The introduction of the goods and services tax (GST) on imported services will bring in revenue of about $90 million a year, Finance Minister Heng Swee Keat said yesterday.
However, he added in his Budget debate round-up speech: "Let us be clear that this is a move to defend our current revenue base from being eroded as more transactions move online."
Mr Heng's remarks were in response to Workers' Party MP Pritam Singh (Aljunied GRC), who asked if the so-called "Netflix tax" would generate additional revenue. The tax, to take effect in 2020, will require foreign suppliers that have a global turnover of more than $1 million, and which sell digital services to Singapore consumers that exceed $100,000, to register to pay GST.
Mr Heng also sought to allay concerns raised by Nominated MP Thomas Chua that the move would hurt many local firms.
Mr Chua noted in the debate that Singapore imported almost $225 billion worth of services in 2016, according to Department of Statistics data. This is a significant figure, and once GST is levied, many purchasers will face pressure arising from an increase in operating cost, he said.
Mr Heng said this figure "vastly overstates" the imported services which will attract GST. "Our move to levy GST on imported services will not affect most businesses," he added. "This is because most businesses can claim full refund of the GST they incur on inputs they procure for their businesses, including imported services."
Firms affected by GST on imported business-to-business services will mainly be financial institutions and residential property developers, which would not get full refunds, he added.