SINGAPORE - The Ministry of Finance (MOF) is calling for public feedback on six proposed changes to the Goods and Services Tax Act including one that will prevent fraud schemes involving the sale of mobile phones, memory cards or off-the-shelf software.
The proposed amendments in general are aimed at easing business compliance, clarifying existing legislation or improving tax administration, MOF said in a media release on Friday (May 12). The proposed changes are:
1. Extend customer accounting to prescribed supplies commonly used in fraud schemes
MOF said supplies of mobile phones, memory cards and off-the-shelf software are commonly used in fraud schemes. In such schemes, the seller absconds with the GST collected, and businesses further along the supply chain continue to claim input tax, meaning tax on the business purchases or expenses.
MOF is proposing that sellers of these items will no longer be able to charge GST to their GST-registered customers. Instead, customer accounting will apply whereby the customers will be required to account to the Comptroller of GST for the GST chargeable. These supplies will be prescribed in subsidiary legislation, said MOF.
2. GST tax notices to go digital unless taxpayers opt out
GTaxpayers who wish to continue receiving their notices in hard copy must opt out. The Act currently requires taxpayers to provide specific consent before they can be issued with digital tax notices.
3. S$200 penalty for late submission of GST returns brought forward
The monthly penalty of S$200 for late submission of GST returns will begin immediately after the filing due date. Currently, the penalty is imposed on outstanding returns starting from one month after the filing due date. MOF said the change will help to deter the late filing of tax returns.
4. Extend customer accounting for GST-registered Real Estate Investment Trusts (Reits) and their Special Purpose Vehicles (SPVs) to movable assets bought together with a non-residential property from the same seller
Currently, to ease cash flow, customer accounting applies to a GST-registered supplier's sale of non-residential property to a Reit or its SPV. It does not apply to movable assets sold together with the non-residential property.
A GST-registered supplier who sells a furnished non-residential property to the Reit or its SPV will have to apportion the selling price into the value of the unfurnished property and that of the movable assets. The change will ease business compliance by dispensing with the need for apportionment, said MOF.
5. Provide for the GST treatment for the sale of government land with existing buildings to be demolished to follow the approved use of the land, rather than the approved use of the building
Currently, when Government land is sold with an existing building to be demolished, the GST treatment on whether the supply is exempt or taxable depends on the approved use of the building, which might not reflect the approved use of the land. The change will provide more consistency in tax treatment for this category, said MOF.
6. Requiring electronic record keeping and additional invoice details for selected businesses.
This will strengthen tax administration and help the Comptroller in verifying that GST transactions are properly accounted for.
Feedback must be submitted by June 4.