Ministry proposes changes to GST law

The Government proposes to tighten the goods and services tax (GST) collection process in the sale of goods commonly used in fraud schemes, such as mobile phones and memory cards.

Under a proposed amendment to the law, GST-registered sellers would no longer be allowed to charge GST on the sale of these goods to GST-registered customers, the Ministry of Finance (MOF) said.

Instead, these customers would account for the GST chargeable by dealing directly with the Comptroller of GST, which means the registered customers would report the GST amount due in their GST return forms on behalf of the registered suppliers.

This will deter fraud schemes where the seller absconds after collecting the GST while businesses down the supply chain continue to claim input tax, which is GST incurred on business purchases and expenses.

CLOSING GAPS

With this change, the risk of the first party running away with the tax collected from the second party is eliminated as the obligation to account for the tax will be passed down to the customer.

MR KOH SOO HOW, PWC's Asia-Pacific and Singapore indirect tax leader, on the proposed change to GST collection.

Mr Koh Soo How, Asia-Pacific and Singapore's indirect tax leader at PwC, said: "With this change, the risk of the first party running away with the tax collected from the second party is eliminated as the obligation to account for the tax will be passed down to the customer."

MOF is seeking feedback on this and five other proposed changes to the GST Act aimed at easing business compliance, clarifying existing legislation and improving tax administration.

A $200 monthly penalty for late submission of GST returns immediately after the filing due date is proposed. The penalty is currently imposed only on outstanding returns starting from one month after the filing due date.

Also, GST tax notices are to go digital unless taxpayers opt out.

MOF also proposes electronic record-keeping and additional invoice details for selected businesses to beef up tax administration. To ease business compliance, it is proposed that customer accounting on the supplier side for the sale of non-residential property to Reits or their Special Purpose Vehicles be extended to movable assets sold with the property. Lastly, there is a proposed change to GST treatment regarding the sale of government land on which there are buildings to be demolished.

Details of the proposed changes can be found at mof.gov.sg.

A version of this article appeared in the print edition of The Straits Times on May 13, 2017, with the headline 'Ministry proposes changes to GST law'. Print Edition | Subscribe