Parliament passes Goods and Services Tax (Amendment) Bill 2010: implementing Budget 2010 changes | Practical Law

Parliament passes Goods and Services Tax (Amendment) Bill 2010: implementing Budget 2010 changes | Practical Law

This article is part of the PLC Global Finance September 2010 e-mail update for Singapore.

Parliament passes Goods and Services Tax (Amendment) Bill 2010: implementing Budget 2010 changes

by Allen & Gledhill LLP
Published on 01 Oct 2010 • Singapore
This article is part of the PLC Global Finance September 2010 e-mail update for Singapore.
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The Goods and Services Tax (Amendment) Bill 2010 (the Bill) was read the second time in parliament and passed on 16 August 2010. The Bill amends the Goods and Services Tax Act (the GST Act) to put in place tax changes announced in the 2010 Budget Statement. This article highlights some of the changes that will be made.
The Goods and Services Tax (Amendment) Bill 2010 (the Bill) was read the second time in parliament and passed on 16 August 2010. The changes arising from the Bill are not in force yet. The Bill amends the Goods and Services Tax Act (the GST Act) to put in place tax changes announced in the 2010 Budget Statement, as well as changes arising from the ongoing review of the Goods and Services Tax (GST) regime. The following are highlights of some of the changes that will be made.

Budget 2010 changes

These changes are designed to reduce compliance costs for businesses:
  • Time of supply and simplification of GST accounting rules. A business now need only account for GST when an invoice is issued or payment is received for the supply, whichever is the earlier. In this way, businesses need no longer track the delivery of goods and services for most transactions.
  • Expand scope of zero-rating of GST for the marine and aerospace industry. The GST Act will be amended to provide for the enhancement to the zero-rating of supplies in connection with the marine and aerospace industry. GST zero-rating is extended to:
    • pleasure and recreational ships wholly used for international travel;
    • goods supplied for use, installation or for retail sale on all ships qualifying for the zero-rating treatment; and
    • transportation of goods or passengers via a ship to or from international waters even if the ship does not call on a port outside Singapore (for example, cruise-to-nowhere packages).
      Zero-rating is also extended to stores and fuel supplied to and merchandises for retail sale on an aircraft qualifying for zero-rating treatment.
  • New Import GST Deferment Scheme (the IGDS scheme). Currently, GST on imported goods is payable at their point of entry into Singapore. This new scheme allows approved businesses to defer import GST to the point of submission of their GST returns. In effect, approved businesses will enjoy a credit period of up to two months on their import GST, similar to what businesses can enjoy for their local purchases.

Other changes

  • Approved Contract Manufacturer and Trader Scheme. For the purpose of enhancing international competitiveness, the ACMT scheme allows qualifying businesses to disregard the GST on value added services performed for their overseas clients even if the goods are treated or processed in Singapore. The ACMT scheme has been refined to allow qualifying businesses to self-assess the eligibility of their transactions under the scheme instead of having to seek the approval of the Inland Revenue Authority of Singapore.
  • Electronic service. The GST Act will be amended to widen the scope of the electronic services provided by the Comptroller of GST. Currently, the GST Act allows the Comptroller to provide electronic services only for the filing or submission of returns, declarations or documents.
  • Exemption of residential property from GST. Currently, the exemption of residential property from GST applies to buildings, flats and tenements that are used exclusively for residential purposes. The Act will be amended so that GST exemption is available to buildings, flats and tenements that are used principally for residential purposes. Examples of buildings, flats and tenements that are used principally for residential purposes are homes for the aged, workers' dormitories and students' hostels.
  • MOF response. A draft version of the Bill was the subject of a public consultation conducted by the Ministry of Finance from 1 June 2010 to 18 June 2010. On 16 August 2010, the Ministry of Finance (the MOF) issued its response to the feedback received on the consultation paper.
To read the response from the MOF website, please click here.

Second reading speech

To read the Second Reading Speech delivered by Mrs Lim Hwee Hua, Minister in Prime Minister's Office, Second Minister for Finance and Transport, on the Goods and Services (Amendment) Bill 2010, please click here.