The $1 million threshold for goods and services tax (GST) registration has served its purpose.
It was applied to help small businesses avoid the need to invest in costly GST-compliant accounting and point-of-sale software.
However, it was not set in stone, as any company can register for GST filing and compliance if it chooses to.
When small companies are not GST registered, it means they pay GST to the Inland Revenue Authority of Singapore (Iras) on the products they buy. They cannot file a GST return to ask for repayment.
On top of this, Iras also collects the GST that customers pay on the end-product.
This means Iras collects more than the 7 per cent GST rate on the product.
I hope the Government will address this by disseminating information and giving incentives to encourage as many small businesses as possible, notwithstanding their annual sales, to register for GST compliance and filing.
Reducing the threshold from $1 million to $500,000 is a timely recommendation and a good start ("EY urges Govt to sharpen some tax policies"; Feb 11).
Small companies should register for GST to prevent any breaks in the chain of production and businesses in GST filing.
Any breaks will not be financially and fiscally conducive to the Government's effort in keeping down our cost of living.
Tan Kok Tim