that the legislation provides for a transitional period for manual filing of GST returns as they were concerned that some small businesses may not be ready for compulsory electronic filing of GST returns.
MOF’s response: Rejected. We note the concern that some small businesses may not be ready for compulsory electronic filing. However, introducing a transitional period for all businesses is not the best approach. IRAS will consider the needs of different groups of businesses and implement compulsory electronic filing in a judicious manner e.g. introducing it in phases. |
8. MOF thanks all who have responded for their comments. We will continue the practice of consulting the public before finalising the amendments to our tax laws.