The goods and services tax (GST) was implemented on April 1, 1994. Companies whose taxable turnover is more than $1 million at the end of the calendar year, or expected to be more than $1 million in the next 12 months, are required to register for GST.
Nearly three decades after implementation, the annual turnover threshold to determine GST registration has remained the same.
The Government has adjusted many schemes that come with a monetary threshold. For example, monthly household income ceilings for buying Build-To-Order flats, executive condominium units and resale flats have been periodically revised to cater for increasing income levels.
The Central Provident Fund basic retirement sum has also been raised regularly to provide retirees with higher monthly payouts in their retirement years, given the rising standards of living.
The annual revenue threshold used to determine if private companies can be exempted from statutory audit was initially set at $2.5 million, revised to $5 million and later to the current $10 million.
Even casino entry levies for Singaporeans were increased from $100 to $150 in 2019.
Notwithstanding that each of these schemes is unique and serves a specific reason, these adjustments have been necessary as inflation erodes the value of money over time.
Take the super inflationary environment that we are experiencing right now. Many companies have responded by adjusting their selling price upwards.
It is therefore easier for companies to achieve $1 million in annual turnover now than it was in 1994.
But these million-dollar turnover companies today may not be as big and have the same capabilities and resources as those in 1994.
Many such companies do not have an in-house accounting team, let alone the ability to administer the GST system themselves. They then have to contract out this function to an external firm to do it, which in turn leads to higher operating costs.
The Government has been timely in amending policies to keep them relevant. Isn't it time then to review the annual turnover threshold for GST registration?
Tan Yong Sang